While I have not yet studied Jorgenson’s work,
Obviously
I will say the projection of 20%-30% price decreases do not sound very plausible on its face.
And Democrats say Republicans throw grandmothers in wheelchairs off cliffs to watch the splatttt.
Jorgensen is not the only source for determining a decrease in product shelf prices as a consequence of repealing business and payroll taxes.
See: Associated General Contractor's Testimony before Congress AGCA '00
I have also refered you to Mastromarko about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.
"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Supported by Mastromarco's accompanying chart of emperical study of replaced taxes on price, where the range of values from industry to industry appears to be about 12-25%.
And the report by Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of all federal taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
Refer The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1
From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.
Those tax components which will not change prices as a consequence of enactment of HR2525
============================
Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1186.5/1945) = 20.5% in consumption prices
Which compares well with the Jorgensen empirical study of 22% fall in producer prices.
The sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
I have strongly supported the rationale for consumer shelf prices to fall in response to repeal of business remitted taxes
Now I would suggest you support your expectation that consumer price cannot fall when the component costs represented by taxes compliance costs remitted by business go away.
Your "I will say" fails to meet the mark. Jorgensen, the Robbin's and other economists working with AGCA have to stand up to peer review of their publications demonstrating the results they report with their professional credentials and reputations on the line.
My own thumbnail calculations confirm the correspondence between Robbin's & Jorgensen, along with the AGCA remarks on the topic.
I would contend your unsupported statements do not stand well against either common sense or the studies of people who reputations depend on being correct in their data and methodology from which their conclusions derive.
Tell us then where do the repealed business taxes go, if not into product price reductions and product quality under the extemely competitive pricing environment of consumer goods in todays markets.
The elimination of corporate income taxes could reduce prices in the 2-3% range. Even if the highly improbable 20% or 30% reduction came to pass, that does not negate the fact that the tax burden is shifted from higher to lower income taxpayers. This effect could be partially offset by increasing both the FCA and NRST rates. That, in conjunction with a Tobin tax concept could have more appeal, assuming the NRST could be effectively enforced.
Isn't there a danger of massive tax evasion with NRST---just as there is with state and local sales taxes? Also, won't there be plenty of shenanigans perpetrated through the protection of "corporate" purchases? It seems like there would be.
I guess I'll put this aside, for now. If and when there is a real push to enact this legislation, I imagine there will be many objective studies to evaluate. Most of the currently available research appears to be biased material masquerading as serious research on both sides (e.g., LewisLynn linked to a study from a reputable source that showed the opposite of NRST contentions).