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Read the book "The Fair Tax". If you do not understand this, then it will be hard for us to debate.

Exactly, but you ought to read the article, because the article finds a huge discrepency in what fairtaxers say and what their researcher says. Fairtaxers misrespresent these embedded taxes by some $1.3 Trillion. Boortz says he'll 'fix' this in later revisions. There is nothing in this book I haven't heard 100 times.

Here is an excerpt:

Part of the problem is the way Boortz and Linder are using the idea of embedded taxes. In an eight-year-old study paid for by AFFT, Harvard economist Dale Jorgenson noted that because the taxes paid by everyone in the chain of production are embedded in the cost of goods, prices could decline an average of 20 percent if all those taxes were scrapped. The FairTax Book devotes an entire chapter to this idea.

What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes.

Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.

I pressed the point with Boortz and Linder. Boortz denies that the book intentionally overpromises. The introduction, he notes, emphasizes that "this book isn't about saving a penny in taxes." But he concedes that the book is confusing about this, and vows to correct it in later printings. Fair enough.

Meanwhile, these guys want to replace the entire tax code, they've ignited a populist movement to get it done, and tens of thousands of copies of the uncorrected book make the FairTax sound like magic.

It seems that the poster Always Right is stuck on quoting a liberal reporter's article without even understanding that it says only that the reporter CLAIMS that Jorgensos said so and so. Nowhere in Jorgenson's work does he make such a statement but he DOES say that:

"... because the taxes paid by everyone in the chain of production are embedded in the cost of goods, prices could decline an average of 20 percent if all those taxes were scrapped ... "

That actually says nothing about wages being part of that or not. It probably even excludes individual income taxes since it is the employee who bears these tax costs rather than the business. But the poster is fixated on the claim the reporter had that Jorgenson told him (the reporter) that prices can only fall this sharply if wages are cut. I doubt Jorgenson said that since he knows better and certainly realizes that most embedded taxes that could be removed from costs are in he business income tax part of the business rather than in employees gross wages which remain untouched.

Jorgenson, if anything, was probably telling the reporter (as he was telling Robbie earlier) that IN HIS MODEL wages declined by the amount of the income tax. That was true for the puropse of his simulation but means nothing "on the ground" in real life. Since a number of economists have made (and are no doubt still making) studies, it does not follow that any single one was relied upon for the assessment of the amount of embedded taxes to be removed. This is especially true since it is the reporter making the claim and not Jorgenson. Jorgenson, in fact, is very much in favor otf the benefits brought about by the FairTax.

It makes a convenient claim of opponents to misstate that, however and offer as "proof" an obviously biased reporter's article which is fairly hazy in precise meaning in several areas.