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It just seems to me that most companies would just pocket the payroll tax, or use that money to offset the loss of profit due to lowering prices. Again, the company isn't obligated to return the cash to the workers.
I don't work for Microsoft, but by reading the papers I found out about their cash surplus and what they were planning on doing with it. Why weren't workers there arguing for higher pay? Relying upon workers to force the hand of a business is rarely effective. Most people don't currently understand that businesses have to pay approx. double of their pay in various payroll taxes, why would they understand not having to pay it? At best, I could see it forstalling some layoffs, but I think even that is doubtful.
Again, a consumption tax might work in a true free market system, but that isn't what we have. Honestly I don't know of anyplace with a free market system. One of the most important things necessary for a free market economy to work efficiently and hold up to many theories is perfect information for all participants. And that is one thing almost always lacking, which gives those with more information (and usually higher income/money) more power in dealing with those without all the information.
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