The problem with boortz is he shoots off without being informed sufficiently. He "knows enough to be dangerous".
When he began writing the book, he didn't take time to understand the assumptions made by the economist who did the study and ended up misrepresenting him.
The 22% reduction he spoke of (and the 22% reduction opined by the economist) were assuming that workers reduced their pay to today's net.
It doesn't make sense to reduce contracted wages. It was just a way to quantify savings. Anyway, in the real world, contracted wages aren't going to change solely because of the nrst. So the thinking was to identify what would be saved by business. That amount was decided on as a range. Anti-nrst folks say retail prices can fall 9% and pro nrst folks say 16%. So somewhere in between would make a reasonable discussion. I always use 9%, just because it makes it possible to even talk to those guys. But I do think it will be more.
I digress. So you've read that either
take home pay decreases AND prices remain constant
or
take home pay increases and tax inclusive prices increase.
Well, postulating that contracted wages remain constant, then tax inclusive prices will increase.
Most people think this is a problem because most people have been lulled into forgetting that the income tax reduces purchasing power - and does so more than the nrst does - this is due to lower effective rates.
A basic example: I pay 25% of my earnings to fed income and payroll taxes. So to to buy a "$100" baseball glove for my nephew, I need to earn $133.
Now look at the nrst scenario; this is where the 9% price drop ocmes in. THe previously priced glove goes to $91. Then, under the nrst, my effective fed tax rate is 17%. So I'd need to earn $109.64.
So tax inclusive prices rise , but the amount you need to earn to buy the thing is significantly less (133 vs 109.64). 6 of one half dozen of the other - but because contracted wages won't change, we use the latter assumption - that take home rises (to gross pay) and prices fall 9-16%, then rise by the nrst. 'Course the marginal rate isn't what we pay - it's an effective rate we pay. You can go to www.pafairtax.org to get an estimate of your effective rate.
That the income tax reduces buying power somewhere besides where you spend it is another socialist tactic to remove taxes from your mind as preventing you from buying more.
In case you didn't notice, I'm trying. And Boortz and Linder co-wrote that book so it's not just Boortz.
You agree that the FairTax will cause higher prices and that these will be ok because the purchasing power is what matters. Wage earners will receive a pay increase with their 100% paychecks to compensate for the higher prices. These prices will rise about 18-20% after the price cut and then the tax addition-- the full 30% for foreign items.
Stick with me here for just one more minute. The government will also need a "raise" to pay the higher prices, and it will take the form of additional revenue that needs to be raised. That additional revenue can ONLY be raised by increasing the FairTax rate, there is no other source to raise it. So, the 23% rate when multiplied by 1.18 is now 27.1% inclusive, which is 37.2% exclusive.
And that assumes no reduction in the base. If we assume just the very minimum that the base reduces 8% due to reduction in shelf prices-- ie. no reduction in unit volume of sales, just an 8% lower price for everything, then we need to divide the 27.1% by 0.92 to get a new inclusive rate of 29.5%, which is 41.8% exclusive. And this assumes ZERO evasion, and the same exact level of unit sales as now.