O.K. Mr. Adakin Valorem. If that is your real name. 
In the same order as your post:
1. The Ron Paul detail was dealt with in the comments.
2. Your quote of me refers specifically to “Federal income tax,” which you failed to refute. I did not neglect the payroll tax. There was no “yes and no.”
When you say that under the FairTax the worker gets his entire gross pay (current take-home plus the 15.3% for payroll tax), you are making an assertion about tax incidence — about what would happen with no payroll tax. You provide no support for this assertion.
3. You assert, again without support, that the bottom 60 percent would benefit most from the FairTax.
4. “The reason the FairTax people use the inclusive rate of 23% is that it replaces an inclusive tax rate.” I’m not a mind-reader, so I can’t swear that I know what they are thinking. The FairTax is a sales tax, not an income tax. Everybody understands a sales tax as a percentage applied to the price of a product. In this sense, the FairTax rate is 30, not 23. The only reason to peddle the latter number is minimize the apparent level of the tax.
5. “Max never mentions the fact that the current tax code creates hidden or “embedded” taxes within the cost of virtually everything we buy.” Actually I address this issue in my piece, as you acknowledge later. Our friend Adakin says that current taxes are “embedded” in the product price. The implication is that with no income/payroll tax, the product price goes down. But then the seller cannot deliver this dividend to the worker in the form of his former gross wage, as promised by Adakin previously in his piece. He is double-counting FairTax revenue, first in higher take-home pay, second in a lower product price. It could be split in this way, but the full amount (15.3% of pre-FairTax wages) can’t be used twice.
“Economists say that taxes and tax-related compliance costs comprise, on average, 22% of the cost of all new goods and services.” “Economists” say no such thing. A few of them, perhaps. If you want to believe Roger Smith, go ahead. He’s not exactly a disinterested party in this debate.
6. 23 is still more than 16.6. Mileage will vary, some will come out ahead, some behind. Few wealthy people will come out behind.
7. The poverty example does not speak to my point, which was that workers above the poverty line but well short of rich could pay more under the FairTax.
8. “If you don’t spend . . . you aren’t taxed.” Sounds like a plan!
9. Adakin says an existing home would not be subject to FairTax. Well if I buy a new home that IS subject to tax and want to sell it, I will want to recover my tax amount as well as the base price. So an existing home could carry the tax along with it. Who would buy a house and then sell it at a loss, unless forced to?
10. Re: FairTax bounty to the rich, Adakin reiterates his embedded point, irrelevant in this context.
11. Adakin says labor costs are “a fixed expense.” Assuming this is true (it isn’t), then the employer MUST add the FairTax to the pre-FairTax product price. Just as with any sales tax.
12. “The real embedded cost reduction comes from elimination of the tax on the company’s profits and elimination of the double taxation on “after-tax” dividends paid to its shareholders.” Here is a new point I haven’t seen before. Somehow or other, the elimination of the corporate income tax ($370 billion in 2007) is going to replace $2,568 billion in total Federal receipts.
13. Gov “benefit” has nothing to do with it. You’re double-counting again.
14. Fewer taxpayers yes, much more incentive to cheat for each one. And those currently cheating the Feds are probably cheating the state too. State governments presently rely on the IRS to provide information on taxpayers. Without it the state governments would be burdened with doing more, which is part of the plan of the FairTax — to raise the costs of collecting taxes.
15. FairTax and exports. The FairTax treatment would be the same as other countries now. Under the VAT, our exports would be taxed at the other country’s border, the same as their domestic products. So no tax advantage to U.S. exports.
16. “The FairTax is fair because if Bill Gates, Warren Buffet, Oprah Winfrey, you, or me buy that bottle of Pepsi and a Big Mac, we will all pay the same amount of tax.” Raise your hand, anybody who thinks any of these people will pay more tax than they do now under FairTax.
And if they pay less, who pays more?
Thanks to Adakin for the exchange, and may all his mortgage-backed securities return his labor with profit.
