Most of the argument between FT fanatics and their opponents has been whether there are enough real savings in compliance costs to allow (a)the Feds to get their whack, (b)the employees to keep their gross salaries, AND (c) retail prices not go up. I don't believe there are enough real savings (not phony savings like counting up the time a guy spends doing taxes instead of watching TV @ $25/hour). However, let's bypass that argument for the moment and assume for this exercise that you FT fans are right, that there is, say $600B, in real potential savings.
What are these costs? They are almost entirely labor costs -- tax accountants, their clerks and secretaries, etc. If you can wring these costs out immediately and to the tune of say $600B, then perhaps retail purchases will not go up by the 25-30% or whatever of NSRT. (It has to be immediate because otherwise the cost of retail purchases will go up before the compliance costs can be wrung out of the producer costs). Therefore, for the FT believers' scenario to occur, about $600B worth of labor has to be dropped -- either laid off or immediately re-assigned to other tasks. It's impossible to do the latter quickly enough to prevent purchase costs from going up, so they will have to be immediately laid off. Now $600B represents a huge number of people, and corresponds to a sharp increase in unemployment rate from about 5% to about 17%!. Now I am concerned about a depression.
However, what is most likely to happen in real life is that the retail purchase prices will go up by about 30% due to the NSRT, before any savings can be realized, unless those savings are realized by immediately reducing employee wages to about the same level their take-home pay had been after IT withholding. That might be implementable quickly enough to avoid retail price increases.
Therefore, from this analysis, even allowing, just for the sake of argument, FT Faith claims of huge real potential savings in compliance costs, one of three things could happen: (i) either retail purchase prices go up 25-30%, due to the NSRT, before producer costs can be reduced, (ii) take-home pay remains the same, or (iii) we get 17% unemployment, and thus a depression.
Unfortunately, my friend, your thinking on this is short-sighted and too narrow in its scope.
Let me explain what I mean, please:
All of that labor you are referencing, no matter its true size, is UTTERLY wasted, inefficient labor.
All of it.
It doesn't produce a single useful product or service.
It doesn't produce one dollar of revenue for government.
Nada.
Might as well just flush all that time and effort right down the toilet.
Freeing up that time, which by any honest estimate is huge, would be a boon to the American people, either in time that could be used to actually produce something of value, or even, hallelujah, to devote more time to their families, their communities, or even to leisure.
Not all benefits have a price tag. Life isn't all about money.
Long term, eliminating the drag on all of us that is created by this inefficient, silly income tax system, would be a positive good.
Some of the saving (the actual income tax businesses now pay) will be quickly realized. That accounts for $650 Billion. Economist using IRS figures have calculated the cost of complinace of the code at $250 Billion, with most of the 'savings' being time spent by individuals filing out forms and record keeping and/or paying accountants to do it for them. The business share of compliance savings is at most $100 Billion. Forget the $650 Billion pigdog uses, he has no clue and incorrectly includes numbers that have no bearing on the discussion. This savings could be realized in the first year. Business would see about $750 Billion. But that savings represents less than 10% of consumer spending. Prices have to go up roughly 20%.
Ding, ding, ding! We have a winnah!