32 Pages Posted: 5 Feb 2011
Date Written: May 1999
This paper examines the required tax rate in a national retail sales tax (NRST). I show that recent proposals, such as one to replace virtually all federal revenues with a 23 percent tax inclusive NRST, are based on assumptions that real government spending would decline by $480 billion per year, and that there would be no tax avoidance, evasion or political erosion of the tax base in an NRST. Correct for these assumptions indicates that the required tax-inclusive rate would be over 50 percent and the required tax-exclusive rate would be over 100 percent.
Keywords: tax policy, national retail sales tax, nrst
JEL Classification: H2
Suggested Citation: Suggested Citation
Gale, William G., The Required Tax Rate in a National Retail Sales Tax (May 1999). National Tax Journal, Vol. 52, No. 3, 1999. Available at SSRN: https://ssrn.com/abstract=1754663