That is what the analysis says, but there is no way to make that happen. What realistically will happen is prices to the consumer will have to go up significantly. To make the fair tax work and not create economic havok, wages would have to adjust, but I don't see how that can be done legally and practically.
Dear Always Right,
"That is what the analysis says, but there is no way to make that happen."
Yes, that's true.
I'm just trying to explain Dr. Jorgenson's theory.
If there were a way to achieve a steady state with an NSRT without trashing the economy during a transition, it would be a far more interesting proposal.
I'm still very leery about taxing away 20% of GDP through consumption taxes, as I think the direct effect on consumption will be highly negative.
However, we could at least debate stuff worth debating if some of the NSRTers around here would give up the idea that price savings of 20+% are going to magically appear out of the sky from "cascaded" corporate income taxes (LOL), rather than the source the actual theoretician cites: Loss of that part of gross wage to the worker that currently comprises payroll and personal income taxes.
sitetest