217. Economic Idea: Do a tax shift of taxes on income to taxes on consumption - Produce 100 million American jobs at higher salary
As I am an expert in economics, here is the idea:
FOR EUROPE:
Today, in Europe, people their income from salary are taxed very high so their net wage is much lower than their gross wage. Like 1,600 EURO net salary, 2,400 EURO gross salary.
What if we remove the taxes on income of salary, and replace that with an increase of taxes on consumption, like VAT.
An increase of VAT from 21-25% would be sufficient because consumer spending is up 30-50% higher, so more VAT income due to higher consumer spending.
It would also produce 100,000ds of jobs (for a small country like Belgium) and therefore, produce more VAT revenues from job creation and more revenues from GDP growth and lower cost of welfare and unemployment benefits.
It would increase the buying power of the working class by 50%.
This implementation could be done over a 4 year period, like 1% increase of VAT per year for 200 EURO per month net higher income each year, creating 20-40,000 more jobs each year.
So salaries can increase by 10-15% each year, while inflation doesn't pick up (a 1% increase of VAT each year, nobody cares)
Also unemployment benefits and welfare benefits and pensions could increase by a few percentages to cover for the increase of VAT and adjusted for inflation.
Companies are obligated to increase the net salary of workers with the tax decrease they get from turning gross wage salary into net wage salary. So the cost of workers stays the same for companies.
We could also replace personal income taxes on labor, to increase salaries by another 1,000 euro+ per month, so for another 5% increase in VAT like from 25 to 30% VAT.
FOR THE UNITED STATES:
An abolishment of employment taxes (and personal income taxes) on labor, replaced with a 5% federal sales tax.
This would produce 50-100 million new higher paying jobs in the USA.
Employment taxes are about $1 trillion per year, workers get 30-50% higher salary, which results in an increase of overall consumption spending by 15-25%, a federal sales tax of 5% could yield $1 trillion per year of tax revenues to replace the abolishment of employment taxes.
Again, companies are obligated to increase the net salary of workers with the tax decrease they get from turning gross wage salary into net wage salary. So the cost of workers stays the same for companies.
This could be implemented on a 5-year period, this tax shift like 1% federal sales tax increase per year.
Replacing personal income taxes on labor could increase salaries another 30-50%, for a federal sales tax of 10%, another 5% higher federal sales tax to replace another $1 trillion per year of personal income taxes, producing another 50-100 million high paying jobs.
CONCLUSION:
It is a far better economic tax model, if we tax consumption more and less taxes on income as higher spending produces more consumption tax revenues.
With 50 million jobs created and a doubling of GDP in 5 years from now (20% GDP growth per year), we could legalize 20-30 million illegal immigrants, give them a work permit under President Joe Biden and do positive immigration into the United States!
