With a national retail sales tax all this changes. Because the tax will be collected by businesses selling retail goods or services, these are the only businesses which will file sales tax returns, and they will be simple. In addition, in the bill we are proposing in Congress, retail businesses are entitled to be reimbursed a fee of about 1 percent of the retail sales tax they collect. No longer will the compliance costs and the actual income tax itself have to be passed on to you and me in the form of higher prices. Through competition, the savings to business will be passed on to us and we can expect retail prices to actually decrease.
3. Abolishes the IRS and tears the income tax out by the roots. It has often been said, with some truth, that Washington has messed-up priorities. We have 24,000 employees in the FBI to fight crime and terrorism. There are 6,700 employees in the Drug Enforcement Administration to combat the polluting of our children and country by drug dealers. The Border Patrol has 5,800 employees who are supposed to protect our borders. How in the world do we justify the IRS having 111,000 employees?
Unlike the other income tax-based alternatives to the income tax, the national retail sales tax is the only proposal that will abolish the IRS and tear the income tax out by the roots. The tax will be collected by the states which already collect state sales taxes, at a fraction of the cost for collection of our present income tax or of any other proposed system.
4. Increases our competitiveness in the world economy. The income tax seriously harms our ability to compete in the global marketplace. Our major trading partners around the world rely heavily on consumption taxes that are applied to all products sold in their countries, whether domestically made or imported, and are border-adjustable, meaning that the taxes on exported goods are rebated to manufacturers within their borders.
Why is this important? It is estimated that each $1 billion in exports supports 19,000 jobs in the U.S. While our competitors exports range from 15 percent to 30 percent of their Gross Domestic Product, our exports only total 6 percent of U.S. GDP. By increasing exports, the U.S. can create hundreds of thousands of the type of high-wage jobs that our country desperately needs.
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