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[Final-Fan]

Entroper said:
@senseinobaka: I followed your example perfectly. However, I find it extremely difficult to believe that you can replace a 22% inclusive corporate tax with a 23% inclusive FairTax, completely eliminate the income tax and payroll taxes, and remain revenue-neutral. Please explain.

That's apparently because the 22% figure DOES include things like the income taxes and payroll taxes of the companies' employees. I had this exact same conversation with Eomund earlier in the thread.

Final-Fan said: (01/05/08, 04:32)
You said earlier, "Currently there is an embedded tax of about 22% in every thing we buy. This embedded tax is the Corporate Taxes, Payroll Taxes, etc. that the government collects from companies already. They want to make a profit so they pass the costs of the taxes and the cost of tax compliance on to the customers in the form of higher prices. This 22% is already an INCLUSIVE tax and would simply be replaced by the FairTax rate of 23% INCLUSIVE. Therefore the prices will stay about the same as they currently are."

Above (01/04/08 19:08), you say that aside from personal income taxes, estate taxes, etc., already 22 of every 100 dollars consumers spend is ultimately going towards taxes. That enables you to claim that the 23% FairTax will simply slide into place where all those bad old hidden taxes used to be, leaving sticker prices about the same (1% bigger).

Of course, this happy little scenario ignores the elephant in the room: If the FairTax is only barely larger than the embedded tax, how can its revenues be equal to those taxes AND the personal income tax?

That is the question I want you to answer, Eomund.

Eomund said: (01/05/08, 05:39)
Ok a partial answer to the 22% vs. 23%.

From the study that Jorgenson did that said the average embedded costs in prices were 22%. I just saw that the 22% was including the personal taxes of the employees as well. So the 22% includes the income taxes of the employees already.... I am still researching this however. But if this is true, and it seems to be, then the earlier statement
22% "hidden taxes" + income taxes =/= 23%
is not valid because my understanding of the 22% is not valid. That being said the remaining 1% difference would have to cover the rest of the taxes collected. This is not impossible, but again I don't have the figures in front of me to make my own judgment on this.

This still does not shake any faith I have that the FairTax is both more fair and a better system than we currently have.

If you (senseinobaka) are not using the same study (Jorgenson's) that Eomund was, then you still need to answer my question from back then.

ALSO:
On Jan. 7 / page 5, Eomund and I came to the conclusion together that either (1) wages would rise and prices would rise (if companies just kept salaries the same but the employees didn't pay taxes on it); (2) wages would stay the same and prices not rise much (if companies dropped salaries to (today's salary - today's taxes) and prices would go up only a little because of the estate tax, gift tax, etc. being factored into the FairTax); or (3) something in between (1) and (2).

So it's clearly possible that prices could go up 30% (but in that case people would also have similarly larger paychecks to compensate). In any case, it doesn't even matter to my post that you responded to; that post concerned the level of sales tax, not overall ticket price.