Show me where Dale Jorgenson said pre-tax.
My problem with what you said is that you said it was claimed that prices would drop 30-40%. I said no, they will drop 20-30%.
Then you freaked out.
Show me where Dale Jorgenson said pre-tax.
He said the price received by producers and for investment goods(capital assets) will fall 20-30%.
Of course it helps to know the definition in an equilibrium model that economists are speaking about when discussing "producer price"; that it is the consumer price discounted for taxes and subsidies. Producer price is the price received by the supplier (i.e. for the market considered) sans tax and subsidies as opposed to the total amount including tax and subsidies that is actually paid by the consumer to purchase a product.
Algebraic Solution of Linear Supply and Demand Models R. Wigle Director Masters Program in Business Economics Wilfrid Laurier University May 9, 2001 http://info.wlu.ca/~wwwsbe/faculty/rwigle/ec238/ref/pe-algebra.pdf
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NRST is not paid by producers on their purchases for business purposes and all federal income and payroll taxes on business are repealed.
According to Jorgenson, including the NRST, from the consumer's perspective, the price of consumption falls 3-10% over the time frame of the study.
http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf
Revised April 12, 1999. This paper was prepared for presentation at the
7. The inter-temporal price system provides the mechanism for re-allocations of resources in our simulations. Figures 10 and 11 give the impacts of the tax reforms on the prices of investment goods and consumption goods and services. Under the Flat Tax the price of investment goods drops by more that 6.8 per cent in 1996 and the price decline continues, falling only modestly to a little over six percent by 2020. The Sales Tax produces a reduction in investment goods prices exceeding twenty percent in 1996, rising gradually to between twenty-five and thirty percent over the period 2000-2020. Under the Flat Tax prices of consumption goods and services decline by more that 4: 5 percent in 1996, but this price reduction falls over time to around three percent in 2020. The Sales Tax reduces the price of consumption by a little over three percent in 1996, but this price decline increases to more than ten percent by 2020. 9. Since producers would no longer pay taxes on profits or other forms of income from capital and workers would would no longer pay taxes on wages, prices received by producers under the Sales Tax, shown in Figure 13, would fall by an average of twenty percent in 1996. Figure 14 shows that prices received by producers would fall by an average of twenty-five percent by 2020. The impact of the Flat Tax on prices received by producers is much less dramatic. Prices decline in the range of six to eight percent for most industries in 1996 and five to seven percent by 2020. |