Friday, November 23, 2007
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The (Not-So) Fair Tax
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Posted by:
Hugh Hewitt at
9:11 AM
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Former Big 5 accounting firm partner and now B-school prof Hank Adler lays out an outline for judging the proposed "Fair Tax" in "A Hard Look At The Fair Tax."
Footnote 1 to the outline is missing. I got it from Hank. It reads:
[1]As discussed in Purchasing Power vs. the Tax Rate, H.R. 25 proposes a tax inclusive sales tax rate of 23% on all retail purchases of goods and services. Sales taxes are traditionally described and administered on a tax exclusive basis. This is a distinction with a significant difference. A 23% tax inclusive sales tax rate is precisely equal to a 29.87013% (rounded to 30%) tax exclusive rate. This paper refers to the tax rate as proposed in H.R. 25 as 30% so that the tax rate may be more accurately compared and contrasted with other tax rates which are traditionally described on a tax exclusive basis.
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