Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: justshutupandtakeit
I don't know but doubt that it is higher than 15%.
For 2004 the FairTax base plus exports (I'm limiting it to that so that there is no squawking from the FairTaxers) was $11,582 billion. That is the total "price" of goods claimed to dropping after the FairTax is passed. The corporate income tax collected in 2004 was $190 billion, or 1.64% of "prices." The employer share of payroll taxes was $383 billion, or 3.31% of "prices." That's a total of 4.95%. Even if all of these taxes were incident on consumers (and virtually every economist believes they are not) that is no where near a 20-35% price drop.

Even if you add a ridiculous $200 billion in compliance costs it still less than 7% of prices. It's $1.9 trillion away from enough costs to achieve a 23% price drop! The numbers don't add up.

The only way pre-tax prices can drop significantly with the FairTax is if nominal wages are reduced!
182 posted on 03/08/2005 2:01:59 PM PST by Your Nightmare
[ Post Reply | Private Reply | To 181 | View Replies ]


To: Your Nightmare

The argument takes those numbers (or their equivalent) then cycles them through the economic chain thereby increasing the impact which is a valid procedure since each step along the chain must pay them.

I agree the numbers do not add up but neither does the economic theorizing which uses them. Such as the idea that income taxes are included in the cost of production.

And you are entirely correct that workers will have to take nominal pay cut for the plan to work. The chances of THAT happening is between zero and none.

The whole thing requires far more faith than I have and I suspect I am not alone in that.


185 posted on 03/08/2005 2:16:48 PM PST by justshutupandtakeit (Public Enemy #1, the RATmedia.)
[ Post Reply | Private Reply | To 182 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson