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To: Tenacious 1

I may have unintentionally confused things when I posted about two different things without distinguishing adequately between them.

Let me try to rectify that.



1) The Transitional Inventory Credit -

This is for a retailer selling goods (inventory) subject to the 23% sales tax. There is no requirement for a loss OR a profit, but merely that it be sold up until the deadline you noted and it applies to inventory on hand but not new inventory as the FairTax takes effect (since presumably income tax will have already been paid). It is important to note that this is for taxable items only and therefore does not cover business to busines sales which you use in most of your examples but only things sold at retail. I cannot tell from your description whether whatever you sell is taxable per the bill or involves selling to other businesses. If you have property already purchased and "in inventory" and you sell it to an end consumer (at retail) before the deadline, then you would indeed qualify for the 23% credit called in Section 902. This would certainly be an incentive to pass at least some part of that saving on to the retail buyer. If not, you can be sure that your competitors probably will.

The comments I made at the end of the post about retailers jumping the gun in lowering prices related only to this credit, nothing more. This is a totally separate issue from the comments relating to embedded taxes and I should not have mixed them.


2)Embedded taxes -

It seems to me if I read your examples right that this is what most of your examples deal with and certainly you are correct that time-wise this is quite different that the TIC above (which is an immediate credit). The embedded taxes are now in the system and it will take some amount of time for them to work through the system and see lowering of prices as the embedded taxes are squeezed out.

As that sort of price decrease occurs, then the different businesses in the chain supplying businesses such as yours will be able to lower their prices as THEIR suppliers will be able to do also. Obviously you would not need to estimate future costs and price accordingly - at least to any great degree - but you may be able to get notification of upcoming price drops from your supplier and plan accordingly. You'd have to keep aware of what you competitors might be doing along those lines but still that is not something that will happen on day 1 as with the TIC. Certainly there is a lead time involved and you at the end of the chain would normally not be the first to start dropping prices.

It will happen, though, and fairly rapidly so you'd be wise to have it in the back of your mind and be on the lookout for it.


I hope that helps clarify a bit of the confusion I may have caused. What sort of customers do you sell to? Are the businesses? Individuals? Both?


34 posted on 09/22/2005 5:33:43 PM PDT by pigdog
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To: pigdog

bump^ thanks for the ping


35 posted on 09/22/2005 6:01:41 PM PDT by FBD (make April 15th just another day! www.fairtax.org)
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To: pigdog

"What sort of customers do you sell to? Are the businesses? Individuals? Both?"

I am a project manager (Engineering background) in the commercial construction Industry. Right now I am managing a large part of a pharmacuetical research building ($200Million) for a well known company. We get price increase notices all the time as the market demand for raw materials grows over seas. It is pretty tough to stay just barely in the green. Too much in the green and competition gets the work. Too cheap and competition gets the work because we go out of business.


37 posted on 09/22/2005 6:52:18 PM PDT by Tenacious 1 (Dems: "It can't be done" Reps. "Move, we'll find a way or make a way. It has to be done!")
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