No, he's saying that a drop of 23% in prices is required so that things won't cost more than they do now when the 30% FairTax is added.
Hmm then how does the prebate affect prices? Proposed to make up taxes on poverty level spending, effectively lowering overall prices paid including tax. Or is that just a freebie? And even if prices go up some, what affect does no SS FICA income tax have on net cost? Lots of apples and oranges involved.
No affect on prices; the prebate is intended to prepay the 30% sales tax on poverty-level consumption, keeping the poor from paying any taxes.
The "prebate" does not affect prices. The prebate lowers the net tax receipts to the gov't thereby causing the "revenue neutral" tax rate to be higher than it would otherwise be. In other words, if there was no "prebate" the sales tax (inclusive) rate would be less than 23%.
It's not a "freebie." Everyone who pay cumulative sales tax in excess of the "prebate" amount pays for everyone who pays cumulative sales tax in amounts less than the "prebate." It's a form of income redistribution or progressivity.
And even if prices go up some, what affect does no SS FICA income tax have on net cost?
Depend on what assumption you choose: If employees get to keep their current gross wages, then prices cannot fall by as much as claimed; after-tax prices will rise considerably. If employees forfeit the income and FICA tax portion of their wages (and keep the same take-home pay) prices can decline more significantly ... if business pass along the forfeiture in the form of lower prices; some will, some won't. After tax prices in that scenario may only rise a small amount. Some claim they will fall a bit, but that debate remains unresolved.