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2005 Bipartisan Tax Reform Panel Report The Tax Reform Panel reports that Treasury Department calculations show that a 34% exclusive rate is required for revenue neutrality when replacing only the income tax (54% of federal revenue). Compare this with the FairTax proponent assertion that all taxes (93% of federal revenue) can be replaced by a 30% sales tax. The Treasury Department estimate of the sales tax rate to replace all taxes would be 58% under the assumption of a low (15%) evasion rate. Under the assumption of higher (30%) evasion, which may be more realistic under such high sales tax rates, a sales tax of 84% would be required. If a state sales tax of 7% is compounded on top of that, the full rate would be 97%. The Treasury Department did not include the FairTax used item exclusion which would drive the sales tax rate higher yet. The Tax Reform Panel also predicted that the administrative costs of the prebate and sales tax tracking programs would equal or exceed that of the current IRS. Since most states rely on an income tax, the IRS would have to be recreated on the state level or state sales taxes would have to double. The Treasury Department estimate of the regressive nature (transfer of tax burden from the rich to the middle class and poor) is even more pronounced than mine. The portion of the tax burden borne by the middle incomes (40 to 60 percentile) would increase 176%. That borne by the top 1% would decrease by 42%. Removing that much money from retail sales income of businesses would cause an economic death spiral of business contraction, resulting job losses, more retail sales loss ... Link to their final report - http://govinfo.library.unt.edu/taxreformpanel/final-report/index.html Link directly to the part of the report dealing with the national sales tax (See/print Chapter 9 pages 207 - 222 See Box 9.2 on page 217 for revenue comparisons.)- http://govinfo.library.unt.edu/taxreformpanel/final-report/TaxPanel_8-9.pdf See the Dayton Daily News Opinion on Fairtax 12/29/07
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