I will continue to wait for someone to clear up the mystery.
This is what the revenue neutrality claim is based on:
Cato Institute Policy Analysis Calculating the NRST Tax Rate
The calculation must be made with respect to total consumption expenditures including foreign purchases in the United Stats not just expenditure of us citizens.
The FCA is taken into account as a reduction in tax base. Then percentage of consumption expenditure is calculated based on total dollars expended in the US economy(taxes + consumption) to yield the required tax revenue for neutrality.
Just adjust by proportions for the increase in GDP from 1995 to now to estimate the absolute revenue received in present terms.
This is exactly what I have been asking for. All of the adjustments to personal expenditures are approximately a wash except state, local, and federal expenditures. I'm not sure I agree with the treatment. Using 1995 numbers, it says, in effect, last year we raised $1.3T in taxes from citizens. Had we had an NRST in place, we would have raised (approximately) 80% of that amount from citizens and 10% of that amount from taxing state, local governments and 10% from taxing federal expenditures.
I disagree with the validity of this treatment. Let's look at state expeditures. In order to afford what they could under the income tax, state and local government will have to raise 30% more revenue. The federal government is exactly in the same place in that they now pay $130 for what used to cost $100, but they get the $30 in tax. HOWEVER, to then count the $30 toward the goal of raising the same revenue as in the prior year appears incorrect. If that makes sense, why not tax ONLY government purchases at 100%, thereby raising enough to pay for government! This looks like double counting unless I'm missing something.
If I am right, a 26% (tax inclusive)/35% tax exclusive rate would be needed for neutrality---assuming all other CATO numbers are accurate and appropriate (I have no reason to think otherwise at this point.)