Why not tax everyone equally percentage-wise? What's wrong with equality? Are you against equality?

Equality is the point of this idea. The current sales tax is unequal in the worst possible way. Because poor people have to use nearly all of their income to pay for food, clothing, etc., nearly every penny they earn is subject to the sales tax. On the other hand, a wealthy person puts a large proportion of his income into savings accounts, stocks, bonds, etc. This proportion of his income is not subject to the retail sales tax. The net result is that the poor end up losing a much larger proportion of their income to the sales tax. This idea seeks to redress this inequality.

So would you agree with the premise of The Fairtax Book?

Most economists agree that replacing the income tax with some form of consumption tax would result in several beneficial effects. So I guess I agree with that part of the FairTax argument, as a theoretical idea.

However, I don't think the FairTax method of addressing the regressivity of the sales tax is a good one. The FairTax depends on a "prebate," a fixed refund to make up for the money lost to the sales tax on necessities. This reverses the regressivity at low income levels, but it loses its power at higher income levels. A $6000 prebate check starts to become insignificant as you move up in household annual income from $50,000 to $100,000 to $250,000 to $1,000,000 to Oprah to Bill Gates. At these higher income levels, the FairTax becomes regressive. The FairTax would be good for the very poor and the very rich, but it would emasculate the middle class.

In contrast, if the sales tax rate always increases with increasing item price as I proposed with this idea, the sales tax could continue to be progressive at these higher income levels.

(Personally, I don’t think replacing the income tax with a national sales tax would really work. Among other problems, it would be too tempting and easy to dodge the high sales tax required by conducting transactions off the books for cash.

I proposed this idea to be applied to the sorts of sales taxes we are familiar with today, 5 or 8%.)

Wealthy people actually usually buy second hand cars, and other things that are less expensive. That's how they became rich - they saved more than they spent. Your idea would hurt the poor and middle class more than the rich.

A progressive Sales Tax / VAT would just make me buy 2 small packs instead of one big one.

That's one of the reasons VAT covers goods and services; and covers all sales, not just retail sales. That way less loop-holes.

Sales taxes are naturally progressive. This statment would get most people thinking that I don't understand the terms, but they'd be wrong. Judging a the effect of a tax in terms of income is a mistake, since income isn't wealth. Money is a means of exchange, something you trade for something of value, not something of value itself. Income is a representation of the wealth you've paid into the economy. Taxing income is fatally flawed. A sales tax manages to tax wealth at the point where it is extracted from the economy and in proportion to its value. A simple % would already be progressive, but the FairTax act adds an extra benefit to the poor, that (p)rebate. I'm a fan of that, but not of this idea; this one needlessly places expensive goods at a competitive disadvantage.

Tax should be a donation to your government not a requirement