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Consumers pay business taxes. For a business, taxes are a cost of doing business. They are factored into the selling price. A business that makes an after tax annual profit of 5% made 7% profit before taxes. Where did the company get the 2% profit to pay its tax bill? The buyer. When it's a grocery store the tax comes from the consumer. When it's the baker the baker's 2% tax comes from the grocery store. Thus, the grocery store not only collects 2% from the consumer for it's corporate tax, it also collects the 2% tax the baker charged the grocery store. So the consumer is paying the grocery store's tax and paying the baker's tax.

It's called embedded tax. It is embedded throughout the chain of manufacturing and production. In the case of a loaf of bread the taxes are included by and passed up from the seed producer, to the wheat farmer, to flour mill, to the baker, to the wholesaler, to the grocery store, and paid by the consumer at the cash register. Each stage in the chain of production includes it's own tax in its selling price. The consumer is paying a tax on a tax on a tax etc., for as many stages there are in the production chain.

On a basket of goods, 22% of the price is embedded tax.

Embedded taxes increase consumer prices by 22%.

Solution: FairTax