Scott,

Your answers are really not supporting your position.

First, the fact that only "new items" would be subject to the tax is just another reason why a national sales tax would not work.  To take a look at an industry already stuggling, the auto industry, your plan would make our current economic situation even worse.  The government is already trying to provide tax credits for purchasing automobiles.  If only new autos are taxes under your plan, who would not opt to buy a used car when the savings would be 30% MORE?  Your plan would drive up the used car prices and still not address the underlying problem we are currently facing - nobody is buying new cars. If people don't buy new items because they are 30% more than used items, the economy would suffer drastically.  And, it would hurt the people with less money who would be paying more for used cars.  This holds true of any goods - not just cars.

Second, you don't seem concerned that burgleries and theft woudl increase dramatically.  The criminals you say would begin paying tax on their toys assumes they would buy these items new... fact is they are criminals and they would steal them - and have even a new source of revenue on the black market.  The increase cost of crime on society would be huge.... higher insurance prices for all of us, and higher prices on all goods to make up for losses caused by theft.

Third, your explanation of the effect on those with Roth IRAs is not really an answer.  The fact is that these people paid the income tax on that money already and they would be paying a 30% tax on that money again when they draw the money out to spend it.  That doesn't seem very fair for something called the "Fair Tax."  Sure, they would pay some taxes anyway... but nothing near the 30% you want to charge them.

Fourth, you seem to think that the rich are stupid and they will continue to spend lavishly in the face of a 30% national sales tax.  Quite arguably, the rich became rich by saving and spending wisely.  If they can buy used porsches, yachts, and jets, they will do so.  And, don't forget that the most coveted items among the rich, antiques and artwork, are all by their very nature "used items" that, according to you, will not be taxed.  The rich will simply change their spending habits to take the best advantage of your plan.  They won't be the cash cow that you imagine them to be.

Fifth, you seem to miss the point regarding the overall effect on the economy.  There is a big difference between the current income tax and your plan.  In a recession, we need consumer spending to create jobs and economic growth.  With your plan, there is an incentive to save, not spend, which is especially true in poor economic times.  How do you spur the economy with a national sales tax?  You need consumer spending, but have tax system that penalizes those who spend.

Sixth, you didn't address the major flaw in the "Fair Tax"... it is NOT fair.  It will cost the middle class MORE in taxes.  The graduated income tax provides a lower rate on the first dollars earned.  It starts at only 10% and gradually rises to about 36%.  With a national sales tax, those who make between $30,000 and $200,000 will be paying 30% on every dollar they spend, since most in that category spend all of their income, they will be paying the maximum amount from the beginning and they lose out of the beneftis of the lower rates provided by the graduated income tax.

Those who can save - will save.  Those who can't save will shoulder the majority of the tax burden in this country.  The rich will get richer, the middle class will get poorer, and the poor won't pay taxes in either tax system.

You seem to have bought into the hype that a consumption tax is a "fair" tax... just because someone decided to call it the "Fair Tax" doesn't change the nature of it.  It is not inherently any more fair than the graduated income tax - it is a consumption tax that hits hardest those who consume the most as a percentage of their income.  Since those with lower incomes spend the largest percent of their incomes, they will be the real losers under your plan.

And you are really wrong when it comes to which provides the more stabile base - that is certainly not a consumption tax.  In lean times, it is easy to cut back on spending - or at least to cut back on spending on "new items," which you claim will be the only category of goods to be taxed.  Thus, the nation would suffer from decreased revenue when it needs it the most.

We could argue this forever... but the simple fact is that the majority of economists and politicians do not consider the consumption tax to be a viable alternative.  It will not happen. As I have said, if we were to try, we would end up trying to phase in a consumption tax and the income tax would never go away - we would have both.

Best,
Robert A. Franco
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