He's claiming prices would fall by twenty percent because (since) producers are not paying tax on profits and workers are not paying taxes on wages.
And this implies wages are falling how? In a retail sales tax only system. wages and profits are not taxed. Consumption is taxed.
Do you dispute that he thinks that this implies that the producer is expected to realize a cost savings from the fact that workers are not paying taxes on wages?
Yep, 10% GDP growth in the first year, production increases and consequent demand for labor increases significantly as well precluding any fall in gross wages paid to employees.
In fact over time, with the increase in capital investment allowing advancment in techonlogical productivity, gross wages will increase as they always have done under similar conditions.
The business no longer paying tax on wages (i.e. employer excise on wages paid) does not imply lower wages anymore than an employee no longer having 7.65% FICA wages and Income tax withholding from his gross. Contracted gross wage remains constant with no withholding that is an increase in takehome pay for the worker, the business realizes the advantage of no longer paying or accounting for its 7.65% excise on wages paid that is a reduction in levy on the business.
And do you dispute that the only way the producer is going to recognize a cost savings is if he doesn't give his workers 100% of the same gross pay he is now giving?
Yes I do dispute that, as the real savings to the business arises our of reduction in overhead costs associated with repeal of the tax system with its imposed requirements on business and removal of need for business to implement evermore creative (and costly) ways of tax avoidence.
So, this means that Jorgenson's model was based on the wage earners NOT getting their entire 100% current paycheck, but instead they would be getting 100% of a new gross paycheck, about the same as what they are now getting after payroll and income taxes.
Sorry, doesn't fly at all in the face of high production growth, increasing GDP economy projected under the study.
You really should read the study in whole, rather than looking to warp statement of results to backfit into your predisposed personal opinions.
Nothing in Jorgenson's report done for AFFT or the earlier one, to be found on the net done for others investigating the potential of the Armey Flat Tax indicates decrease in contracted wages for workers. Quite the contrary, as both reports indicate very high GDP growth and increased production which pressures wage upward, not downward.
FairTaxers are misrepresnting this study to sell their plan.
Looks more to me like an income tax apologist warping the interpretation of a single conclusory statement our of a much broader study indicating conditions just the opposite of what the studies actually present.
I know you are really not that dumb. The study clearly included taxes employees paid as a basis for prices falling 20%. This is so black and white it is not even funny. You are intentionally ignoring what the study that provided the basis for the claim says.