Of course, but the tax effect is what is being debated here.
As a result you have a tiering effect of all costs and if these costs include tax, then the burden related to tax can accumulate and exponentially grow throughout the supply chain.
That's where I'm losing you. The tax effect doesn't appear to be very accumulative nor does it appear much larger than somewhere between my example of 10% or OHelix's example of 17%. And of course these aren't even real world examples. My original point was that I have come to believe that you can't have a large drop in prices with the NRST without a drop in wages. Some drop, yes but I don't think it is reasonable to use the drop as any sort of offset of the over-the-couter outlay on goods and services with the NRST.
"Of course, but the tax effect is what is being debated here."
Regardless of the name of the cost, the effect is the same. If a cost element is removed, the cost will decrease.
"That's where I'm losing you. The tax effect doesn't appear to be very accumulative nor does it appear much larger than somewhere between my example of 10% or OHelix's example of 17%."
I don't think anyone has the complete data, but intuitively, if the corporate income tax rate is 10% and you have 30 tiers in a supply chain, logic can prevail that it doesn't take very long to get to a significant cost that gets passed to each customer and ultimately falls to the retail consumer.
I have to go for now, but I will try to follow up with actual numbers and formulas for you at another time.
"My original point was that I have come to believe that you can't have a large drop in prices with the NRST without a drop in wages"
Sure you can.
LEVEL 1
Price 115
Cost 100
Pre-tax Profit 17 14.8%
Tax (30%) 5.1
After Tax Profit 11.9 10.35%
Tax (Cum) 5.1 4.43%
LEVEL 2
Price 135.5
Cost 115
Pre-tax Profit 20.5 15.1%
Tax (30%) 6.15
After Tax Profit 14.35 10.59%
Tax (Cum) 11.25 8.30%
LEVEL 3
Price 159.5
Cost 135.5
Pre-tax Profit 24 15.0%
Tax (30%) 7.2
After Tax Profit 16.8 10.53%
Tax (Cum) 18.45 11.57%
That is 11 1/2% based on corporate income taxes alone going only 3 levels deep in the supply chain. Many manufactured products go much deeper than 3 levels. This does not even count compliance costs, which under the current system are staggering, nor the employers portion of payroll taxes.
Sorry I couldn't get the columns to line up.