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To: ancient_geezer

"1.The revenue neutral substitution of the NRST for existing taxes would have an immediate and powerful impact of the level of economic activity.The first chart gives a projection of GDP under current tax law. The second chart shows that GDP would increase by almost 10.5 percent in the first year.This increase would gradually decline to a little under 5.4 percent over the next twenty-five years."

Thanks for posting that, AG. It is good to put some of the comments on this thread in their proper context. The naysayers are quick to point to Jorgenson and interpret his meaning with respect to the treatment of employee paid taxes, but they completely miss the big picture of his study. 10.5% GDP growth in the first year is SMOKING. I doubt that the USA has had a year like that in the last century or so, not even in the go-go 90s. Other economists have shown similar findings, some, I believe, with even higher 1st year GDP growth estimates.

And yet here we have the naysayers predicting economic collapse and a stock market crash. Amazing, just amazing.


351 posted on 08/24/2005 4:40:07 AM PDT by phil_will1 (My posts are in no way limited or restricted by previously expressed SQL opinions)
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To: phil_will1

10.5% GDP growth in the first year is SMOKING.

That kind of growth certainly does not support any ideas of falling wages or business profitablity with lower producer pricing structures due to the repeal/removal of federal business taxes from the backs of our businesses.

With higher production that goes with that level of growth, the increase in demand for additional labor precludes any such notion.

The following is a table constructed from the information in the Jorgenson FairTax study showing the increase in production quantity, change in producer price.

In the third the final column I computed the price,(based on a 23% NRST) paid for consumption by an assumed "retail" customer for each business sector via:

Price(consumer)% = 100*((1-Price(producer))/(1-Rate(nrst)) - 1)

and present the change in NRST inclusive price to a final consumer in the last column of the table.

Presuming sector goods or service are sold to a final consumer for each sector the net change to consumer is represented in the last (shaded) column. Those shaded red represent net price increases (NRST inclusive) to the consumer.

I would submit that those NRST inclusive consumer price changes are within ±5 percentage points of the actual values that can be expected.

 

First Year 1996 Percentage Changes for FairTax legislation, replacing 1996 tax law
Business Sector % Change
Production
Quantity
% Change
in Producer
Prices
% Change
in Consumer
Prices
Agriculture 22.8% -22.26% +0.96%
Metal Mining 31.96% -22.51% +0.64%
Coal Mining 13.77% -24.63% -2.21%
Crude Oil 5.10% -13.25% +12.66%
Other Mining 34.99% -23.50% -0.65%
Construction 55.28% -24.48% -1.92%
Food Products 20.79% -22.84% +0.21%
Tobbacco 34.00% -25.14% -2.28%
Textiles 32.58% -23.21% +0.27%
Apparel 17.89% -19.19% +4.95%
Lumber, Wood 53.14% -22.51% +0.64%
Furniture 73.63% -22.36% +0.83%
Paper 28.13% -22.81% +0.25%
Printing 15.22% -24.91% -2.48%
Chemicals 33.91% -21.83% +1.5%
Refining 6.22% -16.05% +9.03%
Rubber, Plastic 49.96% -22.66% +0.44%
Leather 24.13% -15.25% +10.06%
Glass, Inc. 48.25% -22.63% +0.48%
Primary Metals 38.62% -20.72% +2.96%
Fabricated Metals 47.29% -23.20% -0.26%
Non-electric Machine 55.86% -22.26% +0.96%
Electric Machinery 55.25% -21.04% +2.54%
Motor Vehicles 60.82% -18.53% +5.81%
Other Transportation 16.90% -23.80% -1.04%
Instruments 24.51% -22.89% +1.00%
Miscellaneous Manufacturing 57.57% -17.95% +1.07%
Transportation 17.71% -24.45% -1.88%
Communication 14.79% -25.30% -2.99%
Electric Utilities -9.05% -23.51% -0.66%
Gas Utilities -8.29% -20.03% +3.86%
Trade 28.87% -25.43% -3.16%
Finance, etc. 16.93% -24.87% -2.42%
Other Services 12.04% -25.43% -3.16%
Government Enterprises 18.56% -25.57% -3.34%

355 posted on 08/24/2005 4:55:55 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
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