First of all:
consumption = income - investmentTherefore, the flat tax, which taxes income - investment is the same as a direct tax on consumption. Since they are the same, they impact the economy in the identical manner. This includes foreign trade.
You have suggested that tax paid on exported items needs to be rebated in order for the flat tax to be equivalent to the sales tax. Rebating tax paid on exported items has the effect of removing exported items from the tax base. Therefore, you are arguing that:
Consumption = Income - (Investment + Exports)
I think you know which equation is correct.
Therefore, the flat tax, which taxes income - investment is the same as a direct tax on consumption. Since they are the same, they impact the economy in the identical manner. This includes foreign trade.
Sorry doesn't work, under a retail sales tax only final sales to consumers are taxed, suppliers and manufacturers are not, which includes export sales.
The is no tax embed in price with an NRST at export level. All taxes collected from the chain of production remain inbedded with the Flat Tax, while the VAT at least provides a mechanism to reasonably rebate taxes paid by businesses through its credit voucher mechanism.
Flat Tax has no provision what-so-ever to rebate taxes paid by upstream suppliers thus exports go out laden with US corporate taxes including payroll taxes and all the overhead cost burdens attendant with those taxes under the Fat Tax:
Flat Tax as Seen by a Tax Preparer
by Vern Hoven
I think you know which equation is correct.
Sure do, as stated by economists rather than your pitiful attempt to amend amend it:
consumption = income - investment
"Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its income—spends it or invests it. We can measure consumption as income minus investment
The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka
That last reply by you is as terrible an example of intellectual dishonesty as I have ever seen on these threads.