THis is not possible if the family still gets there full $40,000 paycheck. There isn't that much saving to the employer if he is giving what was previously withheld payroll and income taxes to the employee instead of the government.
You can't have it both ways. The calculator is flawed.
You STILL don't know what you are talking about! The income tax system imposes a FAR greater load on U.S. produced goods and services than you realize and, because that is the way the politicians like it, the total amount is unquantifiable.
The FairTax calculator allows you to change it.
You can set 10%, 5% etc. Anything greater than 0% results in a beneficial effect to taxpayers.
The rest of your statement is false. The employer still receives 7.64% of the employer matched payroll tax as well as no tax on profits and a savings in compliance cost. Furthermore, the employer’s suppliers and services will experience the same savings and so will their suppliers and services. The effect accumulates significantly.
If the 7.64% payroll tax and FITW of 4% (of gross for our example) is given back to the employee in their take home, the employee takes home more than $4,500 (for our example) additional income in a year whereas the employer can reduce prices by over 14% depending on how labor intensive the business is.
And note the FairTax calculator does not assume the employee will receive any tax windfall from the employer so the pre-tax reduction of pricing can be set to the full 20% which is the average federal tax embedded into retail pricing.
But in any event, what the employee makes under the FairTax, they keep. There will be no federal taxes on pay.
You have no backup to claim there is not much saving to the employer if he gives the employee his full gross. But in many cases we can be sure that an employer is going to be competitive and will keep part of the employee’s withholding. By doing do the employee can take more home and the employer can lower prices even more.