Mechanics, objections, and why it works
Core Mechanics"We seek critique, not endorsement. Please be harsh. We can handle it."
The Gross Revenue Tax
Mechanics, Objections, and Why It Works
Core Thesis
The Gross Revenue Tax (GRT) replaces all federal income taxes—personal, corporate, payroll, capital gains—with a single point-of-sale tax on transactions. This isn't just simpler; it's structurally superior. The GRT is harder to evade, eliminates tax complexity, broadens the base, and removes the perverse incentives embedded in income taxation.
How It Works
Basic Mechanics
What it replaces: Federal income tax, corporate tax, payroll tax, capital gains tax, estate tax
Exemptions: Essential food, medicine, housing (first $X), education—basic necessities untaxed
Collection Infrastructure
Collected by businesses at point of sale (like current sales tax)
Remitted electronically to Treasury
Real-time tracking through existing payment infrastructure
Auditing focuses on businesses (millions) not individuals (hundreds of millions)
No individual tax returns required
Why GRT vs. Income Tax
Income Tax: The Fundamental Flaw
Income taxes require knowing everyone's income. This creates massive problems:
Surveillance state: Government must track every source of income for every person
GRT: Structural Advantages
Behavioral neutrality: No tax incentive to earn less, hide income, or avoid transactions
Addressing Objections
"GRT Is Regressive"
The Concern: Poor people spend higher percentage of income, so consumption tax hits them harder.
Exemptions: Essential food, medicine, housing, education exempt. These are majority of low-income spending.
Stability Accounts: Everyone gets $25K at birth growing to $1.89M. This IS the progressive redistribution.
No payroll tax: Current 15.3% payroll tax is MOST regressive—capped at $160K. Eliminated.
Net effect: Low-income pays GRT on non-exempt purchases, receives universal healthcare + $25K account + no payroll tax + no income tax filing. Net massive gain.
Luxury goods: Wealthy consume more luxury goods (yachts, jets, art) = pay more GRT in absolute terms
"Underground Economy Will Explode"
The Concern: People will transact in cash, barter, or cryptocurrency to avoid GRT.
Lower rate = less incentive: 7-13% GRT vs. 37%+ income tax. Less reward for cheating.
Businesses can't hide: Legitimate businesses need banking, suppliers, customers. Paper trail exists.
Digital payment dominance: Cash declining rapidly. Most transactions electronic and traceable.
Consumer incentive: Legitimate purchases build credit, provide warranties, enable returns
Current underground: Already exists under income tax. GRT doesn't make it worse.
VAT comparison: European countries collect VAT at 20%+ with manageable evasion. GRT at 7-13% is easier.
"Business-to-Business Cascading"
The Concern: If GRT applies to all transactions, B2B purchases get taxed multiple times (cascading).
Final sale only: GRT applies at point of final consumer sale, not intermediate B2B transactions
Registration system: Businesses register for exemption on purchases for resale (like current wholesale exemptions)
Existing model: State sales taxes already distinguish retail from wholesale successfully
"Wealthy Will Just Save, Not Spend"
The Concern: Billionaires can live on loans, never sell assets, avoid consumption.
They do spend: Mansions, yachts, jets, art, staff, travel—conspicuous consumption is the point of wealth
Eventually liquidate: Loans must be repaid. Assets eventually sold. Estate eventually distributed.
Current system worse: "Buy, borrow, die" strategy already lets wealthy avoid income tax entirely. GRT catches them on spending.
Savings benefit economy: If wealthy choose to save instead of consume, that capital funds investment. Not harmful.
"Implementation Is Impossible"
The Concern: Can't switch tax systems. Too disruptive. Infrastructure doesn't exist.
Infrastructure exists: 45 states already collect sales tax. Payment processors handle it. Just change rate and destination.
Phased transition: Don't switch overnight. Reduce income tax as GRT rises over 5-10 years.
Simplification: Eliminating income tax removes massive complexity. Net reduction in compliance burden.
Historical precedent: Income tax itself was implemented in 1913. We've changed tax systems before.
Other countries: VAT implemented across Europe, Asia. Consumption taxes work globally.
Comparison: GRT vs. Alternatives
GRT vs. VAT (Value-Added Tax)
Advantage GRT: Simpler—no input credits, no refund claims, less fraud opportunity
Advantage VAT: Self-enforcing (businesses want credits). But complexity enormous.
GRT vs. Flat Tax
Advantage GRT: Still need to define/track "income" under flat tax. All complexity remains.
GRT vs. Wealth Tax
Advantage GRT: Wealth is hard to value (art, private companies, offshore assets). Transactions are observable.
Advantage wealth: Directly targets inequality. But practically unenforceable—Europe abandoned wealth taxes.
AIP approach: Stability Accounts address inequality through asset building, not wealth destruction.
The Rate Trajectory
Key insight: As debt eliminated and Stability Accounts mature, required revenue drops dramatically. Rate falls to minimal level permanently.
Discussion Questions
Are the exemptions (food, medicine, housing) administrable without creating loopholes?
What's the right threshold for housing exemption?
How do we handle cross-border transactions (imports, exports, digital services)?
Is 13.2% initial rate revenue-neutral? What are the projections?
How does GRT interact with state sales taxes?
What transition timeline minimizes disruption?
Note: This document focuses on GRT mechanics and objections. The tax is one component of the integrated AIP framework—its effects must be evaluated alongside Stability Accounts, universal healthcare, and other elements. Validators are invited to stress-test these claims.