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Consider that federal taxes alone make add more than 30% to the price consumer goods and services. Addin the costs imposed by trying to comply with the income/payroll tax system we have today and we are hitting more than a 50% burden added to costs over a taxfree business environment.

The following article covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base price(without taxes) of retail consumption goods and services is 36% for federal taxes alone. Why? Because all wages and the taxes on them are paid for out of sales receipts to business,(i.e. consumption expenditure).

Total fed taxes as reflected through gross family income is 23.5% (taxfoundation)
Total state taxes reflected through gross family income is about 10.2% (taxfoundation)
The current net personal savings/investment rate is about 1.2%.(BEA)

Federal tax revenues collected as % of current family expenditure = fed/(1-state-fed-savings) =

23.5/(1-.235-0.102-0.012) = 36.09%

If we add in the cost of federal tax compliance & enforcement, the percentage that truely represents the burden on the family due to the Federal income payroll tax system increases by nearly 55% of tax free prices.

Where Have All the Dollars Gone?
How the government robs Peter to pay him back.
By James L. Payne, Reason Magazine February '94

When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue.

Current total Federal tax revenues are about $1900billion, more than $1,000 billion additional dollars are added on onto consumption prices due to the business costs of complying with the federal income/payroll tax laws.

(Payne '97, Pilla '95, AGCCA 2000, Williams 2000)

Percent total current federal burden (taxes + compliance costs) of consumption dollars = 36*(1900+1000)/1900 = 54.95% economic burden added on to base retail prices.

Reduce the taxes on business and simplifying them ultimately means a lower price and higher standard of living for the citizen as well as a better economy and foreign trade environment.

Consider the effect of reducing the cost of doing business with respect to exported goods, the cost reductions (approximately 22% at producer level) that go along with just a change in how we tax, provides the ability to sell exports at much stronger competitive position in foreign markets, while imports that are not now tax in any appreciable sense would be taxed at the retail level providing a excellent environment for business to operate in this country as opposed to others.

Go one further step and reduce the regulatory environment imposed (approx 13% of the cost of production) on business and we would indeed be a formidable business friendly envirnment providing exceptional incentives to return manufacturing back to this nation.