Income tax is in the embedded tax, too. Did your numbers include inocome tax?
There in lies the rub. Fair Taxers have been maintaining that workers could keep the whole paycheck AND prices would come down 20%. Since income tax workers paid was in fact part of the 20% of embedded taxes, that claim has been exposed as fales.
No. The FairTax supporters claim I get the gross for my paycheck with no federal taxes withheld. Therefore income tax and 7.65% SS and Med tax are my taxes and not the employers. If you want to claim that they are embedded tax for the employer, then I can only claim that my net income is really mine.
My 9% estimate came from assuming that 10% of the aggregate price of goods and services are imports at essentially 0% tax, 10% are corporate profits at 30% tax and 80% are wages at 7.65% SS and medicare. Each company's costs of goods sold, equipment, other companies' services, etc. are made up of the same components. Take 0 x 10% (imports) + 0.30 x 10% (profits) + 0.0765 x 80% = 9.12%.
Shortcomings of my assumptions are 1. There is a small total tariff (about 2%) I left out of imports, 2. aggregate profits are probably a little lower than 10%, 3. I made no effort to figure out how much of wages are above the $90k SS cap, 4. I left out the cost of unimproved land for things like mines and farms, 5. I made no effort to calculate indirect costs attributable to current federal taxes (accounting, filing forms, etc) - I was only calculating direct costs.
All of these shortcomings don't change 9% to 23%. This thread pointed out the missing link: Jorgenson's embedded tax calculations include the employee's taxes as an employer expense, but the FairTax supporters who claim that employees will get their current gross left out that part.