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I havent' followed the full thread, but the issue that I believe is at the core of this dispute is something we've covered before.....The notion that prices will fall the full nominal amount of the tax. I guess, by implication, that means that the PIT must be incident on the consumer. Is that how we got this notion that PIT is incident on the consumer?

Clearly the PIT cannot be incident on the consumer. PIT is incident on the individual, as is the employee portion of FICA/Medicare. We can argue about the employer portion. Those taxes which are incident on the individual (cannot be deflected) are not available to reduce nominal prices. But in reality, nominal wages and nominal prices are meaningless numbers. The real ball to watch is purchasing power. The that should be asked is: Will I be able to buy the same market basket of goods post FairTax? For the vast majority, the answer will be yes...and then some.

The 23% tax inclusive rate is calculated to be revenue neutral. That of necessity dictates that the size of the tax wedge, in gross total, remains constant. In laymans terms, we will be transferring no more to Uncle Sam that we currently do. The total purchasing power of individuals relative to the government will not change.

Prices will fall a little, wages will increase a little and investments will perform a bit better, meaning that at the end of the day, the average consumer should be able to buy the same market basket of goods post FairTax as they could buy pre FairTax. Those at the lower end of the earning scale will be BETTER off because of the prebate and the repeal of the regressive FICA and Medicare taxes. Those at the high end of the scale will see a decrease of their purchasing power because their municipal bond interest will be taxed for the first time. But in gross total, the purchasing power of the legal US population should not change....and that is predicated on revenue neutrality.

The assertion that prices will drop the full 23% is a short hand way of saying that purchasing power will remain constant. No one can say for certain how the price of any one good or market basket of goods will be effected. End nominal price will depend on many things: The marginal rates of the intermediate producers, the number of steps in the process, the incidence at each level and the degree of vertical integration. Now tell me, who understands that, other than an economist? It is NOT an intention to mislead....but a nod to reality. Most people do not have the base knowledge or the attention span that a full discussion of incidence would require. A discussion of prices is easily understood. The absolute truth is that total purchasing power will remain constant, and someone has to pay the tax.....and that someone will be the people spending above the poverty line. Those just above the poverty line will pay a little and those born with a silver spoon will pay a lot.

I havent' followed the full thread, but the issue that I believe is at the core of this dispute is something we've covered before.....The notion that prices will fall the full nominal amount of the tax. I guess, by implication, that means that the PIT must be incident on the consumer. Is that how we got this notion that PIT is incident on the consumer?

Yes.

Clearly the PIT cannot be incident on the consumer.

Actually, I believe it could be, but almost certainly isn't. If employees asked for higher wages due to the income tax and the employer obliged but raised prices to cover the cost, wouldn't part of the personal income tax be incident on the consumer?

The rest of your post I basically agree with. The only microeconomic effect that could change prices is the difference in compliance cost between the current system and whatever replaces it. Then you have the macroeconomic effects, which are anybody's guess.

It is NOT an intention to mislead....but a nod to reality.

What is an intention to mislead is to say consumer prices will stay the same while you get to take home your entire paycheck, which the AFT and most of their support claim all the time. The implication he is that purchasing power will increase...significantly. This just isn't possible.

The absolute truth is that total purchasing power will remain constant, ...

Yes. Which is why it is nonsense to talk about nominal wages.