I heard on the Neal Boortz radio show today that Congressman John Linder was told (I'm not sure who it was, the CEO or other ranking corporate official of an unnamed national retail outlet) that if the FairTax is ever passed, they would begin advertising that they would reduce their prices by 22% on January 1, the day that the FairTax goes into effect.
Now, I don't know what national retail coporation this was, but let's play a little game here. If, for example, Wal-Mart, were to announce that they were reducing prices by 22%, do you think that it's competitors would continue to charge the same prices they are currently charging? Hardly. It's called competition, it's part of capitalism and free-trade and it's a good thing.
Seven states do not have a state income tax. They operate on a state sales tax and it works. I know this to be true because my state of Florida works under a state sales tax - there is no state income tax. And it works so well that Governor Bush wants to give every homeowner in the state a $100 bonus this year. It's being debated; some want to put the money back into the state in the form of roads and infrastructure. Perhaps a noble endeavor, but I think the state would be better off giving me $100 than putting it into a highway project.
I don't know about you, but if I got an extra $100 I would spend it. it would go back into the economy and generate more revenue for the State. Yes, fixing the roads is a good thing, but it won't return money to the State coffers like giving it to the citizens would. You see, chances are I won't spend just $100 at (name the retailer of your choice). More than likely, I would spend another $50 to $100 or more.
During the tax holidays (hurricane preparation items and back-to-school), the state makes money. Not on those items that are excluded from taxes during that period, but on items that are not exempted. Have you ever gone to a store and bought exactly what you planned and no more? Sure it happens, but I believe it's rare.
So the bottom line, as far as I'm concerned: FairTax? It's a good thing.
Also posted at Americans for Fair Taxation