[looscnnn]

At the 23% the revenue would equal what it is getting currently. The thing about this proposal is that no matter what happens with unemployment, there is still tax money coming in due to the fact that people still need to buy goods and services.

[Your Nightmare]

At the 23% the revenue would equal what it is getting currently. The thing about this proposal is that no matter what happens with unemployment, there is still tax money coming in due to the fact that people still need to buy goods and services.

Actually, the rate isn't high enough if you include the reduction in revenues due to the "transitional inventory credit" the bill provides for. Businesses would get a ~$350 billion sales tax credit (they collect the tax and keep the money) for the items they have in inventory on the day the NRST goes into affect.

This credit is not accounted for in the 29.87% rate. So the shortfall for the first two years will be at least as much as the credit (~$350 billion).

There are other reason the rate is too low, that's why I'm glad they are going to have congressional hearings. These issues will come out.

Since taxes distort resource allocation, a critical requirement for a fair comparison among alternative tax reform proposals is that all proposals must raise the same amount of revenue. It is well known that the ST and AFT [Americans for Fair Taxation] sales tax proposals fail to achieve revenue neutrality and tax rates must be increased substantially above the levels proposed by the authors of the plans.

Dale W. Jorgenson and Kun-Young Yun, 2002.

source [PDF]