[Your Nightmare]

No need to adjust as what the government pays today include taxes of the suppliers and all upsteam producers. Since the entire income and payroll tax system is replaced by the FairTax system, the gross (tax plus price) paid by govenment remains constant with what is paid today.

So, you are assuming everyone will take a pay cut to facilitate this price drop? Your assumption that producer prices will drop has been blown out of the water.

Also, if wages and prices go down, so does the revenue to the government, but they are still paying the same price after the tax. The real size of government must decline. This is just another one of your shell games.

You are also ignoring the fact that the government would be paying taxes on the wages of their employees. The amount of FairTax they would pay would be far greater than any payroll taxes they may pay.

[ancient_geezer]

Actually it looks like the economists figure for a takehome pay increase greater than 20% when only the employer's half of SS/Medicare tax is accounted for in price decreases.

Kotlikoff figures a real wage increases on the order of 19% in excess of the base income/payroll tax case.