Consumption = Income - (Investment + Exports)
If Consumption = Income - Investment, why does the flat tax need to exempt exports from the tax base? My position is that since Consumption = Income - Investment, and that the flat tax tax base is Income - Investment, then the flat tax tax base is consumption. There is no reason to exempt exports from the tax base. The flat tax is inherently border neutral. I know of no economist who would argue otherwise.
On one hand, you say that the flat tax needs to exempt exports from the tax base to become economically equivalent to a sales tax. On the other hand, you deny that:
LOL, I don't claim them to be equivalent except in how much revenue they can generate.
That does not mean their impact is the same as regards consumer and business behavior. Nor that the impact different sectors of the economy the same for them most certainly do not.
The proposed Flat Tax clearly levies a tax at all levels of production on the basis of profits, capital gains, interest and dividends and upon individual income in the form of retirement investment returns and wages and any income used to purchase investment vehicles such as stocks and bonds.
The NRST clearly levies a tax only on retail sale of new goods and services and is collect from the purchaser with the business as a hired agent/collector for the government.
The results in the differences of collection and the imposition of cost throughout the chain of production of the Flat Income Tax lays a profound burden on the economy and individuals far greater than that laid by a retail sales tax.
why does the flat tax need to exempt exports from the tax base?
Because the proposed flat tax leaves corporate payroll excises in place and levies taxes on all profits, capital gains, interest and dividends of all upsteam suppliers and the export company as well, those taxes and the costs attendant with them, and the planning, accounting, and litigation costs that go with them are passed on in exports and are unrecoverable because the flat tax does not provide for any mechanism to recover those costs except for higher priced exports.
The NRST is not charged on business to business purchases, nor doe business pay income or payroll taxes thus is not even in the price of exports.
Fundemental differences in application means that the Flat Tax causes export pricing to be higher than under the NRST case. No NRST is charged on an export (to do so would would be in violation of a express prohibition in the Constitution) and thus the difference.
. The flat tax is inherently border neutral. I know of no economist who would argue otherwise.
Interesting I know of no economist that claims the flat tax to be border neutral at all. In fact I have found no economist to claim that. I know they consider the VAT to be because it is border adjustable when implemented as its invoice/credit version, the NRST is naturally because it does not tax business inputs or business at all. Sorry the Flat Tax does not meet either condition. A Flat Tax could be regarded a consumption tax if an only if it truly does not tax funds going to investment nor returns from investment.
With no mechanism for rebating taxes paid to upstream business supplying the manufacture of exports there is no way to even make the Flat Tax (consumption equivalent or not) border neutral.