The single most ridiculous arguement I've read to date opposing the Fair Tax idea.
I'll make this very simple: Business already pay 100% of the wage out every payroll in the pay the employee gets and the withheld taxes to the government. PLUS they have to pay their matching FICA along with state and federal unemployement taxes so they are paying MORE than 100%. Then you add in benefit withholdings to insurance companies, financial instutions for things like 401(k), etc.
What "embedded taxes" are you talking about here? These same business are also required monthly to pay in any tax collections (sales taxes, "sin" taxes, etc) from the previous month.
What a business needs to lower the selling price is lower costs. Since this plan would eliminate corporate income taxes and the matching of FICA taxes then business will now have money they are currently paying to the government out of their profits.
You must not have read my letter, because I address the FICA matching, that is where most of the 10% cost reduction I estimated came from. And Bob's Bakery as a small business (S corp, LLC or sole proprietorship) pays zero corporate taxes. State and federal unemployment taxes are not affected by the FairTax bull, nor are benefit withholdings. So I've addressed all your points that are valid, and I've given him a generous 2% savings in compliance costs to boot.
There is no place else to remove embedded costs. The place where Jorgenson found them was the employee wage and payroll costs, but the FairTax proponents misunderstood him and now they are promising the money to the employees in the form of a windfall pay increase to every wage earner in America.