Heck, even the absentee owner can choose to keep the PIT portion of his profits ... that's his income. Isn't he entitled to maximize his purchasing power? If he gives it back as price reduction, his purchasing power declines substantially!
The problem with your thinking is that for the FairTax to work as advertised, EVERYONE has to agree with you AND all situations have to be alike. EVERYONE has to subscribe to your code of fairness and ALL situations demand uniform behavior. EVERYONE has to forgo their profit motive so they can be "fair" and ALL situations have to maintain a constant "percent of disposable income" outcome.
That just won't happen.
It is not contrived. If a business owner has not investigated what it would cost to hire an employee rather than himself, then he is a poor businessman. The key to expansion, and therefor higher income, is to leverage the work of others, not do everything yourself.
[Heck, even the absentee owner can choose to keep the PIT portion of his profits ... that's his income. Isn't he entitled to maximize his purchasing power? If he gives it back as price reduction, his purchasing power declines substantially!]
Certainly, if he can maintain his competitive position and keep all his old PIT, then he is welcome to it. The free market will dictate otherwise, however.