It looks like you've ignored the taxes paid by non-corporate businesses. You've also under-estimated corporate business income taxes, and pretended that market forces do not exist. So your 8% price drop figure is a tad low, andd your FairTax inclusive prices are therefor a tad high.
I'll tell you what will really happen:
Out of a $9T national retail sales, corporate income taxes were $300B for 2005. Non-corporate business income taxes were $300B. Employer-side payroll taxes were $380B. Business compliance costs including non-corporate business were $200B. The non-corporate businesses will retain $150B of their income taxes to give themselves a 15% increase in take-home pay and maintain their FairTax purchasing power.
Net Taxes passed along in retail prices = $1,030B / $9T = 11.4% which is what prices should fall while maintaining current after-tax profit levels for all American businesses.
On your imported vs. domestic beer example, you miss the obvious market issues. If both are currently selling for $10 a 12-pack, then the consumer has already assigned equal value to them. The total cost for the imported 12-pack must stay the same as the domestic beer or it will lose market share. So both domestic and import beers will fall to $8.86 before tax and $11.50 including FairTax. A 15% price increase overall.
With the tax rebate, some people will be able to afford MORE beer -- import as well as domestic -- than they could before.
the tax bite (taxes paid and compliance costs) is not taken solely out of retail sales (more properly called "personal consumption expenditures") as you claim. The tax bite comes out of the entire GDP of $12 T (yes, the equipment sold to a business - found under "Gross Domestic Investment" not "Personal Consumption Expenditures" - has a tax bite as does Government Consumption. )Redoing your math with the proper denominator:
Net Taxes passed along in retail prices = $1,030B / $12T = 8.6% which is what prices should fall while maintaining current after-tax profit levels for all American businesses.Hmmmm ... that seems to put the number right where Rob said it would be.
MORE BEER!!! Oh Joy, Oh Rapture!!!
That must be a correct analysis - especially since the ones we've seen from the Squirrels always assume that corporate income taxes represent all business taxes (they don't) and that no part of income taxes embedded in prices will be removed (they will). In addition to the ER portion of withholding and compliance costs all of these things will combine to reduce prices substantially (prior to adding the FairTax).
The biased analyses that have been repeatedly offered by those opposing the FairTax are much to low in the price reduction area. Of course they can't admit that since it spoils their little game.
I find it pretty clear that disposable personal income will increase with the onset of the FairTax, not decrease, and in addition the economy will rapidly grow due to its other beneficial effects.
BRING ON THE BEER ... AND THE FAIRTAX!!!
On your imported vs. domestic beer example, you miss the obvious market issues. If both are currently selling for $10 a 12-pack, then the consumer has already assigned equal value to them. The total cost for the imported 12-pack must stay the same as the domestic beer or it will lose market share. So both domestic and import beers will fall to $8.86 before tax and $11.50 including FairTax. A 15% price increase overall.Would you like to play my game theory simulation?