HI Rob,
I don't know if I can wade through the whole thread of bickering, but from reading you original post one of the things that it appears you missed is that while the worker recieves a check without his Social Security witholding taken out (an increase) you note that this doesn't become a savings to the employer. While that part is true, there is a like amount: the employers' contribution, that is every bit as large, and if the employer isn't paying that, then the employer does reap a savings.
I don't really have an axe to grind as I haven't formed a studied opinion on this as I see the tax code so embedded politically, this thing will never get out of committee even if it is introduced.
Dear KC Burke,
Dr. Jorgenson's model does not permit giving the employee side of payroll taxes back to the employee.
It all goes toward price reductions. All taxes currently paid go to price reductions.
Here's the relevant part of the exchange:
RobFromGa: "Excuse me for my lack of understanding of your answer, when you say 'workers would keep that after-tax pay' are you saying that if they are making $1000 a week now, and paying $200 payroll+income taxes now, that under the FairTax you were assuming that workers would get paid $800 and keep all of that? Or are you saying that you meant they would make $1000 under the FairTax?"
Rob is asking - do folks get their old gross pay ($1000) under your model, or their old net pay ($800) that previously had all the taxes taken out?
Dr Jorgenson: "I am saying that the worker would continue to receive the after-tax amount of $800."
All taxes are foregone by the employee and the savings are passed through to the consumer by the employer in the form of reduced prices.
sitetest