Individuals who own a business can assign themselves a salary. That salary will not be subject to a 23% tax.It is if it's a service business...
Suppose you have a service business now. You have a rate of $100.00 per hr. with an assigned salary of the $100.00 per hr. of $25.00.
Would the Fairtax be imposed on only $75.00 or would it be imposed on $100.00 "gross payment"?
Since you brought it up. After the Fairtax the $100.00 per hr rate would be taxed $23.00. So you might say well that's probably what the tax is "under the current system"...Maybe so if it was all income but it isn't. Also the $25.00 per hr salary you assigned yourself hasn't been taxed yet under the Fairtax. So your total tax liability on your $100.00 WAS $23.00 but after the Fairtax it would be 23% of the gross $100.00 ($23.00), then it would be another 23% of your assigned $25.00 ($5.75) when you spend it making the total liability not 23% but 28.75% and the more money you "assign yourself" the higher the tax rate....
Not only that, but if you don't charge the tax on the current service rate you'll either come up short on overhead and other business expenses or you'll come up short for your "assigned salary".....
Get it?
The customers of the business will pay the 23% on any services they purchase. The owner of the business will not pay 23% on the salary assigned to himself. On paper, you are an employee of the business. Employees' salaries will not be taxed.