How about a 7% increase in U.S. living standards?

[The One and Only...]

The last time I talked about replacing the income tax with a national sales tax, I was hit with a few rebuttals. I will discuss these now.

The first was that, if the sales tax would be made progressive via rebates anyway, what would be the point?

The primary benefit is increased economic growth. A consumption tax promotes saving, because all money saved would essentially be tax-deductable. Individuals saving money is something that business relies on to make investments.

This increase in growth relates to the worker in many ways. To put it simply, labor wages relate to labor productivity. Labor productivity increases with increased investment, meaning that labor wages will increase. It has been shown that nations who invest little shows smaller growth in wages.

A hidden benefit would be that Welfare could be ended. For those that needed Welfare in the past, rebates higher than the amount of taxes paid could be given. Hence, the system is more efficient and simplistic.

The increased benefit of saving would also make Social Security look less attractive, thus weakening the potential disaster of widespread failure.

The other criticism was that the tax would serve as an excuse to raise prices and screw the consumer.

This is simply not true. The national sales tax would only apply at the retail level, so prices should go down if anything (although how much would depend on several factors).

For another excellent study on the topic, read this.