Replies

Of course, having the Sales tax affect only new production will mean a collapse in industries and retail sales since people will strive to find comparable used stuff. This is one of the least well conceived components of this whole scheme. A disaster waiting to happen.

ROTFLMA(_|_)

Just how many times you figure people are going to sell each other the same used stuff. If they need a thing, they are not going to sell it duh!!!

Any price reduction will be because the economy collapses.

Price reduction will be because the economy expands from decrease in business costs, expanding production as foreign and domestic markets expand, greater efficiency arising out of increased productivity and expansion of industrial capacity to meet those expanding markets.

Repeal the taxes burdens laid on business, the resulting reductions in costs and release from non-productive tax related behaviours are profound.

I would submit that those NRST inclusive consumer price changes are within ±5 percentage points of the actual value that can be expected, and are in relation to the individual wage earner receiving his full gross paycheck as all withholding is repealed with the repeal of federal income/payroll taxes.

With the expanded markets, both foreign and domestic that occur with lowering of prices received by producers (cost to consumer less taxes). Increases in production will be realized with a constant average cost to the consumer for goods and services out of the productivity gains that business are able to realize in the capital investment freindly environment of a retail sales tax system.

A clear effect that was not missed by even Von Mises at the end of WWII in his recommendations to Austria for restructuring the tax systems to move them from a baddly failing socialist based economic and tax systems into a system friendly to capitalism and entrepeneurship.

Ludwig von Mises as Policy Analyst: Monetary Reform, Fiscal Policy, and Foreign Exchange Controls by Richard M. Ebeling
Heritage Lecture #754

http://www.heritage.org/Research/PoliticalPhilosophy/hl754.cfm#pgfId-1023417

"Austria, Mises said, would be a poor country. The destruction of war, the consumption and misuse of capital, the destruction of a large portion of the Austrian entrepreneurial class due to the expelling or murder of so many Jewish businessmen and financiers, and the debilitation of the labor force from death and permanent injury in battle would require Austria to turn its back on its socialist, interventionist, and welfare-statist past. Only economic freedom and hard work could restore Austria from a condition that we might nowadays loosely refer to as "third world" status.
Fiscal policy, therefore, would have to be designed to do everything possible to unleash private sector incentives and opportunities for investment, capital formation, and entrepreneurship. Virtually all taxes, Mises suggested, should be skewed toward consumption and away from production. What type of broadly based consumption taxes? He proposed:

(1) excise taxes on alcoholic beverages, tobacco, and related tobacco products;
(2) a sales tax exclusively on the sale of goods and services to the final consumer; there should be no explicit or hidden value added taxes;
(3) a progressive consumption tax based on housing expenditures, but with an exemption for housing expenditures for those in the lower income brackets;
(4) a tax on luxury automobiles for private or personal use;
(5) a tax on lottery winnings;
(6) a stamp tax on playing cards;
(7) administrative fees for certain government services, such as issuing patent rights, brand name registrations, determination of weights and measures, and "official stamps" to cover the cost of providing various types of documentation;
(8) a wage tax paid by employers that was not deducted from the employee's salary to fund existing social insurance programs; and
(9) a moderate net profits tax on shareholders and limited liability partnerships when annual disbursements exceeded 6 percent of the enterprise's capital assets; retained earnings by the enterprise would be exempt from taxes so as not to discourage capital formation.

Except for the net profits tax and the wage tax for social insurance costs, all income and business earnings would be completely tax-exempt. And a perusal of Mises' proposed list of taxes clearly shows that he thought that, besides the general sales tax, the fiscal burden should primarily be in the form of what nowadays would be classified as "sin taxes" and a narrow selection of "luxury" expenditures. Mises' long recognized advocacy of "laissez-faire" did not mean a hands-off indifference to the path taken by the market economy. What would be produced, where and how goods would be produced, and for which segments of the consuming public would be determined by the pattern of market demand and the profit-driven entrepreneurs. As Mises expressed it in the early 1940s, "If there is any hope for an new [economic] upswing [at the end of the war] it rests with the initiative of individuals. The entrepreneurs will have to rebuild what the governments and politicians have destroyed."

***
It should be mentioned that Mises' apparent concession to the welfare state in his listing among his fiscal suggestions of an employer's tax for social insurance expenditures did not mean his belief in their desirability or necessity. This was clearly an admission that, given the political currents, not everything could be reformed at once. For example, in 1942 Mises was invited to lecture in Mexico for six weeks during which he had the opportunity to studying the economic conditions in the country. The following year, in 1943, he prepared a lengthy monograph for an association of Mexican businessmen on "Mexico's Economic Problems." His recommendation was to not establish social insurance programs in the first place. If part of the cost of such social insurance schemes falls on the shoulders of the employers, it would only succeed in raising the cost of employing workers, with the negative effect of pricing some members of the work force out of the job market. At the same time, such government-mandated insurance policies restricted the freedom of the employee to weigh the opportunity costs of allocating his income in various ways more reflective of his own preferences and that of his family.