Remember the 22-cents-out-of-every-dollar embedded taxes described in Part I of this paper? Take all of those taxes out, and institute a 23-cents-of-every-dollar consumption tax, and the prices of goods and services haven't changed much.
You can't get both your whole current gross pay and have post-FairTax prices remain at their current levels. Most of the 22% embedded tax Dr. Jorgensen calculated was the income tax and employee's half of Social Security. To remove the 22% embedded tax, your employer would have to retain the amount he pays you to cover your income tax. If he pays you your gross pay, the remaining embedded tax of the employer's half of SS and business profits tax is only about 9%.
income tax and employee's half of Social Security. -> employee's income tax and employee's half of Social Security.
But Dr Jorgensen assumed an excessive amount of labor costs in his calculations. In this country labor is making up a smaller and smaller amount of production costs of manufactured goods as the efficiency of capital rises year after year.
To the savings in actual embedded tax and embedded fica, you have to add the enormous burden of tax accounting, and reporting that is imposed on business. In anything but the smallest business it is the cost-center that falls right after raw materials and labor. For most manufacturing businesses this would totally disappear. Corporations would not pay or file taxes unless they engage in retail sales.
The calculation model for Fairtax has been rigorously gone over by large number of economists (check the faq) and it has been found to be very sound.
Pick at all the nits as you may, it does not collect more (or less) Tax, and will not raise the total price at the register more than the increase in your paycheck. It couldn't.
How in the world do you come up with "9%"??? As has been shown in examples of hidden business income taxes there is a good bit of room to reduce prices whose inflation is partly caused by business income taxes. Even leaving out the withholding portion of taxes there is a good bit of fluff in business income taxes that, when combined with compliance cost savings, would allow prices to be reduced a substantial amount.
You seem to disregard the amount of income tax that cascades
from business to business and raises prices as it goes. When that gets to the end of the line where the consumer buys, there is a good bit of potential to reduce prices.
Trying to make the conjoined claim that wages must go down or prices must go up isn't supported by any competent economist. Those that we see doing this are the Status Quo Lovers - and they do it continually. You seem to be joining with that group.