Boortz not only shows that the FairTax would be fairer than the current tax system, but he also provides examples showing how it would be superior. For instance, it is a well-known fact that aristocratic persons spend more than other individuals on such items as expensive clothes, jewelry, yachts, etc., and under The FairTax Plan, they would get charged a significant amount for those items. However, should they use their money for things that would improve the standard of living for other individuals such as the funding of charitable events, the construction of job-building factories, and financing for the creation and development of new products, then under the Plan, such activities would be tax exempt. We learn that the FairTax would be better than our current system of income taxes because not only is that system making it much more difficult than it ought to be for the average person to maintain a sound standard of living while posing a threat to that of the next generation, but also because it wastes vast resources (i.e. trees) by having taxpayers fill out unnecessary paperwork. This tax would be collected in a way which is similar to how the state sales taxes are collected in 45 of the nation's states as of yet. It would add an extra line to the current sales tax reporting form, and then retailers would collect the tax, which would then transfer to the state taxing authority. Collection agents businesses as well as the states would receive a collection fee, and then tax revenues from the states would go to the U.S. Treasury.
The FairTax calls for an additional sales tax; most persons fall into an income tax bracket of 15%, and all wage earners pay 7.65% in payroll taxes, which is where the 23% originates. Also to be considered are the hidden taxes embedded in everything that one buys from goods to services, which garner taxable rates of 22% and 25% respectively (a figure that was determined by Dale Jorgenson, former chairperson of the Economics Department at Harvard University). This 23% rate accomplishes the following tasks: pay the universal rebate, raise the same amount of federal funds raised by the current system, and pay collection fees to state governments and retailers. Although the FairTax rate is 23% when compared to current income taxes, the rate of the sales tax at the retail counter would actually be 30%, which may seem a little confusing at first, but one must take into consideration that sales taxes are quoted tax-exclusive, while the income taxes are quoted tax-inclusive when compared to the FairTax. What this means is that since the FairTax would replace the federal income tax, the 6.75% exclusion still gets factored, which amounts to approximately 30%. For instance, let's suppose that you want to buy a pair of shoes for $100, then under the FairTax Plan, out of the 30%, 23% would go to Uncle Sam, while a quarter percentage of that amount would go to the store collector, meaning that you would need $130 in order to actually spend the original amount price.
With regard to the Social Security System, we learn that this plan changes neither Social Security benefits nor its structure, although its proposal would benefit any forthcoming SS reform proposals. The Social Security System would still operate in the same fashion as it does today, except that its funds would come from the progressive sales tax, as opposed to the regressive payroll tax. All it would accomplish is facilitating the reformed Social Security system, in that Social Security/Medicare funds would no longer be taxed three times: the time at which payroll taxes are first withheld, the time that those withheld taxes are counted as taxable income tax purposes, and finally when one gets the desired benefits. Furthermore, it has been researched that consumption is a much more stable source of revenue than income. The study was completed by American Farm Bureau economist Ross Korves, which showed that the FairTax was less variable than the income tax base, because during a loss of a job, people will have little to no income at all, meaning that even though they still borrow money for savings, they still consume. The FairTax rate could be reduced if it impedes the government's need for revenue caused by the privatization of Social Security. For instance, should the government mandate a system requiring people to save 10% of their income, then the 23% tax rate would be reduced to 13% so that it would match the payroll taxes.
