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But here’s the kicker: Under the current system, when you earn $1.00, you only have between $.63 and $.90 cents left after taxes with which to buy that bread. Under the FairTax, when you earn $1.00, you have $1.00 left after taxes. (You can find the extra penny between the couch cushions!)

Bzzzt! Much of the math behind the Fair Tax was from Dr. Dale Jorgenson. In his analysis he attributed the employee paid income and social security taxes to the employer to come up with the 22% embedded tax. Thus to save that 22% from the pre-tax price, the employers would have to reduce gross pay. If gross pay is maintained, then the price reduction would only be reduced by the employer share of the SS tax and their tax on profits. You can't get all three of: trillions of dollars of taxes, the current prices as the total price with the new tax and taking home your full gross pay.

See Free Republic 2005: JORGENSON EXPLODES FAIRTAX MYTH (FR Exclusive)

I like replacing the nightmare income tax system with a simple consumption tax. But the FairTax is not a free lunch. You don't take a quarter to a third of everyone's labor from them without pain.

In his analysis he attributed the employee paid income and social security taxes to the employer to come up with the 22% embedded tax. Thus to save that 22% from the pre-tax price, the employers would have to reduce gross pay.

Reduce employee pay by employee income and SS tax? So basically no pay check increase at all. Hilarious. Thanks!