FAIRTAX, An Internal Economic Error

The FAIRTAX is a proposal to replace virtually all Federal taxes with a single retail sales tax on new goods, attempting to eliminate all multiple taxation and the costs of compliance, among other things.

For background, see fairtax.org and the book.

I am not interested here with the pluses or minuses of the overall plan, but merely with refuting one of the primary claims.

From the book, on page 56, we have the following claim :

Now why is it so important that you understand how much federal tax income is embedded in the goods and services you purchase? Because one of the beauties of the FairTax is that price of consumer goods and services in our economy will go down by roughly the same amount as the proposed FairTax rate of 23 percent. This very nearly makes everything a wash.

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