Think about that. Think also, what that would do to GDP and our trade deficits.
The same report that indicates individuals will get what they do today as net income after income/payroll taxes would retain the the same purchasing power showing producer price falls 22% making the change in consumer price paid including the 23% NRST, the same as is paid today for given basket of goods and sevices.
There is no additional taxation, it is just collected on one point in the economy (at retail purchase) instead of from both business and individual income as it is under the current system.
The consequence is that businesses become more productive and competitive on internation trade, as well as within our own domestic economy, expanding both trade and GDP output.
| THE ECONOMIC IMPACT OF THE NATIONAL RETAIL SALES TAX ByDale W.Jorgenson May 18, 1997 Final Report to Americans For Fair Taxation INTRODUCTION AND SUMMARY The purpose of this report is to analyze the economic impact of substituting the National Retail Sales Tax (NRST)for individual and corporate income taxes,the Medicare,Social Security, and FUTA payroll taxes,and the estate and gift taxes.1 I consider a revenue neutral substitution-one that leaves the government deficit unchanged. Finally,I focus on the impact of this fundamental tax reform on economic growth over the next quarter century. I have summarized my conclusions in a series of charts: 1.The revenue neutral substitution of the NRST for existing taxes would have an immediate and powerful impact of the level of economic activity.The first chart gives a projection of GDP under current tax law. The second chart shows that GDP would increase by almost 10.5 percent in the first year.This increase would gradually decline to a little under 5.4 percent over the next twenty-five years. 2.Taxation of consumption would induce a radical shift in the composition of economic activity-away from consumption toward investment. The third chart shows that real investment would initially leap by a staggering 76.4 percent and then gradually fall to about 15 percent higher than under existing taxes. The third chart reveals that real consumption would initially decline by 9.1 percent. However,consumption would overtake the level under existing taxes within five years and grow rapidly under the NRST. 3.Holding net foreign investment constant,the fourth chart shows that exports would jump by 26.4 percent under the NRST, while imports would rise only modestly. This is the consequence of excluding exports from the tax base while including imports. The initial export boom would gradually subside, but exports would ultimately remain more than 13.3 percent above the level under the current tax system, while imports would fall a modest 0.9 percent below this level. |
The same report that indicates individuals will get what they do today as net income after income/payroll taxes would retain the the same purchasing power showing producer price falls 22% making the change in consumer price paid including the 23% NRST, the same as is paid today for given basket of goods and sevices.But you said "Sorry, doesn't fly at all"...
Why did you leave paragraph 5 of the report out of your post?
5.Since producers would no longer pay taxes on profits or other forms of capital income under the NRST and workers would no longer pay taxes on wages, prices received by producers, shown in the sixth chart,would fall by an average of twenty percent.AG:AG:
The business no longer paying tax on wages (i.e. employer excise on wages paid) does not imply lower wages anymore than an employee no longer having 7.65% FICA wages and Income tax withholding from his gross. Contracted gross wage remains constant with no withholding that is an increase in takehome pay for the worker, the business realizes the advantage of no longer paying or accounting for its 7.65% excise on wages paid that is a reduction in levy on the business.robfromga:And do you dispute that the only way the producer is going to recognize a cost savings is if he doesn't give his workers 100% of the same gross pay he is now giving?
Yes I do dispute that, as the real savings to the business arises our of reduction in overhead costs associated with repeal of the tax system with its imposed requirements on business and removal of need for business to implement evermore creative (and costly) ways of tax avoidence.robfromga:
So, this means that Jorgenson's model was based on the wage earners NOT getting their entire 100% current paycheck, but instead they would be getting 100% of a new gross paycheck, about the same as what they are now getting after payroll and income taxes.AG:
Sorry, doesn't fly at all in the face of high production growth, increasing GDP economy projected under the study.robfromga:You really should read the study in whole, rather than looking to warp statement of results to backfit into your predisposed personal opinions....HMMM!
Nothing in Jorgenson's report done for AFFT or the earlier one, to be found on the net done for others investigating the potential of the Armey Flat Tax indicates decrease in contracted wages for workers. Quite the contrary, as both reports indicate very high GDP growth and increased production which pressures wage upward, not downward.
FairTaxers are misrepresnting this study to sell their plan.AG:
Looks more to me like an income tax apologist warping the interpretation of a single conclusory statement our of a much broader study indicating conditions just the opposite of what the studies actually present.HMMM!
Were you lying then or are you lying now?