Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.
Boy, talk about "slight of hand!"
The savings to the company has NOTHING to do with the fact that the employees will be taking home their entire income, with the possible exception of the roughly 7.5% savings in the "employer's contribution" to FICA and medicare. That cost is a cost of employment, and the savings may or may not be passed on to the employee, it may be kept, or it might be split up between the two. The embedded taxes mentioned by Linder and Boortz are the corporate taxes and compliance costs of the businesses.
If an employee makes $100,000 a year, he will continue to make that $100,000, however the employee's take home pay will reflect the actual earnings of the employee, rather than hiding the taxes paid.
Mark
That was the man who did the study (who was paid by the fairtax organization) agreeing with that.
Those taxes that the employee will now be pocketing were the majority of the 'embedded taxes' according to the man who did the study. But of course you know more than him.
The savings to the company has NOTHING to do with the fact that the employees will be taking home their entire income, with the possible exception of the roughly 7.5% savings in the "employer's contribution" to FICA and medicare.Taxing Sales Under the FairTax: What Rate Works?The most recent study I know of by their paid economists has this snippet in their paper.
(39)
"Private consumers would receive lower (gross) wages under the FairTax because producer prices fall".....