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To: Dimples

As you apparently now agree, Dr. Jorgensen's work does not support the claims that have been made.

What I agree with is that Dr. Jorgenson's work is incomplete on the subject as regards the effect of tax related overhead cost effects on wages and prices equally.

The Dr. Jorgensons work indicates little change in purchasing power of the individual citizen once NRST is included with the price received by the producer as consumer price the customer pays.

I agree that Dr. Jorgenson held takehome pay constant with respect to the income/payroll tax baseline as a simplifying assumption for implmenting his model, thereby saying nothing about where actual pay received in the real world will goes. As has been pointed out it is unlikely that contracted wages (i.e. gross wage on pay slips) can actually change in the real world outside Jorgenson's implementation.

Bottom line, assume gross pay will become takehome in any real situation, producer prices can fall by whatever proportion the business side of income & payroll taxes make up current prices.

Additionally it should be noted that producer prices can fall or gross income can climb by what ever tax related overhead costs (not accounted for in Jorgenson's simulation) are saved in going to a retail sales tax system would effectuate a net increase in consumer purchasing power to that degree.

What cannot be said definitively, is that Jorgensons IGEM results preclude the claims of NRST supporters as regards receiveing full contracted pay, and lower producer prices. The question that remains is how much is the gain from any full accounting of tax related business costs, and that remains a question for further studies on the bottom line thier.

473 posted on 08/29/2005 4:26:49 PM PDT by ancient_geezer (Don't reform it, Replace it!!)
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To: ancient_geezer
What I agree with is that Dr. Jorgenson's work is incomplete on the subject as regards the effect of tax related overhead cost effects on wages and prices equally.

It's also incomplete on the effects hydro-dams have on salmon migrations ...

But, come on. It was never meant to model either one of those!. Let it go. You act like Dr. Jorgenson was the personal economist for the FairTax movement. He wasn't then; he isn't now. He never even attempted to model the thing you guys call the FairTax, and certainly didn't intend it to be the difinitive work on the subject.

I agree that Dr. Jorgenson held takehome pay constant ...

Actually, he didn't do that either. You're falling prey to the presumption that the model intended to hold wages at some particular level (the one you want, or the one he did) as an INPUT to the structure of the model. He didn't. His model simply takes taxes OUT of the employers line items of cost (in bulk) and re-inserts the same number (in bulk) as a direct consumer cost to model the growth impacts on the overall economy (he does this with several tax schemes one if which is a generic sales tax scheme.) The impact on wages is an incidental effect, not a cause.

Bottom line, assume...

Well, see, that's the problem ... there's too much assumin' goin' on! Assume all you want. Just don't try and make conjecture look like fact by trotting out an authoritative source unless the authoratitive source used the same assumptions.

What cannot be said definitively, is that Jorgensons IGEM results preclude the claims of NRST supporters ...

NOW were getting somewhere! Moving from "Jorgensen PROVES what we say" to "Jorgenson doesn't PRECLUDE what we say" is a MONUMENTAL move!

Thanks for your support.

474 posted on 08/29/2005 6:24:23 PM PDT by Dimples
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