Let's say bread costs me 75 cents a loaf at wholesale. I am being taxed at about 23% on my earnings, which raises my cost to 92 cents.You didn't earn 75 cents, you spent it...You don't add income tax to money you spend...
Then I mark the bread up 35%, which brings the retail price to $1.24 per loaf.If the bread cost you 75 cents and you sold it for $1.24 your earnings are $0.49 If your tax rate is 23% on $0.49, your tax is $0.11 you could reduce your gross price/wage to $1.13 or about 9%...Then you'd owe 23% of the $1.13 to the Fairtax making your net income $0.87. From that you'd have to buy more bread, pay business expenses, rent etc. If it's all profit, what happens when you spend your $0.87? You know you still have tax to pay ..Your $0.87 will only purchase 23% of that or $0.67 worth of product....
Now, let's look at the fair tax system. Under this system, that 23% tax paid by the employer on each unit vanishes.Where did it go?
Now it costs me just 75 cents per loaf, not 92.You're adding the income tax before there's any income. You don't add your income tax to the purchase price....everything you've done after that is nonsense.
So, I mark it up 35%.Mark what up 35%?
This gives me a retail price of $1.01 per loaf. Now, when you add the 23% sales tax the total cost per loaf to the consumer is $1.24-exactly the same.The Fairtax when added is 30% not 23%.
The fairtax is "23% of the gross payment"....Your entire premise is grossly flawed, void of any logic.
You are trying to quote this tax as if it were not embedded. It's embedded in the price, and will average between 22 and 24%.
Employer's are currently taxed. The average tax that ends up embedded in the price of each unit sold is approximately 23%. When employers cease to be taxed, then that embedded tax will disappear from the price of the product.