[Your Nightmare]

If the equation did not allow for increases or decreases in wages, you'd complain about the formula. As is, you assert that the formula permitting the wage to change must mean that wages fall.

Talk about misleading.

In the Jorgenson/Wilcoxen model, the price of labor goes down as the marginal tax rate on labor income goes down. So eliminating the income tax (reducing the marginal tax rate on labor income to zero) in favor of a NRST causes the price of labor to go down in the model.

[ancient_geezer]

In the Jorgenson/Wilcoxen model, the price of labor goes down as the marginal tax rate on labor income goes down.

Clue, the price of labor includes employer side payroll taxesl. Yes price of labor goes down because employer taxes on wage and tax related costs go down, the contracted employee wage however is only a fraction of the price of labor.

The contracted wage of the employee does not go down, under conditions of the repeal of business income and payroll taxes and reduction of tax related overhead costs.

The contracted wage of the employee does not go down, with an expanding economy and expanding industial sector production.

The contracted wage of the employee does not go down, in Jorgenson's results.