The Romney 2011 Tax Return - a FairTax teachable moment

Romney's Gross Income was 13.7M and his bottom line liability from line 61, form 1040 = 1.5M for a 10.9% effective rate under the current system.  This is a simplistic way of looking at effective taxes which combines earned and unearned income taxes, thereby taking us out of the “Warren Buffett” discussion.

The Romneys famously gave 30% of their income to charity last year which would have left 9.6M to spend. Assume they put another 30% into savings and investments, net discretionary spending would be 5.5M. Times .23 (FairTax rate) is 1.26M. 1.26/13.7 = 9.2% effective under the FairTax. This would seem to square nicely with our contention that every segment of the income spectrum would see some advantage in effective taxes, in this case 1.7%. To put a dollar figure on it in Romney's case, he will have an additional 233K to spend or invest.

Putting additional disposable income in everybodys’ pockets is just the beginning of the positive things the FairTax does for the economy.  And what the FairTax does for the economy is just the beginning of what it does for our society and our culture.