So let's re-balance the equation with the more likely numbers:
$100 worth of product drops to $95. And with the Fair Tax added in it goes to $123.50. However to pay for the $123.50 worth of product, the Family is bringing home $118. They are $5.50 (or nearly 5%) behind.
I disagree Dimples - Respectfully.
Though Jorgensen has either changed or fine tuned his 22 to 25% drop to include a wage or salary drop. Others at least at Fair Tax including Dr. Walby have not.
The American Farm Bureau Federation supports the efforts of the Fair Tax as well.
A conservative 10% price drop does not mean a wage drop in take home pay. it does means the employer saves the 7.65% employer paid payroll tax and it does mean the employee keeps tohe 7.65% payroll tax normally dedcuted form his gross pay.
So, $129 is the new gross that come home versus the $100 in take home pay under the old system.
And a 10% drop takes those $100 woth of product down to $90 and add in the Fair tax they now pay $117.
THey are $12 dollars ahead(per $100 in take home pay under the income and payroll tax) and we haven't accounted for the Prebate yet!!!!!
Think about it, if you could eliminate 7.65% payroll tax paid by the employer(not part of gross salary) and eliminate the coroporate income tax; and eliminate 80 to 90% of the economically wasted 250 to 400 billion in compliance costs. Plus pump in to the economy increaed investment and growth because of the more efficient tax system. The result is booming economic growth and job creation.
Now multiply the savings
throughout the supply chain from producer of seed and fertilizer to the farmer to the grain mill to the baker to the grocery store.
Most of these people paid business income taxes and payroll tax; most paid accountants and tax attorneys to keep them compliant with the code. inefficient busineess decisions were made because of the tax code. etc. etc,.
10% price drop is conservative and reasonable expectation just to most businessmen let alone economists.
Public will expect it when the Fair Tax is passed and will punish those companies and sellers that do not lower prices. This will be a driving force to get the 10% savings.
The idea that a wage drop is required for a 10% price drop in the supply chain is false.