[Your Nightmare]

The majority of the "embedded taxes" you claim are in prices are also "embedded" in wages.

How can the majority be in both?

Oy! Because the taxes in wages can also be in prices. That's the point, to get the embedded taxes out of prices you would also have to get them out of wages, ie. reduce wages.

And again, my statement did not say the majority was in both. I said "The majority of the 'embedded taxes' you claim are in prices are also 'embedded' in wages." That is not saying that the majority of taxes are in both prices and wages. It is saying the majority of the "embedded taxes" in prices are also in wages. I could explain it further if you still don't understand.

[Principled]

Please give us the definition of the terms "real" and "nominal" you use in this post before we go further.

You must have missed this one to you.

[Conservative Goddess]

"Oy! Because the taxes in wages can also be in prices. That's the point, to get the embedded taxes out of prices you would also have to get them out of wages, ie. reduce wages."

That is an absolutely incorrect statement. The total entity level tax burden is allocated to investors in the form of reduced return on investment, to employees in the form of REDUCED wages and benefits, and to consumers in the form of higher prices.

The ultimate incidence of entity level taxation is allocated by market forces, but in the process is neither expanded or reduced in GROSS TOTAL. They're like a water balloon with a fixed volume...you can change the shape of the balloon, but the total volume is constant. By definition, taxes which are incident on the employees are not part of the cost of a good. Likewise taxes which are incident on investors are not part of the cost of the good. Taxes which are a part of the good and not incident on the employee or the investor.

Taxes that are incident on the employee are a REDUCTION in wages. Removing that embedded cost will INCREASE wages....not reduce them. Removing the embedded tax cost from goods will REDUCE their price. Removing the embedded tax which is manifest as a reduced return on investment will INCREASE return on capital.

There will be no reduction in nominal wages as a result of removing the embedded tax cost. On the contrary, nominal wages may increase.