Here’s a great little excerpt from the Fair Tax Mark Methodology document:
“To appraise this current effective tax rate we use an averaging method, considering six years of accounts in the process (using as our sample three sets of accounts and their comparative data) but weighting each year on the sum of the digits method so that greater attribution is given to more recent data than older data, which we think appropriate if changes in behaviour is to be given the credit it deserves in a reasonable time frame.
The use of this averaging method to calculate the current effective tax rate lets us, in our opinion, ignore the vagaries of deferred tax since the timing differences that it should record should, on average, we think reverse over such a time scale. Please see our discussion of deferred tax on the Fair Tax Mark website for more discussion of this issue.
This does, in our opinion, increase the objectivity of the information”
This is my highlighting. In the space of two sentences the FTMRNG essentially states that:
- more recent events are weighted more heavily than older events, and
- the method is dependent on recent events being of equal weight to older events
I’ve illustrated this elsewhere. The time weighting means that it is a practical certainty that timing differences will not even out because of the annual weighting.
The Fair Tax Mark calculation fails completely under its own internal contradictions.
If this is primarily about judgement, you have to question the judgement of a campaign who sees this calculation as being more objective than simply using the actual effective rate of tax.