Am I wrong? What if anything am I missing?
The problem is, if employees are pocking their full paycheck, 2/3rds of the so-called embedded taxes are still in the costs of the products. Your takehome pay will go up, but after the 30% tax is added, most prices will go up 20%, some will go up the full 30%.
Did you see the movie, "A Few Good Men" and the Marine private was on the stand being cross examined by the JAG prosecutor? He got caught in his little lie and then got confused and kept repeating the same thing trying to get out of the hole, but just kept getting deeper.
That's what your response reminds me of.
In that question, I have GRANTED you your premise and everything bad that can possibly happen and am having it all happen all at once to make the situation as bad as it can possibly be.
How much as a pay cut do I have to take to be at the point where I would actually be worse off. You are the boss. Start cutting.
Please don't repeat your projected objection. Just give me a number where a pay cut would hurt me. What number makes me NET worse off in my gross paycheck? And is it really a reason to be upset IF I still have the same NET purchasing power?