Great post, but I'll take a stab at a rebuttal anyway...
The FairTax can claim (and rightly so) that it is progressive because of the prebate. Each family gets a check from the government monthly that pays for the tax on necessities. Why do that? To keep the tax SIMPLE. If we try to untax milk, bread & other "necessities," we open the floodgates for lobbyists and manipulators. It's much easier to tax EVERYTHING, and give you back what you pay on necessities. For a family of 4, that would be about $525 per month. A family of 4 making $50K per year could live in the U.S. and pay NO tax (just keep your retail purchases of new goods/services below $2300/month, and your tax burden is 0). Compare this to our current system. A head of household (family of 4) with an income of $50K pays ~$3600 in FICA/Medicare, plus the employer pays another ~$3600 for that employee. Even if that wage earner gets a refund of all income tax, he starts with ~$44.4K, even though nearly ~$54K was set aside for his income.Compare that to someone making a million per year - the FICA/medicare tax would be around $20K....in % terms, way less than our $50K/year worker.
By the way, your use of the term "billionaire" seems to refer to someone with an annual income of over $1B, not someone with a net worth of $1B. Steve Jobs may have enormous net worth, but his paycheck shows his wages as $1/year (not including stock options).
For most people, taxes aren't negotiable. You can't decide to not pay taxes (even though Harry Reid says taxes are voluntary). Under the FairTax, average citizens would have a choice. Don't want to pay tax? Buy a used car instead of a new one. Save your money instead of spending it. It would be a very different attitude amongst consumers.
What does the FairTax want to accomplish with taxes?
- Income for the Federal Government
- Transparency of taxes, so those paying the tax see how much
- streamlining the taxation process (no invasive 1040 forms, corporate tax, payroll tax, expensive compliance).
- freeing the poor from taxation
- Taxing those who currently don't report income (unregistered aliens, drug dealers, etc)
- making the federal government PART of the economy (if they want more income, they'll have to entice us to spend more of ours, which we'll only do if we are happy!)