To encourage Econ.Growth a country must be competitive and at present the US relative to it's major trading partners, has a 20%+ disadvantage, due to high external costs. These cost are Taxes, Regulations, Litigation, Health-care.
Repealing the federal income/payroll tax system and replacing it with a tax at retail sales only would go along way towards correcting that problem.
As it is now, products coming in from other nations are subsidized by having their nation's VATs credited to their exporters. They are able to lower there export price by that level as their products leave their countries essentially unburdened by their taxes systems.
OTOH, our nation embeddes its income/payroll taxes and costs associated with them into prices of it manufacturers and exporters. Placing us at a severe disadvantage in international trade.
Get rid of the income/payroll tax syste would allow a fall in producer prices of around 22% thus making our products more competitive on the international scene.
At the same time levy a retail sales tax on all products, imports would be taxed the same as our own manufacturers for the first time in nearly a hundred years. The change would be dramatic.
Rep. Bill Archer, Chairman, House Ways and Means Committee 106th Congress:
- "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."