fairtax proposal.
Very short explanation:
Replace the income tax (and possibly other taxes) with a 23% sales tax. If you meet requirements like being a US citizen, you receive a "prebate" equal to the tax you'd pay on poverty line spending. Somewhere around $3,464 for an individual, $7,176 for a family of 4 (I couldn't find these numbers on the site, I had to calculate them based on the description of the prebate). This makes it a reasonably "progressive" tax.
The site itself talks about "no longer needing the IRS". Personally, my first thought on that is that you're still going to need an agency collecting the sales tax money as well as administering the prebate, which would logically be the IRS. IE the mission changes in some major ways, but still remains - to collect taxes and pay out refunds as required by law. To me, the IRS is not the "enemy" most people who hate income taxes view it as, as it just operates how congress tells it to.
VAT and US style sales taxes are different. With VAT, what happens is that business A, for example, produces wood logs. They sell them to business B, charging VAT. business B converts them into boards (for example), then sells them to business C, charging VAT. They then get to deduct the VAT they paid to A for buying the raw materials. Business C sells the boards to customers, again, charging VAT. They deduct the VAT they paid to B, and remit the excess to the government.
In the USA, that's generally handled by simply making business transactions tax exempt. So A selling to B simply doesn't charge sales tax. You only charge sales tax when selling to the final consumer.
Yow. Doubling the pay of auto workers would improve the economy vastly more than the tax shenanigans you're talking about.
Except for the problem that you'd probably sell notably fewer $73k SUVs as long as somebody is still able to offer a $70k one, perhaps one imported from overseas where they pay even less.
Yes, VAT is used a lot in Europe. Is that your proposal? Implement VAT and that will solve America's problems? You honestly think America isn't competitive because we don't have VAT?
Well, except fairtax isn't really VAT, the idea is to get rid of the huge mess and waste of time that is our income tax system, and replace it with a theoretically simpler to manage sales tax system.
Note: I say "theoretically" because I'm far from convinced that that is actually the case. For example, fairtax cites taxes foreign visitors as a benefit - but what about the tax loss of US tourists going elsewhere? If I can, say, go to Canada for a vacation and not pay 23% sales tax, why wouldn't I? Heck, maybe I'll bring back some stuff while I'm at it.