[Your Nightmare]

We don't have a state income tax.

I also don't think having 10% of the number of current collection points matters. First, you are assuming that the person making the collection (the seller) is doing the evading. There are a lot of ways for the buyer to evade also. And, even with a reduction in collection points, you are reducing federal tax enforcement by ~100% by eliminating the IRS. The states aren't going to do a very good job of enforcement for a quarter of a cent on the dollar.

We should expect at minimum a 5% evasion/avoidance with a NRST and I would say it would be closer to 10%. Of cource the AFT's 29.87% rate assumes 0% evasion/avoidance.

[ancient_geezer]

We should expect at minimum a 5% evasion/avoidance with a NRST and I would say it would be closer to 10%.

Evasion/Avoidence under the current income/payroll tax system exceeds 10%.

Of cource the AFT's 29.87% rate assumes 0% evasion/avoidance.

Actually teh 23% NRST legislated rate assumes the same underground cash economy would exist as exists now 10-15% of GDP. The 23% NRST rate is confirmed with NIPA consumption as its taxbase which does not include iillegal and underground cash economies in its consumption expenditure totals.

As you have been informed before.

GDP/NIPA, measurements can only account for legal and measurable transactions outside the cash underground economy That same cash underground economy that makes up the bulk of evasion today, will make up the bulk of evasion under the NRST.

That cash economy is not accounted for in the GDP/NIPA statistics and thus provides the same implicit compensation as income tax rate calculations do today, where the tax base for income taxes is reported income already reduced because of evasion/avoidence.

Actual consumption is greater than the personal consumption figures NIPA reflects, GDP/NIPA leaves an outstanding discrepency of around $8000 per family in cash purchases not accounted for GDP/NIPA statistics.

 

http://spruce.flint.umich.edu/~mjperry/Unit10.html

PROBLEMS WITH GDP -

1. Nonmarket production - Nonmarket production is excluded from GDP because there is no way to accurately measure it. Only actual "market transactions" get counted in GDP.  Nonmarket production includes household production like fixing your own car, repairing, fixing, painting your house, working on your garden, growing your own food, cooking, the work of a housewife/househusband, etc. Estimated to be 10-15% of GDP, or about $1T/year.

Example: If you eat out a restaurant, the value of the meal counts in GDP since it was a market transaction.  If you eat the same food at home, only the value of the food counts and your "nonmarket production" (cooking) is NOT counted in GDP.  If you hire someone to clean your house, it adds to GDP.  If you clean your own house, it doesn't count for GDP. 

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2. Underground economy - could also easily be another $1T, or 10-15% of GDP from prostitution, drug trafficking, gambling, smuggling, illegal gun sales, tax evasion, etc. Also unreported cash income from cash business - taxi drivers, waiters/waitresses, bars, craftspeople, carnivals, fleas markets, illegal immigrants, etc.

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Evidence: There is about $500B of currency in circulation, for about 250m people, that means there is $2000 currency outstanding per person x 4  persons per average household = almost $8000/family in CASH!!

 

Any tax rate calculation based on GDP/NIPA numbers is grounded in only the accessible tax base, and is implicitly compensated for tax evasion and avoidance.