You didn't read the book or do much research. The owner of the business DOES get to keep everything he makes.Then where do the 20% price reductions come from?
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. Then I mark the bread up 35%, which brings the retail price to $1.24 per loaf.
Now, let's look at the fair tax system. Under this system, that 23% tax paid by the employer on each unit vanishes. Now it costs me just 75 cents per loaf, not 92. So, I mark it 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. There may be a variance of a few cents,but the price will be essentially the same. Therefore, I can sell the same amount of bread each week that I was selling before.
But, now the consumer is getting a larger paycheck each week because no taxes are withheld. So,the consumer might buy an extra loaf of bread per week, because he or she has more disposable income.
All the while this is happening, the IRS ceases to exist. The cost of paperwork to help look for tax loopholes is gone. The loss of productive time spent contemplating the tax implications of every business decision is gone. Now, if any business tries to keep selling bread at $1.24 before the 23% sales tax is added, then this pushes the cost to the consumer up to $1.52. How many loaves will I sell at $1.52, when everyone else is selling it for $1.24 total cost? This is a win-win situation for the government and for Americans.