In your case and assuming there is a 12% decrease in prices due o the removal of the income tax (keep in mind there's a 7.65% difference just in the Employer portion of payroll taxes alone plus the business income taxes), and spending all the $40,000 with no other taxable income you'd have a slight gain in purchasing power of something like) 0.31%. While that may not be much, if you economize by spending only, say, $34,100 (maybe putting some extra investments to work since they're tax free) you'd bump your purchasing up by from 0.31% TO 2.52%.
That's a heckuva' lot better than a poke in the eye with a sharp stick and there's no gift or estate tax to be concerned and no AMT and no filing or reporting of any sort of paperwork about your income of any sort to the government - it's none of their business.
It's called FREEDOM!!
Let me get this straight, my income is no longer taxed and prices I pay for things will decrease? Where do I sign up for such a wonderful system?
It's called FREEDOM!!
I call it perpetual motion!!