Enlighten me. Revenue currently received from the income tax would have to come from the NRST. How will a new sales tax not cause price increases?
1) Prices ALREADY include a tax component of an amount ggreater than 23%. Any income tax system passes tax costs along to the next step in production - just as any other cost is passed along. Tax costs include the taxes themselves and associated compliance costs. Tax costs alone come to 22% of prices (geezer can give a link). Of course some tax and compliance costs manifest in lower wages, but there is still at least a 23% increase in price due to the costs of the income tax.
2) If all the costs of the income tax were eliminated... that means eliminating income tax and eliminating associated compliance costs, profit margins could soar.
3) We live in a competitive market environment. In any competitive market, prices will fall to the lowest level possible to still have the business make the required return. If a company chose NOT to lower prices, it would lose market share fast- 23% is a big savings.
4)When tax costs are eliminated from prices, prices will become lower by the amount of the tax costs (very nearly).
5) Then add the 23% nrst and prices come right back up to where they were.
So, prices won't change because prices are first affected by a decrease (eliminated taxes and compliance costs) before the nrst is added.
But now folks have their paychecks free of federal deductions.
Hope this is expressive. I'm awfully tired... long drive today w/ sick child.... arghhh.
How I wish for no payroll tax.