The national sales tax (Why the NRST is dopey)

Town Hall ^ | May 3, 2005 | Bruce Bartlett

[Texas Patriot]

Hmm, now I understand just what your saying and to behonest I wasn't aware that this was the case and I will have to do some
research on this aspect.
In the mean time does anybody else have an answer or explanation.

[ancient_geezer]

I wasn't aware that this was the case and I will have to do some research on this aspect.
In the mean time does anybody else have an answer or explanation.

He is correct insofar as levy on government paying the NRST on wages that constitute payment for a service, just as an individual must also pay the NRST on wages they pay directly to a domestic servant that does not work for an agency that pays them. All consumption is taxable under the NRST, services as well as new goods, and no exceptions. Just as income is taxable today regardless of whether one earns there wage from the government or not.

 

Sec. 2(a)(12) TAXABLE EMPLOYER-

`(A) IN GENERAL- The term `taxable employer' includes--

`(i) any household employing domestic servants, and

`(ii) any government except for government enterprises (as defined in section 704).

`(B) EXCEPTIONS- The term `taxable employer' does not include any employer which is--

`(i) engaged in a trade or business,

`(ii) a not-for-profit organization (as defined in section 706), or

`(iii) a government enterprise (as defined in section 704).

`(C) CROSS REFERENCE- For rules relating to collection and remittance of tax on wages by taxable employers, see section 103(b)(2).

 

`SEC. 103. RULES RELATING TO COLLECTION AND REMITTANCE OF TAX.

`(a) Liability for Collection and Remittance of the Tax- Except as provided otherwise by this section, any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (including financial intermediation services).

`(b) Tax to Be Remitted by Purchaser in Certain Circumstances-

`(1) IN GENERAL- In the case of taxable property or services purchased outside of the United States and imported into the United States for use or consumption in the United States, the purchaser shall remit the tax imposed by section 101.

`(2) CERTAIN WAGES OR SALARY- In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.

 

A fairly comprehensive discussion of the issues involved in the NRST levy on government consumption can be found in this PDF:

 

Prepared for Americans For Fair TaxationPrepared for Americans For Fair Taxation
By David Burton and Dan R. Mastromarco
The Argus Group: February 4, 1998

This report responds to Ken Kies’ letter to Chairman Archer of January 12, 1998. In his letter Mr. Kies propounds several objections to the Americans for Fair Taxation (AFFT) FairTax plan (FairTax) as raised by the Joint Committee on Taxation (JCT) staff. This memorandum addresses those objections with respect to three basic issue areas. They are:

•the revenue neutral sales tax rate,
•compliance and evasion issues, and
•the economic impact of replacing the current tax system with a sales tax.

Page 14-16

 

C. Government Value Added Should be in the Tax Base The Same As It Is In the base of the Income and Flat Tax Schemes

 

In the absence of a special rule, a sales tax would fail to tax government value added at any stage. In the absence of a tax on government payroll, therefore, the tax base would be much smaller than under either the income tax or the flat tax schemes. Assuming spending were held constant, this would effectively increase the relative size of government by the proportion of revenues relative to wages and government purchases that are foregone. The JCT may be incorrectly and inadvertedly increasing the size of the government.

 

We anticipate that one possible source of confusion on the part of the JCT is the tax treatment of government output. How should such output be taxed, if at all?

The GDP includes, of course, both government value added and private value added. Government value added is included at “cost”, which is primarily the wages paid to its employees. The income tax taxes income whether the source is government or the private sector, and by doing so, taxes government output. While the government pays its employees a gross amount and then withholds the income tax from their paychecks, we could, of course, just pay government workers a lower tax-free wage. This would accomplish the same objective. However, we choose not to do this: with the result that we have higher spending (from paying pre-tax wages) and higher tax revenue (from the income tax on those wages).

And it is important to note that the flat tax does tax government (and non-profit) output because government (and non-profit) wages are included in the tax base. To be consistent, the AFFT FairTax does so as well.

A pure subtraction method VAT (aka a business transfer taxes) would not typically tax government value added. The Hall-Rabushka flat tax variant is an exception, however. Unlike a normal subtraction method VAT, the flat tax allows a deduction for wages and then taxes wages at the individual level. In doing so, it also provides the mechanism for taxing government wages (while a normal BTT only taxes business wages by taxing receipts and denying the deduction for wages). Thus, the flat tax base is much larger than the base of a normal BTT (i.e. larger by the size of the government wages).⁶²

So today, both the income tax and the flat tax tax government output.

However, a sales tax, in the absence of a special rule, would, like a pure BTT, not tax government value added by employee wages. In the absence of a tax on government payroll, therefore, the tax base would be much smaller than under either the income tax or the flat tax schemes. Assuming spending was held constant, this would effectively increase the relative size of government by the proportion of revenues relative to wages and government purchases that are foregone. The FairTax taxes government value added in order to maintain the relative size of the government to the private sector, rather than increasing the size of the government.

Another way of looking at this problem is to examine it from two different perspectives: incidence forwards and backwards.

If we assume that consumption taxes are fully incident on the factors of production, then the return to capital and the return to labor will decline by the amount of the tax. As noted earlier, under this incidence assumption, tax-inclusive prices would not be higher but the return to workers and capital would decline. Thus, in the absence of a special rule, government workers would experience a windfall. Their consumption prices would not go up and their wages would go up by the amount of the repealed income tax but, since government value added is not taxed, their wages would not appear to be subject to downward pressure.⁶³

Taking the alternate incidence assumption, namely that the FairTax would be fully passed forward and borne by consumers, government employees would pay the tax just like private sector workers, since tax-inclusive prices would be higher by the amount of the FairTax. Government workers would, of course, have higher pre-tax wages, but the costs of purchasing goods and services would be higher by the amount of the FairTax. However, the inequity in our alternative incidence assumption redounds to the beneficiaries of government who would now be consuming a level of government services that is enlarged by the removal of the wage taxes formally imposed. We collectively would be getting the benefit of government (the Armed Forces, the Consumer Product Safety Commission, National Public Radio, or the JCT on Taxation) free of tax. Those who disproportionately benefit from government would disproportionately benefit from this effective increase in government spending. Or, put another way, we would have legislated a huge increase in the size of the government that is paid for by the private sector.

Another way of addressing this problem is to simply take the National Income Product Accounts and start calculating the tax base under the various consumption taxes. If one goes through this exercise to demonstrate the oft-repeated equivalence of the various consumption tax plans, it becomes clear that in the absence of a special FairTax rule regarding government, the flat tax has a broader base because it taxes government wages. Similarly, a pure income tax is broader not only by the amount of unconsumed capital income but also by the government wages amount.⁶⁴

In the context of a sales tax, then, an employer payroll tax on government wages simply achieves parity with the income tax and the flat tax. Failure to impose this tax would exempt government value added from tax for the first time and constitute a dramatic incentive to consume through the medium of government. The JCT seemingly recognized this in their pamphlet “Impact on State and Local Governments and Tax-Exempt Organizations of Replacing the Federal Income Tax,” p. 57-58, May 1, 1996. A sales tax should also be imposed on government purchases from the private sector to fully reflect the opportunity cost of that purchase.

Government enterprises (e.g. Amtrak, the Post Office) are a separate case. They can easily be put on equal footing by taxing their sales and exempting their inputs as if they were a private enterprise. If government (and non-profit) enterprises are not subject to tax, they will have a huge relative price advantage over private companies through cross-subsidization.

 

---

62. Even a normal BTT, however, taxes government purchases of goods and services from the private sector since the private revenues from those sales are includible in the taxable base.

63. Eventually, with free market forces, private sector workers and perhaps political pressure would bid the government salaries down. However, given the rigidity of government pay scales and rules against exchange this may take many years (i.e. government wages may be “sticky”). In the interim, the relative size of government will have increased.

64. Since the sales tax does not tax the “return” to government investment (i.e. later government consumption scored as government capital consumption in NIPA), using a tax prepayment approach that is equivalent in present value terms to taxing the returns is appropriate.

[Your Nightmare]

Hmm, now I understand just what your saying and to be honest I wasn't aware that this was the case and I will have to do some research on this aspect. In the mean time does anybody else have an answer or explanation.

People will have explanations of why government should be taxed but that isn't the issue we are discussing. The issue is that if you tax government consumption the cost of that consumption increases. You can't count that tax as revenue without increasing expenditures, which is what the FairTax supporters have done, otherwise you could just tax government spending at whatever rate you wanted (1000% ?)and generated all the "revenue" you wanted.

William Gale of the Brookings Inst. has recently revised his paper on this issue. He describes the problem in detail.

The Americans for Fair Taxation have published a "rebuttal" of Gale's points but they never address his main point! Here is what they say:

I. Gale Perspective: Taxing Government Output, as it is Taxed Today, Would Require Spending Cuts

Gale: At the very least it is not obvious that the correct treatment is to tax all government purchases of consumption and investment goods and tax government sales of goods or services to the public. … This would reduce real spending on other items, but the proposals do not indicate where the spending cuts would occur. (Policy Paper 2/17/98, page 18-20)

Gale is right when he states that the correct treatment of government under a sales tax is not obvious, however, he goes on to reaches the wrong conclusion. Government output is taxed today. Failure to tax it in a sales tax would constitute a massive increase in the relative size and scope of government. The goal of the FairTax plan is to be spending and revenue neutral.

The GDP includes, of course, both government value added and private value added. Government value added is included at "cost", which is primarily the wages paid to its employees. The income tax taxes income whether the source is government or the private sector, and by doing so, taxes government output. The government pays its employees a gross amount and then withholds income tax and payroll tax from their paychecks. No money changes hands -- an accounting entry is made debiting the expense side and crediting the tax revenue side of the government budget. We could, of course, just pay government workers a lower tax-free wage and reduce federal spending considerably. Similarly, we could reduce government spending by making businesses' income from the sale of product tax-exempt. GM would certainly sell cars to the government cheaper if they didn't have to pay income tax on the revenue. However, we choose not to do this: with the result that we have higher spending (from paying pre-tax wages and higher product prices) and higher tax revenue (from the income tax on those wages).

And it is important to note that the flat tax does tax government (and non-profit) output because government (and non-profit) wages are included in the tax base. The FairTax does so as well.

A pure subtraction method VAT (a.k.a. a business transfer tax) would not typically tax government value added. The Hall-Rabushka flat tax variant is an exception, however. Unlike a normal subtraction method VAT, the flat tax allows a deduction for wages and then taxes wages at the individual level. In doing so, it also provides the mechanism for taxing government wages (while a normal BTT only taxes business wages by taxing receipts and denying the deduction for wages). Thus, the flat tax base is much larger than the base of a normal BTT (i.e. larger by the size of the government (and non-profit) wages).¹⁵

So today, both the income tax and the flat tax tax government output.

However, a sales tax, in the absence of a special rule, would, like a pure BTT, not tax government value added by employee wages. In the absence of a tax on government payroll, therefore, the tax base would be much smaller than under either the income tax or the flat tax schemes. Assuming spending were held constant, this would effectively increase the relative size of government. The FairTax taxes government value added in order to maintain the relative size of the government to the private sector, rather than increasing the size of the government.

Another way of looking at this problem is to examine it using two different incidence assumptions.

If we assume that consumption taxes are fully incident on the factors of production, then the return to capital and the return to labor will decline by the amount of the tax. As noted earlier, under this incidence assumption, tax-inclusive prices would not be higher but the return to workers and capital would decline. Thus, in the absence of a special rule, government workers would experience a windfall. Their consumption prices would not go up and their wages would go up by the amount of the repealed income and payroll taxes. Since government value added is not taxed, their wages would not appear to be subject to downward pressure.¹⁶

Taking the alternate incidence assumption, namely that the FairTax would be fully passed forward and borne by consumers, government employees would pay the tax just like private sector workers, since tax-inclusive prices would be higher by the amount of the FairTax. Government workers would, of course, have higher pre-tax wages, but the costs of purchasing goods and services would be higher by the amount of the FairTax. However, the inequity in our alternative incidence assumption redounds to the beneficiaries of government who would now be consuming a level of government services that is enlarged by the removal of the wage taxes formally imposed. Beneficiaries of government spending (whether the Armed Forces, the Consumer Product Safety Commission, National Public Radio, or the Joint Committee on Taxation) would receive those benefits free of tax. Those who disproportionately benefit from government would disproportionately benefit from this effective increase in government spending. Moreover, the relative price of government consumption would decline, encouraging consumption through the medium of government. The price of government consumption would no longer reflect its true opportunity cost.

Another way of addressing this problem is to simply take the National Income Product Accounts and start calculating the tax base under the various consumption taxes. If one goes through this exercise to demonstrate the oft-repeated equivalence of the various consumption tax plans, it becomes clear that in the absence of a special FairTax rule regarding government, the flat tax has a broader base because it taxes government wages. Similarly, a pure income tax is broader not only by the amount of unconsumed capital income but also by the government wages amount.¹⁷

In the context of a sales tax, then, an employer payroll tax on government wages simply achieves parity with the income tax and the flat tax. Failure to impose this tax would exempt government value added from tax for the first time and constitute a dramatic incentive to consume through the medium of government. The Joint Committee on Taxation seemingly recognized this in their pamphlet "Impact on State and Local Governments and Tax-Exempt Organizations of Replacing the Federal Income Tax," p. 57-58, May 1, 1996, where they state, a sales tax should also be imposed on government purchases from the private sector to fully reflect the opportunity cost of that purchase.

Government enterprises (e.g. Amtrak, the Post Office) are a separate case, and they can easily be put on equal footing by taxing their sales and exempting their inputs as if they were a private enterprise. If government (and non-profit) enterprises are not subject to tax, they will have a huge relative price advantage over private companies through cross-subsidization.

---

15. Even a normal BTT, however, taxes government purchases of goods and services from the private sector since the private revenues from those sales are includible in the taxable base.
16. Eventually, with free market forces, private sector workers and perhaps political pressure would bid the government salaries down. However, given the rigidity of government pay scales this may take many years (i.e. government wages are unusually "sticky"). In the interim, the relative size of government will have increased.
17. Since the sales tax does not tax the "return" to government investment (i.e. later government consumption scored as government capital consumption in NIPA), using a tax prepayment approach that is equivalent in present value terms to taxing the returns is appropriate.

None of this addresses the fact that if you tax government wages and purchases the cost of those wages and purchases goes up. Expenditures must increase accordingly or the amount of "real" consumption must go down (basically, an across the board 23% budget cut). Now that may sound good to some, but that is a separate issue from generating revenue by taxation.

[BTW, your local & state governments have to pay the same tax on spending and wages so they can either cut services or increase taxes.]

[Your Nightmare]

Sorry, I was composing my post while AG posted his. But you can see he posted what I did and it never addresses the main point! They explain why but don't explain how! They (and AG does too) completely ignore the main point.

[ancient_geezer]

They explain why but don't explain how! They (and AG does too) completely ignore the main point.

How, is accomplished in the legislation as I have provided in #222:

 

Sec. 2(a)(12) TAXABLE EMPLOYER-

`(A) IN GENERAL- The term `taxable employer' includes--

`(i) any household employing domestic servants, and

`(ii) any government except for government enterprises (as defined in section 704).

`(B) EXCEPTIONS- The term `taxable employer' does not include any employer which is--

`(i) engaged in a trade or business,

`(ii) a not-for-profit organization (as defined in section 706), or

`(iii) a government enterprise (as defined in section 704).

`(C) CROSS REFERENCE- For rules relating to collection and remittance of tax on wages by taxable employers, see section 103(b)(2).

 

`SEC. 103. RULES RELATING TO COLLECTION AND REMITTANCE OF TAX.

`(a) Liability for Collection and Remittance of the Tax- Except as provided otherwise by this section, any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (including financial intermediation services).

`(b) Tax to Be Remitted by Purchaser in Certain Circumstances-

`(1) IN GENERAL- In the case of taxable property or services purchased outside of the United States and imported into the United States for use or consumption in the United States, the purchaser shall remit the tax imposed by section 101.

`(2) CERTAIN WAGES OR SALARY- In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.

 

As well as it is addressed in the ARGUS response to the JCT objection that a sales tax does not tax government value added as the income and Flat Tax proposals do:

 

"In the context of a sales tax, then, an employer payroll tax on government wages simply achieves parity with the income tax and the flat tax. Failure to impose this tax would exempt government value added from tax for the first time and constitute a dramatic incentive to consume through the medium of government. The JCT seemingly recognized this in their pamphlet “Impact on State and Local Governments and Tax-Exempt Organizations of Replacing the Federal Income Tax,” p. 57-58, May 1, 1996. A sales tax should also be imposed on government purchases from the private sector to fully reflect the opportunity cost of that purchase."

 

It is interesting that the orginal folk's raising complaint that an NRST does not make provision for government to be taxed on its value added the same as income and Flat Tax proposal do, are the spokesmen for government in taxes, the JCT!!!!

[Your Nightmare]

How, is accomplished in the legislation as I have provided in #222:

I meant how as in where does the money come from to pay it.

BTW, government wages would be taxed under a NRST when the employee spent them. You are wanting them to be taxed a second time, otherwise known as double taxation.

[Sloth]

Anything that ends withholding is an improvement.

[groanup]

They (and AG does too) completely ignore the main point.

What is the main point? I am reading that government currently taxes wages it pays gov't employees. To be revenue neutral (as much as possible) it must tax purchases by gov't entities under a NRST.

[Your Nightmare]

What is the main point? I am reading that government currently taxes wages it pays gov't employees. To be revenue neutral (as much as possible) it must tax purchases by gov't entities under a NRST.

First, a government employee's wages would be taxed under a NRST when they spend it. They are not treated any different than anyone, just like it is currently. Under the FairTax they would be treated differently. Their wages would be taxed when the government pays them and then again when they spend their wages. This is not equivalent to the current system.

But this is not the main point, the main point is where does the money come from to pay the tax? For every dollar you generate in revenue taxing the federal government, expenditures must increase exactly one dollar (actually, a tad more to account for collection costs). This is just Enron accounting used to present a rate lower than it would have to be.

[ancient_geezer]

I meant how as in where does the money come from to pay it.

The same government as taxes paid on govenment paid wages and for wages by businesses selling to government today.

It come from the taxpayer always. Do you intend to not tax government paid wages under a Flat Tax that you say you prefer, or under the current income/payroll tax system that is in place?

BTW, government wages would be taxed under a NRST when the employee spent them. You are wanting them to be taxed a second time, otherwise known as double taxation.

ROTFLMAO, it is not a tax on dollar flow, it is a tax on consumption each time new consumption occurrs.

The consumer pays NRST on purchases from a business providing goods or services which pay wages to the consumer out of which to pay taxes!!!

An infinite loop whether government is paying for services thus wages, or the individual is paying taxes for services (including domestic servants wages) .

There is but one thing being taxed in the flow of dollars, wherever goods or a service is purchased for consumption, it is the use or consumption that is taxed . Two different services, two different levies of the tax.

The same dollars repeatedly flow throw the economy through different hands applied to different goods and service is not multiple taxation, there is not a tax on the dollars flowing, there is a tax on consumption, whoever purchases for consumption and whatever the consumption.

The purose of the NRST, a consumption tax is to "tax all consumption of goods and services in the United States once, without exception, but only once."

[Your Nightmare]

The same government as taxes paid on govenment paid wages and for wages by businesses selling to government today.

This sentence makes no sense.

It come from the taxpayer always.

So you need to increase revenue (ie. increase the rate).

Do you intend to not tax government paid wages under a Flat Tax that you say you prefer, or under the current income/payroll tax system that is in place?

Income taxes are paid by the employee, not the government. And payroll taxes are accounted for in expenditures, your proposed sales taxes are not.

ROTFLMAO, it is not a tax on dollar flow, it is a tax on consumption each time new consumption occurrs.

The consumer pays NRST on purchases from a business providing goods or services which pay wages to the consumer out of which to pay taxes!!!

An infinite loop whether government is paying for services thus wages, or the individual is paying taxes for services (including domestic servants wages) .

There is but one thing being taxed in the flow of dollars, wherever goods or a service is purchased for consumption, it is the use or consumption that is taxed . Two different services, two different levies of the tax.

The same dollars repeatedly flow throw the economy through different hands applied to different goods and service is not multiple taxation, there is not a tax on the dollars flowing, there is a tax on consumption, whoever purchases for consumption and whatever the consumption.

The purose of the NRST, a consumption tax is to "tax all consumption of goods and services in the United States once, without exception, but only once."

OK, I'll buy that. But that doesn't explain where the money comes from to pay the tax. If the government is paying someone $50,000 now, they would would still have to pay him $50,000 with a NRST plus a $15,000 sales tax. Where does this $15,000 come from?

The same with purchases. A $100 million fighter is still going to cost $100 million plus $30 million in sales tax. Where does the $30 million come from?

[ancient_geezer]

So you need to increase revenue (ie. increase the rate).

Same revenue received today. Paid back as taxes from government contractors and government employees.

Remove the tax from government contractors and government employees the tax on the same regards consumption in the NRST can be removed as well lowering the tax rate even more.

OK, I'll buy that. But that doesn't explain where the money comes from to pay the tax.

We have a fiat dollar money system remember? Managed through a fractional reserve banking system underwritten by the federal debt the instruments for which the Federal Reserve is required by law to purchase.

Ultimately every dollar in our system traces back to government payments in interest or the redemption of prior asset based money with devalued paper and metal currency. With the inflationary impact of government debt, the current M3 $9,532 billion money supply is solidly rooted in

The Outstanding Public Debt

[groanup]

For every dollar you generate in revenue taxing the federal government, expenditures must increase exactly one dollar (actually, a tad more to account for collection costs). This is just Enron accounting used to present a rate lower than it would have to be.

The money comes from the tax. Granted it's a circle (j**k). The gov't pays the tax and collects it. Right?

[ancient_geezer]

. If the government is paying someone $50,000 now, they would would still have to pay him $50,000 with a NRST plus a $15,000 sales tax.

Included in the tax rate as revenues remain constant out of which government purchases for consumption which fund those same tax collections today.

That is what is meant by a revenue neutral tax rate and is based in NIPA:GDP data which includes all government consumption!!

Seems govenment will be put on par with private industry and need to maintain its total consumption within the constraints of a constant dollar purchasing power it has today rather than experience additional purchasing power out of being relieved of taxes embedded within its revenue receipts if we were to allow the tax advantage you wish to give to government.

[ancient_geezer]

Dang, the updating U.S. NATIONAL DEBT CLOCK gif doesn't fly so we'll do it this way:

Ultimately every dollar in our system traces back to government payments in interest or the redemption of prior asset based money with devalued paper and metal currency. With the inflationary impact of government debt, the current M3 $9,532 billion money supply is solidly rooted in

The Outstanding Public Debt

$ 7 , 8 1 1 , 8 7 6 , 3 4 4 , 5 7 6 . 0 6

[Your Nightmare]

Same revenue received today. Paid back as taxes from government contractors and government employees.

No. I showed you the example of wages (which you ignored). How do you pay that employee the same and the tax without increasing expenditures?

Remove the tax from government contractors and government employees the tax on the same regards consumption in the NRST can be removed as well lowering the tax rate even more.

Another sentance that makes no sense...

We have a fiat dollar money system remember? Managed through a fractional reserve banking system underwritten by the federal debt the instruments for which the Federal Reserve is required by law to purchase.

Ultimately every dollar in our system traces back to government payments in interest or the redemption of prior asset based money with devalued paper and metal currency. With the inflationary impact of government debt, the current M3 $9,532 billion money supply is solidly rooted in

Doesn't answer my point.

[Your Nightmare]

The money comes from the tax. Granted it's a circle (j**k). The gov't pays the tax and collects it. Right?

But they have to pay more to collect it. So if the FairTax increases the cost of government consumption (expenditures) the amount of revenue collected under the FairTax would have to increase above the current level of revenue.

If a $50,000 employee now costs the government $65,000, they need more revenue than they currently get to pay for this increase in expenditures.

[Your Nightmare]

That is what is meant by a revenue neutral tax rate and is based in NIPA:GDP data which includes all government consumption!!

But a large portion of the revenue is generated by increasing expenditures! If you increase expenditures you need more revenue. This is pretty basic. You can't make the government pay a tax without accounting for it on both sides of the ledger. The current system does and the FairTax must also. Otherwise it's just snakey, Enron accounting.

[ancient_geezer]

But a large portion of the revenue is generated by increasing expenditures! If you increase expenditures you need more revenue. This is pretty basic.

If you inflate the money supply that might be true, however if the money supply is constrained to population growth, which essentially is what has been the effect of current Federal Reserve policy, government and the private sector are left on a level playing field competing for the same consumer dollar.

Guess what government must constrain itself to constant dollar purchasing power regardless jsut as competing private sector companies must.

To give government the benefit of revenues free of the burdens of taxation, is to increase governments purchasing power over the private sector. That my freind is a growth of government in real terms. Sorry govenment needs to compete in the same manner as the private sector in reduction of its dollar expenditures, i.e. maintain constant purchasing power with a fixed per-capita money supply.

To hand government a windfall by relieving its current burden of taxation financed out of revenues received would be to hand govenment a windfall to enhance its growth that should not be and can not be countenanced by any one who wants to claim to be a fiscal conservative.

[Texas Patriot]

Are you saying that under a NRST I would have to collect from my employer (whether it's the Govt. or say GM) a tax based on my salary because my employment constitutes a service so that if I made 100 grand I would have to collect $29,000 and remit it to the federal government? I would think that a federal employee would be no different than any one else in that no one will be making more money under the NRST we will just be keeping in our own pockets what we already earn (Is this not right?) and we will "pay" taxes when we consume something like buying a car or eating at a restaurant and flying on a plane.

but I am still thinking on your fighter plane example. hmm I thought that BTB stuff wasn't taxed and there for the govt. would behave much the same any business and a fighter plane or a uniform is simply a material or tool necessary for it to conduct it's business of National security, public service or law enforcement.