What are the other costs? I've already estimated 9% direct costs for the employer's half of SS and Medicare plus corporate income tax on the profits. Now I'll add 2% (to be generous) for compliance costs. That still leaves 12% more (or about $1.2 trillion in total) to get to the point where embedded taxes and the NRST figures match so there is no net change in prices as FairTax.org claims.
Some of it is going to be in time and effort wasted in trying to avoid or defer income taxes. Also add some foolish investments promoted by the tax code. Some Senator likes Guatemalan fruit bats, so he puts a deduction in the tax code for investing in Guatemalan fruit bat farms and a lot of money gets wasted on those bats. Go to an NRST and you get rid of those stupid investments. Do those add up to the remaining 12%? Or do you have to count the employee's SS, Medicare and income taxes like Jorgenson said but FairTax.org claims you don't (because employees take home their entire paycheck)?
I have not tried to quantify them as I doubt that they CAN be quantified, either by me or Dale Jorgenson. That is in fact one of the MAJOR problems with the communist inspired progressive income tax.
Have you ever heard anyone say something to the effect that "I'm not able to work any more overtime this week as I won't see a penny after the government get's through with it"? That IS a cost imposed by the income tax system!
The FairTax base for 2004 would have been ~$9,716 billion. Add $1,173 billion in exports to that (they claim taxes are embedded in them too) and you get $10,889 billion. This is the amount that is suppose to be reduced by ~22%. In 2004, corporate income taxes were $189.4 billion, add half of the employment and general retirement receipts ($344.6 billion) and you get a grand total of $534 billion in tax revenue from corporations. That is 4.9% of the FairTax base plus exports or 5.5% of the domestic FairTax base alone.