This has nothing to do with only paying employees their NET wages! An employee will now be able to take home his gross wages (from a federal withholding perspective) AND prices will still be able to be lowered because of the removal of all these embedded costs. The company can do one of three things with the savings (or a combination): increase dividends, increase wages and benefits, or lower costs. The actual choice he/she makes depends on where the pressure falls in his region and industry.
One of the great benefits of this proposal, is the economic growth that will accompany the change. According to studies by the International Trade Commission in 1998 and Princeton Economics in 1996, we will attract the manufacturing base back to America, and wages will rise. According to Dale Jorgenson, former Chair of the Harvard Economics Department, prices will drop between 15 and 25% before the sales tax is added...so after the tax, prices will actually remain at about the same level.
If is really disingenuous to suggest that employees grossing $45,000 today will suddenly find themselves grossing only $30,000! NO economist has ever suggested that result. They will not take a pay cut. On top of that, you mentioned the tax- exclusive rate at 35% when in your original article, you say it is 30%. The rate is quoted on a tax inclusive basis to compare it with the current income tax. If we quote the combination of federal payroll tax and a 27% federal income tax on a tax- inclusive basis it is 43.3%. On a tax-exclusive basis it becomes 76.36%! Even the 15% income tax rate when combined with the employer and employees share of payroll taxes, on a tax-exclusive basis looks ugly at 43.47%. But regardless how we look at these numbers, here is the main point. A fottball field is the same size whether measured in yards or inches, the number is just different. It is the same with the cost of government. If it takes 30% of what we spend to run Government, and we spend more than we our net income in this country, what is the real tax we are currently paying.?
One point I often hear made is that people won't like paying the tax. That is actually one of the best features. To suggest otherwise is to say the best way to run government is to hide its cost from the people. Whether you are for bigger or smaller government, I'm sure you are for honest visible government?!
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