6. Eliminates the taxes on work, investment and savings. Most legislators understand that taxing something will produce less of it. By eliminating the income tax which penalizes work, investment and savings, we will get more work, investment and savings.
There will also be what some economists call the “sponge effect.” The U.S. is the world’s largest market and has the best infrastructure of any country on Earth. When the income tax is replaced with the national retail sales tax, it will become the world’s largest tax haven and a “sponge” for capital from around the world. According to Martin Armstrong of the Princeton Economic Institute, replacing the income tax with a national retail sales tax will create an inflow of foreign capital into this country like we have never seen. Mr. Armstrong points out that the nearest comparable period in modern history was in 1940. Seeking to avoid the ravages of World War II, capital flooded into the United States and government bond rates were at 1 percent.
A conservative estimate is that the adoption of the national retail sales tax will lower interest rates between 200 and 300 basis points. In short, the United States will experience the greatest economic boom in history.
7. Requires illegal immigrants and importers to pay taxes in the U.S. Not only do we fail to enforce the laws with respect to our borders, we also allow illegal immigrants to work in our country and, because they work for cash, to pay no taxes to our federal government. If we adopt a national retail sales tax, then each time illegal aliens make purchases they will pay a federal tax. This will not cure our illegal immigration problem but it will ensure that everyone living in our country contributes to paying our government’s expenses.
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