How will the FairTax affect the costs of goods and services?

The FairTax will dramatically reduce the cost of goods and services by as much as 20 to 30%. All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices will come down. Dr. Dale Jorgenson, Chairman of the Economics Department at Harvard University, has projected a producer price reduction of 20 to 30% in just the first year after adoption of the FairTax. Dr. Jorgenson also estimated that service prices would decline by 25% because of the repeal of the income tax. In addition, the FairTax will lower compliance costs by more than 90%, and the removal of these costs will force prices down even lower.