"Proposals to replace the existing federal tax system have received increased attention in recent years, but the claims made on behalf of some of these proposals are not credible. In particular, claims that a national retail sales tax could replace the income tax system, the estate tax and payroll taxes at a 23 percent tax-inclusive (30 percent tax-exclusive) tax rate are fundamentally flawed."
"This paper shows that such claims hinge on hidden reductions in real government spending of almost half a trillion dollars per year, and on the impossibly optimistic assumptions that there will be no tax avoidance, no tax evasion, and no statutory erosion of the proposed tax base. Corrections for these problems show that plausible national retail sales taxes will require--at the federal level--tax-inclusive rates on the order of 50 percent and tax-exclusive rates on the order of 100 percent."
"Accounting for economic growth would reduce this rate, but consideration of state and local taxes would raise the rate by even more than growth would reduce it. Finally, given the experience of other countries with high-rate retail sales taxes, there have to be serious questions about whether a sales tax with rates that high could actually been forced."
So the consequence is that government would have to go on a diet.
That think that's bad?
You're using the Brookings Institute for your analysis?
Of course it is. Its on a level of Scam a Patriot, and should prolly be up over at quatloos.com (if it isn't already).
It is patently absurd to assert, as does Gale that a sales tax that (1) raises revenue equal to 17.6 percent of GDP and (2) because it taxes all consumption, has a tax base equal to 84 percent of GDP, must be set at rates anywhere near the 50 or 60 percent that he claims....
Throughout his analysis Gale asserts inconsistent opinions on the impact of both repealing the existing tax system and of replacing it with a sales tax. He states that income taxes are “clearly incorporated in the price of goods that are bought and sold.” This means that when they are repealed, producer prices will come down as research conducted by Harvard’s Dale Jorgenson suggests. Jorgenson finds that repealing the income and payroll tax would reduce producer prices by 20-35 percent depending on the industry. Gale, however, then rejects the view that income taxes are in the price of goods we buy and assumes that removing them will not reduce prices. He can not hold both points of view simultaneously.
I submit your "authority" has been rebutted here:
http://www.fairtaxvolunteer.org/smart/GaleRebuttal.pdf