Reply #124: A sales tax of 17% would destroy the economy [View All]

[CTLawGuy]

The economy grows or shrinks based on whether, for example, you go to one extra movie this year or one fewer movie.

If you increase the price of everything by 17%, you decrease people's real purchasing power. Eliminating the income tax does not make up the extra money needed to cover the sales tax for the majority of people, since the poor use a greater percentage of income on consumption.

A 17% sales tax, because it decreases demand, would force companies to shrink production to adjust, causing the loss of jobs, which in turn makes people poorer, and makes demand lower, which makes companies scale back... and repeat...