[lewislynn]

In the AFFT rebuttal to a "Tax Notes" commentary by Gary Fleischman, the AFFT argues that actual gross wages would INCREASE by the amount of the ER Payroll Tax in an effort to show how much easier it would be for a family to save down payment money for a home purchase.

It gets worse.

Karen Walby, AFFT's Director of Research (obviously either not the brightest bulb or just going along with the lie...or both) does the same thing here on pages 2 and 4 for a chosen few.

She also adds the (GAG!) "prebate" to the gross in every example giving each one more "spendable income" than they actually earned, including one earning $100,000.LOL!

I wonder where all that extra cash would come from....So much for "it's not an entitlement".

[pigdog]

The cash you inquire about isn't "extra" but merely part of the tax revenue obtained under the FairTax.

And sorry (GAG!) Looey, the prebate isn't an entitlement as you been told countless times - but it is a refund of some part of tax paid. And you're right ... it becomes added on as spendable income since that's what it is and it helps lessen the tax burden (even on someone spending at several times the poverty rate).

[groanup]

You guys are so terrified of the pre-bate. Are you just as terrified of the EITC? What about it?

[Dimples]

The methods used by Walby is also suspect in her accounting of the costs of the current tax system embedded in prices. As we all (except for pigdog) know, the 22% figure used to calculate this cost comes from Jorgenson's model. As we have also confirmed, this 22% is made up of the personal income tax and payroll tax withheld from employees paychecks and the profit and payroll tax paid by employers.

Given that Walby is expecting employers to pass the withholdings, including the ER payroll tax back to employees, the only tax left is the corporate profit tax. It not clear how much Jorgenson allocated for compliance costs, but using the oft stated $200 Billion figure and realizing that employer wage costs remain entirely unchanged, the actual cost of the current tax system embedded in prices is only about 4%.

So to be fair, instead of subtracting 22% from Spendable Income, only 4% should be deducted. The rest is all wage cost that remains in the cost structure under the FairTax.

To correct Walby's examples, simply multiply the "Current System - True After Tax Purchasing Power" figure by 1.333.

As usual, the AFFT is double counting.