Who Pays the Tax?

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How in the world can a single tax replace a "three legged stool" of taxes?  The answer lies in the Principles of Taxation, specifically that "Broad tax bases allow rates to be kept low, which in turn encourages voluntary compliance."*  In Nebraska's case that broad base can eliminate the need to have taxes levied directly on property you already own (property, state income, and inheritance taxes) while keeping the rate reasonably low.  Our plan more than doubles the existing sales tax base.  How do we do that?  By eliminating current sales tax exemptions and increasing the incentive to comply, as documented with the Bar Chart below, specifically in the Fourth Bar citing the Beacon Hill dynamic study.

How can we say we increase the incentive to comply?  Lower rates mean that the incentive to avoid compliance is reduced.  It simply isn't worth it in most cases to take measures not to comply if the rate is low enough.  Did we make that up?  No.  Please read on:

In depth, "If states opted for one form of taxation, say a retail sales tax [or consumption tax], then instituted a broad base so that all consumption goods and services were subject to the tax while repealing other taxes, the state could raise the revenue necessary to fund legitimate government functions simply and efficiently, with the least cost of collection and lowest burden on taxpayers. More importantly, every resident of the state would have a vested interest in keeping taxes low because they all would be taxpayers."

 — From Principle #8 in the  "Ten Principles of Federal Tax Policy", written by Daniel J. Pilla for The Heartland Institute, who holds the copyright.