First thing I can see is a nose-diving economy as people reign in spending as they adjust themselves to the new system.
Domestic consumption is expected to initially drop 5% while personal investment and savings increase at least that amount. At the same time, our export business is expected to grow by as much as 30% by virtue of removing the tax burdens from our manufacturing and export businesses making our products much more competitive on foreign markets. That assures continued short growth of our economy as well as strengths the American dollar in foreign markets while attracting manufaturing back to our shores and a tax friendly, indeed tax haven for manufacturing creating jobs and demand for labor (higher real wages) as our economy expands long term.
Chairman of the House Ways and Means Committee,
Rep. Bill Archer (R-TX)
August 12, 1996
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Today, one of our greatest economic problems is the lack of personal savings. A pure consumption economy with nil personal savings and investment is what keeps the Social Security system inplace and assuring the growing dependancy of the people on government.
The lack of savings and investment on the part of the American consumer is holding back the full potential of our manufacturing base. Savings and capital investment assure techonlogical impovements and upgrades of out business infrastructure as well as creating new industry which fuels labor demand and higher wages.
Virtually all economic models project a much healthier economy if a federal sales tax replaces the current tax system. These models typically project that the economy will be 10 to 14 percent larger in 10 years.[2] A dynamic, growing economy will provide more and better paying jobs. Employers will need more and better-trained workers.
FIGURE 1: This figure shows the positive correlation between real wage rates and capital investment per hours worked, from 1947 to 1992. During this time period, the amount of capital per hour worked increased steadily and
these increases led to increases in real wage rates over the same time period.
The ever growing decline in personal saving and investment with growing dependancy of the majority of American families on govenment and its social systems has come with a very high cost in terms lack of capital investment into our business infra-structure:
