When people go to the store and realize that there is a 23% sales tax, on top of their state and local sales tax, they will not buy anything that isn't a "necessity".  Sure, theoretically they are saving more by not paying income tax, but it will have a huge psychological effect. It will be natural for everyone to say, "Ah... I really don't need that.  Why should I buy something I don't need and pay the government that much money?"

You know, the only reason the current system has worked as well as it has is becuase the average worker doesn't have to write the check to pay their taxes... they are withheld and they only see their net pay.  It makes it easier to swallow.  With the national sales tax, they will realize how much they are paying.

When people stop spending at their current levels, businesses will start laying people off because nobody is buying their goods.  Those people now can't afford to buy anything and the decline in spending will get worse.  Rather quickly, we will be in a depression.  Hence "instant depression."

Best,
Robert A. Franco
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