Hypothetical Fair Tax Question?

No.

With a state sales tax, only the final sale is taxed, so there are no compounding effects. States do not charge sales tax when one business buys something for another resale or that will become part of the product that the company sells, without using it first. For example, the refiner does not pay a state sales tax when buying ore, the auto company does not pay a state sales tax when buying a state sales tax when buying aluminum, and the dealer does not immediately pay a state sales tax when buying a car for resale to customers. (Sometimes, a car does not sell and the dealer keeps it for personal use; when that happens, the dealer does pay state sales tax.) States sometimes do charge state sales tax when a business buys something to use, not to immediately resell or to make into a product. For example, the mining company may have to pay sales tax when it buys a truck to transport the ore, and the car dealer has to pay sales tax when buying paper for the computer printer in the office.

With a "value-added" tax (VAT), tax is paid on the increase in value, not on the total amount of money changing hands. For example, if the car dealer pays the manufacturer $10,000 and then you pay the car dealer $11,000, the "added" value is $1,000, so a 10% tax would be only $100. As with the state sales tax, the total tax collected, at all steps, is the nominal tax rate times the final purchase price, with no compounding effects. (However, there is a compounding effect in the total amount you pay, because of confounding intermediate issues. For example, if the dealer pays the salesperson a commission of a certain percentage of the price of the car, then any taxes paid by the manufacturer that increase the price of the car also increase the pay of the salesperson.)

Finally, when the dealer sells you the car, if the tax is 10%, that does not mean that you would pay 10% of the advertised price. The tax you pay is based on the price that you pay for the car, not the price that the dealer advertised. You can usually negotiate with the dealer and pay less than the advertised price. The advertised price has nothing to do with the tax.

The so-called "Fair Tax" is a flat 30% sales tax collected only from the end consumer.

What you are describing is a modified VAT. VAT normally has VAT-in and VAT-out features. The producer collects VAT (VAT-out) from the next step in the production and distribution cycle. That person also collects VAT, but then takes a credit for the VAT (VAT-in) paid to the producer. This process continues to the end consumer. The net result is that the end consumer pays VAT at the stated rate on the retail price of the goods.

In your scenario the tax grows exponentially at each step. Business tends to modify their processes to maximize returns, so many producers will become direct vendors to the end consumer in order to keep total taxes low. They will swallow up firms in the production and distribution process which will tend to limit competition.

The major issue with VAT is that it is an administrative burden on business and the government both. Instead of only the final retailer collecting and rendering the tax, everyone has to collect and render taxes. The government also has many more businesses to audit to ensure compliance with the tax laws. The administrative cost of a poorly designed VAT system (which covers most of them, by the way, having done VAT returns in Europe) can consume as much as 25% of the total taxes collected.

As an aside, the 30% "Fair Tax" would collapse the housing and auto industries nearly overnight. Do you have an extra $6,000 in cash for the "Fair Tax" on a new $20,000 car? How about $60,000 for the "Fair Tax" on a new $200,000 home? Neither do I. Since such a huge tax burden does not add anything to the value of the goods purchased, you're likely not going to be able to finance it, meaning that you will have to have ready cash to pay the tax at closing.

How come a pair earning $a hundred,000 can unquestionably pay $25,000 or greater in taxes however the guy making a million in ordinary terms pays $seventy 5,000? 10 circumstances the funds yet thrice the tax. what's your opinion of tax subsidies for worthwhile oil companies and tax rebates for others? Subsidies and rebates are actually not tax cuts. that could use the $25,000 greater? Edit: Bullsh!t!. final twelve months 20 of my consumers paid that and greater. they had no toddlers, no important scientific deductions and have been renting. the place are you getting those MANY deductions from? yet my wealthier consumers had super NON-funds write offs. that's what you're alluding to with the $500,000 in write offs.I propose you prepare some severe tax returns. Or seek advice from a CPA Oh and by the way, my prosperous consumers had no flowers, no kit, no workers and that they took lavish holiday trips. they had extensive bonuses. a number of that have been deferred. so as that they weren't taxed on that the two. My $a hundred,000 consumers are not so fortunate. You by no potential did answer the question approximately subsidies and rebates.

Some stages of manufacturing could be exempted from the tax. For example, raw materials that are of no use to an end consumer.

But even without exemptions, the overall benefits could be big enough to reduce manufacturing costs and to justify paying higher prices for the finished products.

I haven't studied the whole plan, but I think it makes great sense. But it does reward people for saving money, and penalize them for spending. That could be a good or a bad thing depending on who you ask.

they call it the value added tax(in Europe)

of course, at each stage there is a tax and in the end the consumer pays it all