I refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39. "[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.
Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
http://fms.treas.gov/mts/mts0901.pdf
- Total revenues collected by Feds in '00 = $2,025 billion
(33.6% of consumer price [per Robbin's 1999 federal tax contribution to prices] )Those tax components which will not change prices as a consequence of enactment of HR2525
- Individual Income Tax (Labor) = $1,004.5 billions,
- Employee half of Social Insurance = 648/2 = 324.0 billions,
- Excises = $68.9 billion
- Customs Duties = $19.9 Billion
- Miscellaneous = $42.7 Billion
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- Total constant price factors = $1,460 billion
- Remainder federal tax components affecting price = (2,025 - 1,460) = $565 billions
Adjust for a conservative $800 billion cost of tax compliance,
(The Flat Tax; Hall & Rabushka, '95,What the Income Tax Costs the American People: quoting James L. Payne estimates 65cents for each dollar of revenue collected)
- Total tax related factors affecting consumption price = (800 + 565) = $1365 billions
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1,365/2,025) = 22.64% reduction in consumption prices
Which more than verifies the Jorgenson empirical study of a 22% fall in producer prices
The two sources are in reasonable agreement, Just using static analysis taking the repeal of SS/Medicare taxes as well as income taxes into account for HR25.
I see 20-25% a reasonable value to expect retail prices to fall, not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
Accounting for productivity enhancements and other economic growth factors would add to the potential for decline in consumer prices as can be determined from Jorgenson's studies! But would be beyond the scope of this validation.
Remainder federal tax components affecting price = (2,025 - 1,460) = $565 billionsIn one line you're saying the corporate tax is $565 billion. In the next line you're saying compliance costs are 65% of every dollar collected and somehow conclude that equals $800 billion. Isn't 65% of $565 billion equal to $367 billion?
Adjust for a conservative $800 billion cost of tax compliance, (The Flat Tax; Hall & Rabushka, '95,What the Income Tax Costs the American People: quoting James L. Payne estimates 65cents for each dollar of revenue collected)
Total revenues collected by Feds in '002000? That doesn't take into account the Bush tax cuts. Why not use 2003 numbers? I provide them for you.