The statement in #304 was:
“But those figures do not count the hidden, embedded taxes that have been embedded into the cost of everything we now buy.”
As you should be able to understand from this statement, once the embedded taxes have been paid they are embedded into the cost of a thing ... they are no longer taxes (which have, presumably, been reflected in the tax collections of the Feds as leprechaun9 said earlier) but they are now increased costs and must be paid for by someone. We are not separating personal or corporate taxes but taking them collectively as a part of the whole. They all go to increase the costs of the thing involved even though the tax portion required has presumably been paid.. Though they started life as embedded taxes, they are now plain old costs and not taxes as you keep trying to state.
These increased costs must be recaptured by buyer #1, and are largely passed forward (raising prices) to the next point in the chain where the process continues (we are ignoring the effect of the overhead of buyer #1 on these costs for this discussion). The next point in the chain (buyer #2 lets call him) sees what amounts to those increased costs received from the first point in the chain (buyer #1) and the overhead of buyer #2 burdens what were these added costs from buyer #1 increasing their cost amount at the end of buyer #2's chain - a multiplying effect on the original cascaded costs. These cascaded costs are now quite a bit greater than at the input to buyer #2 and buyer #2 will now have embedded taxes of his own, some part of which will now become embedded tax costs just as for buyer #1. (And again, that does not mean they are taxes - those have surely already been paid by buyer #2 and employees).
This cascading continues through the entire consumption chain growing as it goes with a multiplying effect for each buyer. None of these amounts (which let’s call cascaded costs) add anything productive to the thing involved unless you consider federal taxes productive. This is, in fact, the cascading mechanism that “the literature” (as you call it) refers to. The effect of the (already paid) taxes are actually multiplied and not just passed on in a linear fashion.
It is really no surprise that you don’t understand this mechanism. A lot of two-handed economists don’t either. Whether you understand it or not, it is still there, it functions regularly as things are passed along the chain from production to end consumption, and it greatly boosts the prices that the end consumer must bear at the last point in the chain.
It is, in a very real sense, a hidden tax caused by the income tax system. And, certainly, consumers never for the most part know they pay it. This will be eliminated by the FairTax and is one of the reasons that prices will decline.
To get an idea of this cascading, make up a simple spreadsheet starting with, say $1, and see the magic of cascading (whether called taxes or costs - with costs being the more accurate term for thinking about the process). This sort of cascading is what I refer to in #304 ... not the taxes themselves.
These increased costs must be recaptured by buyer #1, and are largely passed forward (raising prices) to the next point in the chain where the process continues (we are ignoring the effect of the overhead of buyer #1 on these costs for this discussion). The next point in the chain (buyer #2 lets call him) sees what amounts to those increased costs received from the first point in the chain (buyer #1) and the overhead of buyer #2 burdens what were these added costs from buyer #1 increasing their cost amount at the end of buyer #2's chain - a multiplying effect on the original cascaded costs. These cascaded costs are now quite a bit greater than at the input to buyer #2 and buyer #2 will now have embedded taxes of his own, some part of which will now become embedded tax costs just as for buyer #1. (And again, that does not mean they are taxes - those have surely already been paid by buyer #2 and employees).
This cascading continues through the entire consumption chain growing as it goes with a multiplying effect for each buyer.
OK, lets get this straight. Corporate income taxes, payroll taxes, etc. can be passed forward but they cannot cascade. A cascading tax occurs when a tax at one level of production is paid on the tax from the previous levels. Thus, the more levels of production, the greater the effective tax rate. This does not happen with corporate income taxes or payroll taxes. Payroll taxes are paid on wages, not on the payroll taxes of the previous levels. Corporate income taxes are paid on profits, not sales . Any taxes passed forward from previous production levels are deducted from sales to determine profits and the taxes due, thus no tax is paid on the income taxes from previous levels.
In this example I will assume the business can adjust their price to account for the income tax on their desired profit (even though this is not how pricing works in the real world) which would make the corporate tax incident on the consumer (not a common belief). I take the input costs (which include the tax from the previous level), include the value added and the desired net profit and add the tax in the desired profit to get the total price. This price is the input cost for the next level of production.
Corporate Income Tax
Level 1 Level 2 Level 3 Level 4 Level 5 The total effective rate is 20% (2.89/14.45), the same as the statutory rate. Because the previous taxes were removed from the amount taxed (profits) there was no cascading! There was "passing forward" of the tax, but that is completely different from cascading. You can add more levels of production to this example and the effective rate would not change.
For comparison, let's look at this example with no income tax.
No Tax
Level 1 Level 2 Level 3 Level 4 Level 5 The difference in the final price is the same as the tax passed forward above, $2.89.
Now let's look at a real cascading tax, a sales tax on all sales, not just retail sales.
Cascading Sales Tax
Level 1 Level 2 Level 3 Level 4 Level 5 The total effective rate is 675% (14.45/97.47)! If you were to add more levels to this example, the effective rate would continue to climb. This is a cascading tax.
As these examples clearly illustrate, corporate income taxes, payroll taxes, etc. do not cascade. To think that they do is silly.