The Required Tax Rate in a National Retail Sales Tax

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

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:

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

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