If this were the only flaw with Boortz’s pitch, perhaps the proposal would still be viable. But it isn’t. The Fair Tax contingent claims that the sales tax would raise revenue comparable to the income tax. This simply isn’t true. The source of the claim is this: the Fair Tax calculation includes sales taxes paid on government purchases in the revenue estimate. If we remove this circular cash flow from the computation, the revenue estimate changes radically. A couple of government committees have done revenue estimates sans government purchases and have concluded that the actual tax rate would have to be in the vicinity of 57 to 70%.

This rate is too high for a sales tax system. Why? As a percentage of income, wage earners will pay a much higher rate than owners of capital. The tax will be grossly regressive and will burden ordinary workers to a much greater degree than the current system. For this reason, the tax isn’t “fair” at all.