As the Government extracts revenues from the Citizen.
The two cases can be equivilent only in a the sense of the one postulate of raising the same revenue for Government from an algebraic equivalency, not one of taxation mode.
Consumption = Income - Investment
The Retail Sales tax is place on the left side of the equation, the Flat Tax is imposed on the right side of the equation.
They may both raise the same amount of revenue for the government under some nominal equilibrium conditions. But That postulate cannot be maintained because the politics and economics are dynamic.
The substantial difference lies within who has first control of the allocation of resources, the Citizen or the Government.
Flat Income Tax, Income tax case.
The first allocation of resources goes to the government, leaving whats left to the Citizen.
Government extracts monies from the citizen before the citizen has opportunity to allocate funds toward the citizen's goals. That leaves the Government in contol of substantial portions of the revenue flow.
Government extracts additional monies from the business, business pays for taxes and the cost of overhead for planning, accounting and litigation from the price it receives from the citizen as the customer of business.
The government's tax take is split between the citizen and the business, with taxes collected from the business hidden from the perception of the citizen.
Retail Sales Tax case:
The Citizen has first crack at allocation leaving whats left for Government extracted from retail sales tax.
The Citizen receives his Full Earned Pay: and may allocate to tax free investments, or tax free products, as opposed to taxable products. The Citizen has the opportunity and choice do as he wishes and actually control whether or not the government is able to extract anything at all from him.
The Flat Income TaxFlat Income Tax, case would remove roughly 1/2 of the potential voters out their from having a perceptual stake in the tax system (perceiving no tax below the Flat Tax exemption level).
In other words, 1/2 the voting population gets bennies from liberals on the backs of the other 1/2 and blaming rising prices on business not government taxation.
A great formula for political disaster for conservatism. Foster class warfare and make the culprit look like Robin Hood.
A point made by Alan Keys , in an interview with Des Moines Register reporters and editors:
He said a national sales tax could be structured so that some goods are exempt. People could shop in stores that featured no-tax items if they wished to avoid paying the tax.
"You don't pay them until you decide what you do with your money," Keyes said. Under the current system, "we pay government before we do anything else."
Keyes said under his system, stores would develop that offer nothing but goods that aren't taxed.
Taxpayers "could cut their taxes to nothing and they wouldn't have a fancy accountant to do it," Keyes said.
He said a 23 percent national sales tax could allow for the elimination of both the income and payroll taxes. If only the income tax were replaced, the rate would be between 15 percent and 17 percent.
I disagree with Alan on this Critical matter, an NRST should be applied as a single rate, single stage Retail Sales Tax across the board. Single stage as it only taxes an Item Once, (items already taxed once may be resold without tax).
Interesting implications arise for the potential of the Citizen to control how much tax gets to the Government in that NRST case if one thinks about it, as in the HR2525 FairTax used goods, older homes, and used cars are not taxed. The rule is tax once but only once.