Goal: Encourage Foreign Investment
The same factors that apply to returning lost wealth apply to encouraging foreign investment.
Taxing income is regressive. The more progressive an income tax, the less attractive a nation becomes for foreign investment. The flatter an income tax, the more financially attractive a nation becomes.
Therefore, changes to the progressiveness of our current system will have no effect on encouraging foreign investment.
A flat income tax, especially one that excludes corporate and payroll taxes, should have a minor positive effect – minor, because any form of income tax will still require an IRS to insure compliance.
The income tax components of 9-9-9 negate much of the benefit of the sales tax component and actually adds a layer of complexity. Of course the income tax portions of 9-9-9 will require the retention of the IRS. We’re being generous in giving it two stars on this goal.
But the FairTax, by eliminating the IRS and all income taxes, will create an extremely positive investment environment that will drive massive investment in U.S. business. This new investment will create a tremendous amount of new jobs, which translates to a significantly broadened tax base. This further translates to new tax revenue. In fact, 80% of top foreign manufacturers said in a poll that if the USA were to end the income tax and adopt a national retail sales tax, they would build more production facilities in the USA and 20% said they would move their corporate headquarters here. That’s powerful.
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