If by that you mean that Dr.Jorgenson, or ANY economist for that matter, believes that the ONLY costs imposed by the income tax system on the U.S. economy are the taxes themselves then your duck is TOTALLY loose!
No one has made that assertion. But another good effort at changing the subject.
Dear Bigun,
Well, Dr. Jorgenson posits an approximately 20+% decline in the general price level. He is also positing a 20+% decline in gross wages, as the saved personal income, corporate income, and individual investor income taxes are passed through as savings to the consumer.
It appears that Dr. Jorgenson is saying that the price level decline will be roughly equal to the decline in gross wages.
Dr. Jorgenson does posit that the changes proposed will eventually result in additional economic growth - so, in a sense, that is a cost imposed by the current tax system.
But he is not arguing that the price decline will be paid for from "cascaded embedded taxes and tax costs" or whatever.
It's straight-up: Employees no longer pay income taxes, but they don't get those taxes back. Prices decline by the amount of those taxes. And then go back up after the application of the NSRT.
All we've done is play musical chairs with the taxes. Instead of paying them at the point of income generation, we pay them at the point of consumption. But from the change alone, folks don't gain any additional income or purchasing power. Eliminating "cascading embedded costs/taxes/delusions" isn't what gets us to a better world. At least not directly at all.
In fact, this model is much more sane than what had been proposed by many of the NSRTers here. It is clear how and why it will work.
As well, after clearing away the delusions of some, that folks would experience a net increase in purchasing power, virtually overnight, of 10%, 20%, or more, we can now debate the real merits and demerits of the system.
In terms of whether it would be better to give the taxes paid by or on behalf of workers back to the workers, or to use them to reduce the overall price levels, my own belief is that Dr. Jorgenson's path makes more sense.
I think it's problematic to achieve, but clearly the preferable method (if practically achievable).
I still don't think this is a good idea in an economy where the federal government absorbs 20% of GDP, and I'm adamantly opposed to its implementation PRIOR to the ratification of an amendment that spells out the repeal of the 16th amendment.
But Dr. Jorgenson's remarks, by vitiating the claims of some NSRTers here at FR, delivers the proposed system from the realm of lunacy to something worth debating, and perhaps trying to improve upon.
sitetest