Again, I think you're misinterpreting the paper. (Actually, this one sounds a little more like poor reading comprehension.)
Fom Jorgenson, et al, page 25:
2. Figure 4 compares the consumption tax rates for revenue neutral substituion of the Armey-Shelby Flat Tax (FT) and the National Retail Sales Tax (ST) for existing income taxes. The Flat Tax rate is 25.1 percent in the year 1996 and remains virtually constant through the year 2020. The National Retail Sales Tax rate rises from only 15.7 percent in 1996 to 21.4 percent in the year 2020. Only the Flat Tax includes a system of personal exemptions, so that the tax rate is considerable higher, especially at the initiation of the tax reform.
As I wrote, Jorgenson, et al, assume a ~15% sales tax rate without rebates. The only reason the Flat Tax rate is higher is because Jorgenson, et al, included a system of personal exemptions for the Flat Tax. Jorgenson, et al, did not include a system of personal exemptions for the Sales Tax (rebates). If Jorgenson, et al, had included an equal exemption for income/consumption for the FT and ST, then the ST rate would be the same as the FT rate.
If Jorgenson, et al, had considered equal exemptions for the sales tax and the flat tax, their comment on page 24 becomes operative again: "This greatly simplifies the tax economist's task, since the economic impact would be the same for [both the sales tax and flat tax] approaches."
Again, I reiterate my point. The sales tax and the flat tax are "economically equivalent". They impact foreign trade in the same exact manner. Both taxes are border neutral.
They impact foreign trade in the same exact manner. Both taxes are border neutral.
ROTFLMAO,
Flat Tax has no mechanism for rebate or credit back of taxes paid by manufacturerers& upstream suppliers. NRST does not tax manufacturers nor their upstream suppliers. There is no equivalence whatsoever in that example for even that narrow consideration.
The only equivilency that can possibly be attributed to a Flat Tax that acutally removes all investment and returns from investment,(it is to be noted that no "Flat Tax" before acutally Congress meets that criteria) is that they ultimately reach the same tax base as regards national tax payers, not that all their effects are the same in all areas. The trade example being one area where very different effects on the value of the dollar relative to foreign currencies with the ultimate on foreign economies and our own in terms of shifting investment flows towards the US.
They impact foreign trade in the same exact manner. Both taxes are border neutral.
LOL
“He who asserts must also prove.”
Artistotle