I have the feeling what the good doctor was trying (very poorly) to say is that after taking home the gross pay as opposed to net, and then deducting the sales tax, the average worker/consumer would still have the same "disposable" income.
Dear Ditto,
"I have the feeling what the good doctor was trying (very poorly) to say is that after taking home the gross pay as opposed to net, and then deducting the sales tax, the average worker/consumer would still have the same 'disposable' income."
Well, actually, I had a few minutes last night, and I spent them reading a little from one of Dr. Jorgenson's books about taxation. From what I understood, one purpose of the NSRT is to make gross wages = net wages. Right now, gross wages (your nominal salary plus the costs of your benefits and the employer's side of payroll taxes) are significantly higher than your net wages ("take-home" pay).
Dr. Jorgenson is saying, you will continue to get the same net pay that you've been receiving under the old system. But now, that will also be your gross pay. Thus, your gross pay will be reduced to match your net pay, you won't pay any income taxes, and the employer can lower the cost of products and services offered by the saved tax amount.
"Disposable income" is a trickier term. I believe it properly refers to the amount of your income you have after you pay all your necessities. Your mortgage doesn't come out of your disposable income. Going to the movies does.
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