I contacted Dr. Dale Jorgenson, the Harvard economist who did the FairTax models, earlier today. He said that he assumed workers would keep their current after-tax income, NOT their current gross pay.
There is no pay raise with the FairTax plan, as many of us have stated, and been ridiculed for stating.
RobFromGa
Yeah. Let's keep the Gestapo IRS. That's the way to go.
Great post. It's good to see someone doing some actual research, instead of reading a media report or post from someone who says they know what they're talking about, and then spouting off. Keep up the great work.
Someone is smoking something!!! Have you or the good Dr. ever been hired by a company? Net pay is never discussed or agreed to. An offer from a company is at gross whether the amount is an hourly rate or an annual salary. For a company to do what you and the good Dr. suggest would be a breach of contract and a cause for action not to mention the reaction of labor unions. THINK! and get real.
Rob, I just looked at you home page. It appears you are attempting to do good working with addiction. I think you should stay with that topic because you are apparently out of your league when discussing taxes.
The headline seems rather misleading; hardly an explosion of a myth. Rather it is a disagreement of terms of calculations.
Those who demand honesty should also exhibit it themselves.
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I find it fascinating that economists get so confused over simple things like take home pay. Notwithstanding possible misinterpretations of Dr. Jorgenson's testimony - it is quite clear to me that if you were hired as an employee with a gross $1000/mo salary and are paying $400/mo in withholding taxes once the FairTax act comes into effect that employee would then receive the $1000/mo salary that he contracted for in his employment agreement. The savings to the employer would be the matching Social Security withholdings (7.25% or thereabouts), the enourmous cost savings of dealing with withholding tracking, quarterly tax reporting, complex tax avoidence/differance savings/investment plans, and the resulting pass through savings in costs of upstream materials and services used in the standard operation of his business. Of course the biggest benefits of all would be the end to the terrible erosion of our capitalist free market system and the increase in personal freedom for each individual who no longer has to submit his personal financials to government bureaucrats.