Replies

Ok I finally read what you wrote. LOL! Let me break it down for you since it’s obvious you went to a government school.. You Said: So, Dr. Jorgenson, whose report you are relying on to support your calculation of embedded taxes, is stating that in making those embedded tax calculations he was not assuming that the worker would keep his current after-tax amount Answer: Ok your key words, “he was NOT assuming that the worker would keep his current after-tax amount” That is not what the Doctor wrote, or well at least you posted. I have just copied and pasted what you said he wrote. The Dr wrote, “I am saying that the worker “WOULD” continue to receive the after-tax amount of $800.” This is even better! Thanks for posting this. Since the Doctor was assuming employees would still be taxed like they are today. It makes the Fair Tax (HR 25) incredible knowing that we would take home what we make before taxes. This would be a huge pay raise for everyone. And if the doctor did not factor this then our buying power should increase. Thanks for posting this  You said: By reducing the gross pay of the worker to the current after-tax amount, the producers would see a cost reduction that would allow them to reduce selling prices. Answer; If a company is paying an employee $30,000 a year, and the Fair Tax bill becomes law. That company would no longer have to worry about embedded taxes. So then why do you think the company would reduce the pay of the employee? How do you come up with that conclusion? LOL! Just think about it…. the company has no tax liability therefore it has more money now that it does under our current tax system. Embedded taxes are gone! How come you think the company would have less money? You wrote “. There would be no increase in take-home pay.“ Answer: Nothing could be further from the truth. Please read HR 25, or the Fair Tax Book. The Fair Tax eliminates ALL taxes and replaces it with a consumption tax only. You also wrote earlier in the same post : “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… would fall by an average of twenty percent” In this statement, Jorgenson seems to say that one of the reasons for the price drop at the producer level was the elimination of the tax on wages paid to workers. So, naturally if the business is going to realize this benefit it must reduce the workers gross pay be the amount that is currently being paid in the form of income and payroll taxes. This only makes sense because how can the business reduce costs if it gives the worker tax savings to the worker?” Answer: You came up with the wrong conclusion. If a business no longer has any tax liability, then why would they reduce an employees pay? The company just gained a lot of money since the embedded taxes have been eliminated? You also wrote, “Dr. Jorgenson’s report clearly showed that under his study the worker would not get their complete paycheck, because if he/she did, there would be no cost savings to the business and therefore no price drop associated with worker taxes. “ Answer: How in the heck do you come up with there would no cost savings? LOL! Now I see why you have all your numbers screwed up. You act as if the taxes that employee’s see they paid in their check is really being paid by the company and not the employee. LOL! No wonder why you are so confused! Now I understand Employers pay ½ of your Social Security, but companies are not paying your federal and state taxes. That is being paid by the employee. This is why we do our taxes each year. If the companies were paying our Federal and State taxes, then we would not have to fill out a 1040 every year. LOL!

Dear Sprite518,

You appear to be misreading the conversation between RobFromGa and Dr. Jorgenson. Here's the critical exchange:

RobFromGa asks:

"Excuse me for my lack of understanding of your answer, when you say 'workers would keep that after-tax pay' are you saying that if they are making $1000 a week now, and paying $200 payroll+income taxes now, that under the FairTax you were assuming that workers would get paid $800 and keep all of that? Or are you saying that you meant they would make $1000 under the FairTax?"

Dr. Jorgenson replies:

"I am saying that the worker would continue to receive the after-tax amount of $800."

Dr. Jorgenson is assuming that the gross pay of $1,000, pre-tax in the current system, will be reduced to a gross pay of $800 under the NSRT, but without any payroll or income taxes, the new gross pay will be equal to the old (AND new) net pay of $800.

The $200 of gross pay that the worker lost under the old system is still lost to him, but is used by the business, under Dr. Jorgenson's model, to reduce general price levels.

No free lunch.

sitetest

A readability re-post of Sprite518 at #156:

To: RobFromGa

Ok I finally read what you wrote. LOL! Let me break it down for you since it’s obvious you went to a government school..

You Said: So, Dr. Jorgenson, whose report you are relying on to support your calculation of embedded taxes, is stating that in making those embedded tax calculations he was not assuming that the worker would keep his current after-tax amount

Answer: Ok your key words, “he was NOT assuming that the worker would keep his current after-tax amount” That is not what the Doctor wrote, or well at least you posted. I have just copied and pasted what you said he wrote.

The Dr wrote, “I am saying that the worker “WOULD” continue to receive the after-tax amount of $800.” This is even better! Thanks for posting this. Since the Doctor was assuming employees would still be taxed like they are today. It makes the Fair Tax (HR 25) incredible knowing that we would take home what we make before taxes. This would be a huge pay raise for everyone. And if the doctor did not factor this then our buying power should increase. Thanks for posting this :-)

You said: By reducing the gross pay of the worker to the current after-tax amount, the producers would see a cost reduction that would allow them to reduce selling prices.

Answer; If a company is paying an employee $30,000 a year, and the Fair Tax bill becomes law. That company would no longer have to worry about embedded taxes. So then why do you think the company would reduce the pay of the employee? How do you come up with that conclusion? LOL! Just think about it…. the company has no tax liability therefore it has more money now that it does under our current tax system. Embedded taxes are gone! How come you think the company would have less money?

You wrote: “ There would be no increase in take-home pay.“

Answer: Nothing could be further from the truth. Please read HR 25, or the Fair Tax Book. The Fair Tax eliminates ALL taxes and replaces it with a consumption tax only.

You also wrote earlier in the same post: “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… would fall by an average of twenty percent” In this statement, Jorgenson seems to say that one of the reasons for the price drop at the producer level was the elimination of the tax on wages paid to workers. So, naturally if the business is going to realize this benefit it must reduce the workers gross pay be the amount that is currently being paid in the form of income and payroll taxes. This only makes sense because how can the business reduce costs if it gives the worker tax savings to the worker?”

Answer: You came up with the wrong conclusion. If a business no longer has any tax liability, then why would they reduce an employees pay? The company just gained a lot of money since the embedded taxes have been eliminated?

You also wrote, “Dr. Jorgenson’s report clearly showed that under his study the worker would not get their complete paycheck, because if he/she did, there would be no cost savings to the business and therefore no price drop associated with worker taxes. “

Answer: How in the heck do you come up with there would no cost savings? LOL! Now I see why you have all your numbers screwed up. You act as if the taxes that employee’s see they paid in their check is really being paid by the company and not the employee. LOL! No wonder why you are so confused! Now I understand Employers pay ½ of your Social Security, but companies are not paying your federal and state taxes. That is being paid by the employee. This is why we do our taxes each year. If the companies were paying our Federal and State taxes, then we would not have to fill out a 1040 every year. LOL!

156 posted on 08/25/2005 7:22:13 AM PDT by Sprite518