 A 2006 study published in Tax Notes by the Beacon Hill Institute at Suffolk University and Dr. Laurence Kotlikoff estimated the FairTax would be revenue @-@ neutral for the tax year 2007 at a rate of 23 @.@ 82 % ( 31 @.@ 27 % tax @-@ exclusive ) . The study states that purchasing power is transferred to state and local taxpayers from state and local governments . To recapture the lost revenue , state and local governments would have to raise tax rates or otherwise change tax laws in order to continue collecting the same real revenues from their taxpayers . The Argus Group and Arduin , Laffer & Moore Econometrics each published an analysis that defended the 23 % rate . While proponents of the FairTax concede that the above studies did not explicitly account for tax evasion , they also claim that the studies did not altogether ignore tax evasion under the FairTax . These studies presumably incorporated some degree of tax evasion in their calculations by using National Income and Product Account based figures , which is argued to understate total household consumption . The studies also did not account for capital gains that may be realized by the U.S. government if consumer prices were allowed to rise , which would reduce the real value of nominal U.S. government debt . Nor did these studies account for any increased economic growth that many economists researching the plan believe would occur . 
