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Really? We are talking about businesses here. The overall tax related overhead is greater than the tax revenues collected?

Tax related burdens on prices and sales as represented in retail sales in GDP certainly are greater than revenues by a wide margin. With direct overhead costs connected with minimizing taxes paid making up as much as 50-70% of each revenue dollar collected and secondary effects arising out of a retarded demand do to high pricing levels necessary to maintain business in a non-optimal but profitable status doing even more damage.

Also, are you claiming that everyone of these dollars of overhead is in prices? A business just jacks up their price to cover them?

Nope, I am claiming the combination of direct overhead costs pressuring the price that businesses must recieve upward, retards demand and consequent depression of sales which taken altogether reduce GDP(i.e. total retail sales) by amounts far in excess of the tax revenues collected.

With relief of taxation on the producer level, that there is more than sufficient, in the whole to account for a change in 20-25% of current pricing at the producer level where the price decreases occur.

Net with the NRST, total payment of a 23% NRST pretty much come out a wash as far as what is seen by the consumer. After all what we are doing is removing the tax related burdens from the producer, and moving the tax payment to the bottom of the chain of production, the retail level. The advantages of cost reductions accrue through out the production chain and the accelerates the growth of the economy as a whole as a consequence of increased productivity and efficiency of business level operations.

Direct cost on business are accounted for in three elements of overhead costs, direct compliance cost being only a small portion of the total:

http://www.taxfoundation.org/compliance2002.html

Overhead Compliance Costs

The complexity generated by the growth and constant change of the tax code creates two general types of economic cost: overhead and opportunity cost. Overhead can be divided into three principal activities: the economically sterile exercises of tax planning, compliance, and litigation, all of which act like tax surcharges on taxpayers.

• The first type of overhead is tax planning, which in this context refers to all the economic decisions that individuals and firms make to maximize their benefits in the tax code.

• The second type of overhead, tax compliance, refers here to the basic actions required to file the federal income tax, including record keeping, education, form preparation and packaging/sending.

• The third type of overhead is tax audits and litigation, referring to the cost of the IRS and the Tax Court, as well as all the legal costs that taxpayers incur while dealing with these two government institutions.

Of these three costs, the second, tax compliance, is the only one estimated in this report. It is for this reason that the data presented here should be viewed as extremely cautious estimates of the federal income tax compliance burden on taxpayers.

*** snip ***

The Burden of Compliance Costs

As shown in , and , the Tax Foundation estimates that in 2002 individuals, businesses and non-profits spent over 5.7 billion hours complying with the federal income tax. Using an hourly cost of $29.98 for individuals and $37.26 for businesses and non-profits, the estimated cost of compliance in 2002 is $194 billion (See Methodology section for details about how the hours and wages were determined)—Individuals bear a cost of $86.1 billion, businesses bear a cost of $102.5 billion and non-profits bear a cost of $5.4 billion. Therefore, the overall compliance cost surcharge alone amounts to nearly 20.4 cents for every $1 collected by the federal income tax.

Taken altogether, the true tax burden impressed upon us all through higher prices and loss of productivity exceeds the mere revenue collected by the govenment by substantially more even than the $593 billion estimate of James Payne in 1995:

Town Crier Staff Writer
Clyde Noel : http://www.losaltosonline.com/latc/arch/9528/

"In a book titled "Costly Returns," economist James Payne estimates the nation's bill for tax record-keeping, audits, filing tax attorneys and accountants totals an astonishing $593 billion. To put it another way, that's more than twice as much as last year's entire defense budget and $240 billion more than all 1996 Social Security outlays."

Broader estimates for example like that of Daniel Pilla centered again on 1995:

Killing the IRS, By Daniel J. Pilla, Reason Magazine July 1995

"There is little about a flat-tax system that will trim the staggering cost of tax law compliance. At present, this burden is estimated at $700 billion annually. Much of the cost is associated with recordkeeping and tax law enforcement, neither of which is reduced by a flat tax. A flat tax certainly involves a simpler tax return, but return preparation is the smallest component of tax law compliance.
The solution to our tax problem is to adopt a national retail sales tax in place of the personal and corporate income tax. Only a sales tax can eliminate the invasiveness of the IRS, since one's income and lifestyle are irrelevant."

And higher yet, another 1995 estimate:

Chief Executive, The New directions in tax reform -
May 1995.

Tax expert Ernest Christian Jr., a partner with Washington's Patton, Boggs & Blow, reckons these are low estimates or at best incomplete. Citing a U.S. Treasury study which indicates that 6 billion man-hours are consumed each year just in the record keeping for income and payroll tax returns alone, Christian says the true burden on the U.S. economy is probably closer to $1 trillion. For example, Jane Gravelle of the Congressional Research Service estimates that economic loss from the corporate income tax is equal to about 97 percent of the corporate tax revenue collected.

Not to mention the even greater losses on the economy that result from depessed sales(deadweight losses) that are relieved at the producer and intermediate buinsess levels in the chain of production as a consequence of tax system inflated prices. Burden on sales, much of which would be relieved by removing the more direct tax related overhead costs accounted for above allowing more optimal prices at producer level.

http://www.heritage.org/Research/Taxes/hl565.cfm

An American Economic Review study found that every dollar of taxes could impose as much as $4 of lost output on the economy, with the probable harm ranging between $1.32 and $1.47
Edgar K. Browning, "On the Marginal Welfare Cost of Taxation," American Economic Review, Vol. 77, No. 1 (March 1987), pp. 11-23.

"Another study in the Journal of Political Economy estimated that the corporate income tax costs more in lost output than it raises for the government."Jane G. Gravelle and Laurence J. Kotlikoff, "The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good," Journal of Political Economy, Vol. 97, No. 4 (1989), pp. 749-780.

STATEMENT OF REPRESENTATIVE DICK ARMEY
HEARING ON THE IMPACT ON
INDIVIDUALS AND FAMILIES OF REPLACING THE FEDERAL INCOME TAX
Committee on Ways and Means, Full Committee, 4-15-97 Testimony

Hinders Economic Opportunity

According to a study by Jane Gravelle, an economist with the Congressional Research Service, and Larry Kotlikoff, an economist at Boston University, the corporate income tax costs the economy more in lost production than it raises in revenue for the Treasury. Dale Jorgenson, the chairman of the Economics Department at Harvard University, found that each extra dollar the government raises in revenue through the current system costs the economy $1.39.

Economic Burden of Taxation
William A. Niskanen
Presented October 2003
Friedman Conference
Federal Reserve Bank Dallas page 6.
www.dallasfed.org/news/research/2003/03ftc_niskanen.pdf

"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "