"Businessess pay no taxes under the Fairtax. That is his main source of savings that he would be able to pass on to his customers."
For many businesses it is not just the income taxes that they pay but the cost of keeping records for the IRS, tax accountants, tax lawyers, and all the other overhead that is eating them up. As a part time electrical contractor my wife did the book keeping but her time is worth something. Tax accountant: $5375.13 + IRS: $3291.04 + bookkeeper + FICA was all money out of my profit that I would not pay under the FairTax. However, the money I would save by not paying my portion of the FICA would not go to my customers but to my employees. Then again, I would no longer be paying self employment taxes and that is another savings could be passed on to the customers.
I totally agree. That's why I said "main" source of savings. There are so many other sources of savings, beyond not paying income tax, as you have so clearly illustrated. I try to keep my reasoning simple for people who don't own a business or don't understand the burden of the current tax code.
I also like that you think the employer portion of FICA is simply something that you would pay the employee if you could. Most people don't get that employers consider wages as only part of the "cost" of employing someone.