🚀 go-pugleaf

Edward N. Kurmudgeon (edwardk@aimnet.com) wrote:
: Ed Symanzik (zik@enoch.cl.msu.edu) wrote:
: : Bill Mechlenburg (mechlen@ix.netcom.com) wrote:
: : : 1.  A national sales tax would have to be in the order of 30 to 40% on
: : : top of state and local sales tax to produce enough revenue to replace
: : : the present income tax.  This high a tax would be a huge incentive for
: : : cheating and evasion requiring a bureaucratic army of auditors and
: : : enforcers.

: : Only 18% if there were no exceptions.

: Please explain that to me.  The total retail sales in the United States
: in 1995 was 1.4 trillion dollars.

Ok, I found the study that most of these NST numbers are based on.
It was done by Laurence J. Kotlikoff, professor of economics at Boston 
University, and it's titled "The Economic Impact of Replacing the Federal 
Income Tax with a Sales Tax" published in 1993.  The URL is 
http://www.cato.org/main/pa193.html.

I also found some data to support his numbers.
Commerce Department's Bureau of Economic Analysis
gopher://una.hh.lib.umich.edu:70/00/ebb/nipa/gdp/gdp-tab.bea

>                                             1993   1994
> Personal consumption expenditures......... 4378.2 4628.4
                                             (in billions)

This includes the following catagories:

>  Durable goods
>     Motor vehicles and parts
>     Furniture and household equipment
>     Other
> 
>   Nondurable goods
>     Food
>     Clothing and shoes
>     Gasoline and oil
>     Fuel oil and coal
>     Other
> 
>   Services
>     Housing
>     Household operation
>       Electricity and gas
>       Other household operation
>     Transportation
>     Medical care
>     Other


From the back of my 1040a tax return for 1993:
> personal + corporate income tax receipts    628 billion

I don't have my 1994 return handy so using 1993 numbers:

  628/4378.2 = 14.3%.  

So, if all consumption was taxed, we would only need a 14.3% sales tax
to replace personal and corporate income taxes.  I don't know what 
catagories Professor Kotlikoff left out but this does show that his
numbers are reasonable.