The tax rate is not 23%.  The Tax Bill, Sec. 2 (a) (5): ". . . `gross payments´ means payments for taxable property or services, including Federal taxes imposed by this title."  and Sec. 101 (b) (1): ". . . the rate of tax is 23 percent of the gross payments . . ."  In Mathematical modeling "including" means add, "is" means equal, and "of" means multiply.  Let X be the "rate of tax", then X is 23% of gross payments. X = .23 multiplied by price plus tax.  Let price be 1, then "rate of tax" and "tax" will be the same number.  Therefore: X = (.23) (1 + X). Answer: X = .30.  The tax rate is 30%.

The 23% that is used to hoodwink people who do not bother to read the Bill is just a mathematical relationship.  It is not money paid. Item sells for $1, National Sales Tax will be 30 cents, and the Total the consumer pays will be $1.30.  When you divide $0.30 by $1.30 the answer is 23 percent.  This is not the cents the consumer pays.  The same low-IQ, low-education behavior is manifested in percent pay raises. .

The tax is 30% on purchases of all services and all new products - Sec 1 (b) (2).  The Bill requires that the NST be printed on the cash register receipt - Sec 510.  You buy an Item.  The receipt states: "$1.00 Item", "$0.30 NST", "$1.30 Total".  Citizens will be outraged.  You pay 30 cents because the rate is 30 percent.  The Mathematically-challenged say: "Item costs 77 cents, tax is 23 cents, the total is 1 dollar. That´s a 23 percent tax."  The same low-IQ, low-education behavior is manifested in percent pay raises. .

The proponents of the National Sales Tax Bill say the 23 percent is inclusive. That does not have any meaning for the manager of the store who has to program the cash registers to apply the National Sales Tax. The state sales tax is 4%, the local sales tax is 3%, and National Sales Tax is 30%. The store sells an Item for $1.00. The register is programed to multiply $1.00 by 0.04, multiply $1.00 by 0.03, multiply $1.00 by 0.30, and then print the results of the calculations on the receipts and then add all entries and print the total on the receipt:

The $0.04 State Sales Tax divided by $1.04 (the total of the price of the item and the sales tax, inclusive) equals 0.038 (the percentage the tax is of the total of the price and the tax, round to 0.04).   The $0.03 Local Tax divided by $1.03 (the total of the price of the item and the local tax, inclusive) equals 0.029 (the percentage the tax is of the total of the price and the tax, round to 0.03).   The $0.30 National Sales Tax divided by $1.30 (the total of the price of the item and the National Sales Tax, inclusive) equals 0.231 (the percentage the tax is of the total of the price and the tax, round to 0.23).

How many consumers have such low IQ's that they will not understand what is the tax rate? Just how many low IQ people are promoting a National Sales Tax and do not understand what is the tax rate? There are thousands of people who cannot preform this analysis. There are thousands who cannot understand it even after this analysis is presented.

America has an awesome economic system that provides a mechanism whereby the mentally handicapped proponent of a National Sales Tax can do something that someone else believes it is valuable enough to give them a living-wage.

National Sales Tax (NST) Hoax: "the poverty level income will not be taxed". The Bill requires a pre-bate of 23% of the poverty level income. The 2006 A.D.¹ Guideline poverty level is $9,800.00. The pre-bate will be $2,254.00 ($9,800.00 * .23 = $2,254.00). The poverty-level income person can buy $7,513.33 worth of products and services using the pre-bate to pay the 30% NST ( .30X = $2,254.00 therefore X =$7,513.33 ). Then the poverty level income person will use only his/her remaining $2,286.67 ( $9,800.00 - 7,513.33 = $2,286.67 ) to buy $1,758.98 worth of products and pay $527.69 for NST ( X + .30X = $2,286.67 therefore X = $1,758.98 for products. $2,286.67 total available minus $1,758.98 for purchases = $527.69 for NST ). What sort of irrational, cruel people are promoting this system as a fair tax, when a person with a poverty level income pays $527.69 in federal taxes? This will severely punish the people living off of Social Security. To the Mathematically-challenged: calculate the taxes paid when the poverty level income is $20,000. Surprise! The Math of the Bill will always tax poverty-level income.

National Sales Tax (NST) Hoax: "low incomes will pay little taxes".  A person earning $6 per hour will gross $12,480.00 per year. The pre-bate will be $2,254.00.  This person can buy $7,513.33 worth of products using the pre-bate to pay the NST.  S/he will purchase products and pay the sales tax with his/her own money ($4,966.67) after spending $7,513.33 ($12,480 - $7,513.33 = $4,966.67.  The sales tax is 30%, therefore X + .30X = $4,966.67.  X will equal $3,820.52 for purchases.  That will be $4,966.67 total available minus $3,820.52 for purchases equals $1,146.15 for taxes.

The effective federal income tax rate will be $1,146.15 / $12,480 = 9.18% of the poor person's income.  This sales tax system will create effective income tax rates that will plot a negatively accelerating curve that is more obscene than the current bracket system plots.  A negatively accelerating curve means that the tax rate increases faster on low and middle incomes than it does on high incomes.  Construct a graph. Percent tax on the Y axis.  Gross income on the X axis.  Draw a straight line from 0 thru 9.18% tax and $12,480 income, and you will get a 50% tax at about $64,000 income.  This places the 9.18% tax in perspective. The straight line is because the income tax rate should increase the same for all incomes.  See the charts.

National Sales Tax (NST) Hoax: "firms will reduce their prices by 23 percent when NST becomes law". The Bill does not require prices be reduced. Firms will not reduce prices. [1] IMPORTS. The prices of imported products do not have any U.S. taxes built into their manufacturing costs. The prices of Imported products will not be reduced. [2] 1-PERSON and other SMALL BUSINESSES. The average cost of production is higher for these firms (Microeconomics 3301). [3] BANKRUPTCY. Firms in bankruptcy cannot reduce prices. [4] RETURN ON INVESTMENT. Firms that are not earning a high rate of return on investment will not reduce their prices. [5] PROFIT MARGINS. Profit margins are never too large. Microeconomics 3301 states that "the purpose of a firm is to maximize profits". [6] MARKET SHARE. The only time a firm will reduce prices is if the managerial accounting model indicates that if the price is reduced, the resulting reduction in unit profit will be more than offset by increased sales volume and the total profit will be higher. [7] DECEPTION. Proponents should know prices will not be reduced 23 percent because they give everyone $2,254 to pay the NST.

National Sales Tax (NST) Wish: "when the NST is enacted prices will be unchanged". This is because 23% of the price of every service and new product is various taxes (income tax, social security, etc.). These taxes will be eliminated and a 30% sales tax will be added. Example: an item now sells for $1. The 23% included taxes will be eliminated ( $1 * .23 = 23 cents ). The item then sells for 77 cents ( $1 - $ .23 = $ .77 ). A 30% NST will be added ($ .77 * .30 NST = 23 cents ) for a sale price of $1 ( $ .77 + $ .23 = $1.00).

If the proponents of the Bill really expect this to happen, then it is irrational and irresponsible to give every person who is at least 18 years old a pre-bate of $2,254 to pay the NST. This is typical of this poorly reasoned Congressional Bill. If eliminating the included 23 percent taxes and adding the 30 percent NST produces the same amount of revenue, then the pre-bates will be a huge outflow of money from the U.S. Treasury. 230,000,000 people aged 18 and over, multiplied by $2,254 = $518,420,000,000. This new item of over 518 Billion dollars will now be in the federal budget.

National Sales Tax (NST) Horrors.
[1] All governments must pay the NST on their purchases - Sec 703 (a) (2). Think about how this will reduce the purchasing power of state, county, and city governments. These governments will have to raise their taxes to maintain the same level of services. This means the effective NST rate is higher than 30 percent!

Money to finance the Federal government will be obtained from the sales taxes that the Federal government pays on its purchases - Sec. 703 (a) (1). Is this rational even to a modal-IQ graduate of a government high school?

[2] Several states use a lottery to provide funds for poor students. The profits from those lotteries will be subject to the national sales tax - Sec 702 (d). Money for students´ education will be reduced. This means the effective NST rate is higher than 30 percent!

National Sales Tax (NST) Faults:

[1] The primary postulates of the National Sales Tax as a revenue source are seriously faulted.

One primary postulate is that a person should support the economic system that supplies his/her needs. The tax will be a fixed percent of the amount of needs that are supplied by purchases in the U.S. only. Purchases from other nations will not be taxed. Many people will use the internet and travel to avoid the NST.

Another primary postulate is that people who benefit little from the economic system should be taxed at the same rate as people who benefit greatly from the economic system.

[2] Typically, a person does not have the wherewithal to purchase his/her needs until s/he has income.

Therefore, the rational, self-serving, revenue system has the major postulate that you support the economic system that supplies your income, in proportion to the amount of income you receive. The higher the income the higher the rate. See the charts.

National Sales Tax (NST) Hoax: "the powers of Congress and Lobbyists will be reduced". This is such a thoughtless statement. Congress will be lobbied to reduce, or eliminate, [1] the tax on food, [2] the tax on medicines, [3] the tax on doctors´ fees (tax on being sick), [4] the tax on industries that are in financial distress, [5] the tax on funeral expenses (a true Death Tax), [6] the tax on institutional care for the aged [7] the tax on institutional care for the mentally handicapped [8] the tax on purchases by charitable organizations [9] the tax on purchases by governments [10] the tax on purchases of houses [11] etc.

Then the NST rate will be increased from 30%, to 40%, to 50%, to 60% and the price of the "one dollar" soft drink will increase and the price will go from $1.30 to $1.40 to $1.50 to $1.60. Then the NST will also be added to used products.

National Sales Tax (NST) Hoax: "IRS will be eliminated". The truth is the IRS will become more invasive because it will be needed to:
[1] register and keep a record of every person for the pre-bate
[2] monitor the whereabouts of every citizen: are they in prison?, are they out of the country?, are they members of more than one family?
[3] mail millions of pre-bate checks each month.
[4] collect NST for the 5 states without a sales tax
[5] audit the income-tax-returns of all individuals to ensure that they did not get money from the sales of products or services for which taxes were not collected, or were collected but not sent to the IRS,
[6] audit the income-tax-returns of all firms to ensure that they are collecting the tax on their sales,
[7] audit 45 States for accuracy in collecting NST
[8] audit the purchases of all state, county, and city governments
[9] audit state education lotteries,
[10] issue regulations about what is an investment
[11] etc.

The Fair Tax Bill is not revenue neutral.  The National Sales Tax Bill defines a tax rate of 30 percent, Sec 2 (a) (5), Sec 101 (b) (1). This tax added to the prices of all services and all new products, Sec. 1 (b) (2), will supposedly produce the same amount of money that the Federal Government collects now. However, the rate will have to be considerably higher than 30 percent because much of the money collected under the Bill is from Sales Taxes that the Federal Government pays on its own purchases, Sec. 703 (a) (1). Say what - advocates of the NST Bill think the government can pay for itself?!

Some foreign firms will set up a factory in the U.S. They would get all of the benefits of being in the greatest country in the world and they would not have to support the federal government. A profitable deal. The Amerian worker would bare all of the costs of supporting the environment that makes it possible for the firms to make large profits. Great for the economy. The firms do not support the federal government. The rice producing firms in South Carolina had a very profitable system in the early 1800's. South Carolina had a great economy in the early 1800's. Firms were shipping rice around the world because the price was low.