So my boss couldn't pull me into his office and say, Phantom, we are reducing your salary to $80K a year starting tomorrow? That mechanism doesn't exist?
You think union thugs are gonna take the pay cut? There will be some downward pressure on wages, but that is a longer term effect. The immediate effect is an instantaneous 20% inflation spike due to the fairtax. What happens longer term is crystal ball stuff. Most likely people will just live with the new prices and keep their current wages. Seniors are then royally screwed.
If the FT Plan becomes law the employee will keep his after tax pay,not the gross pay.
In the example by Dale Jorgenson,the Harvard Economics Professor who is the father of the National Sales tax,an employee earning $1000 a month and paying $200 in fed income taxes and payroll taxes would keep $800 under the FT Plan as he kept under the current system
The $200 now the employer gets to keep goes toward reducing PRODUCERS PRICES,but RETAIL PRICES would be increased by the National Retail Sales tax Any gains by workers and investors would be the result of increase economic efficiency
Meaning if the producing price fell by 23%,the retail price would be increased by the National Sales Tax rate of 23%
I.e, no change in price to the good or services before or after the FT Plan
All of you can email Dr Dale Jorgenson at djorgenson@harvard.edu
to get this info
Current example $100,000 annual salary,$80,000 net after Fed and Payroll taxes
Monthly gross $8333
Monthly net $6666
Under FT Plan employee would continue to receive the same net figure of $6666 and the $1667 difference would go the employer to reduce production costs
Further payroll reductions to the $6666 figure:
Health Ins
Life Ins
State Inc Tax
IRA
401K
Net figure $5000 take home pay
$5000 take home pay deduct expenses:
Mortgage
2 car payments
credit cards
Utilities
Car Maint&gas
Food,clothing and drugs and medical
Total expenses $4000
Disposable income $1000 to buy goods and services that did not change in price from before the FT plan to after it.
It’d true that some of these deductions and expenses will be taxed at the sales tax rate,but a lot of them,mortgages,credit cards notes etc won’t be taxed at near the sales tax rate.
Not that great a deal to me or the gov’t