Then wouldn't the removal of tax on your labor be an incentive to earn even more as you would get to keep every penny?
Remember, with the NRST there are NO FEDERAL TAXES of any kind taken from your pay check. No income tax, so SS tax, no medicare/medicaid tax, NOTHING.
You get to keep 100% of your check (minus state withholdings).
>> Then wouldn't the removal of tax on your labor be an incentive to earn even more as you would get to keep every penny?<<
Why yes it would. And the fear of really high (and complex) taxes is exactly what disincents many americant to even pursue getting beyond their employee/slave status.
But since income is the starting point, it does not incent you from earning because you have to earn to live.
Most of what we spend is not required in order to live. The mindset of the average american is that you HAVE TO earn everything you earn, but you do not have to spend everything you spend. And if all the taxes are on the back end, it definitely would incent saving relative to spending.
Keep in mind also that if all the taxes you pay on income became a sales tax, and you live in a state that already taxes through sales, then the tax would become a major part of your purchase and something that, unlike an income tax, you could do something about.
Why the state withholding? Would the NRST knock out state sales taxes and so state withholding would be the only means of financing state government? Or do you mean that the NRST is just to replace any and all of the current Fed tax system?
I'm asking this very seriously, because now I'm a bit confused.