Do one with a tax cost component (Rob said 9%)No he didn't.
RobfromGa
"my statement was that if the most any input component of price was reduced was 9%..."BTW, except for in failed Fairtax logic, only a sales tax or VAT could be an input component of price.
The difference between the two is NOT 9%.Garbage in garbage out.
ANd the input component we speak of is the tax costs that will be eliminated when the income tax is eliminated. So you now agree that the income tax behaves like a vat. Finally!
I stand by the statement: Reducing price by x% in each stage of production does NOT necessarily lead to a final price reduction of the same percent.
A farmer spends $10.50 getting a bushel of corn to market. Of that 10.50, 50 cents (5%) represents taxes and tax costs that will be eliminated under the nrst (so he could sell for 10.00 if not for those tax costs.)
The market guy buys a bushel for 10.50 and has similar tax costs (5%)and sells the bushel to the wholesaler for 11.03.
The wholesaler buys for 11.03 and has similar tax costs (5%) and ends up selling to the grocer 11.58. THe grocer has similar tax costs (5%) and ends up selling to the retail customer for 12.16.
If we'd been under an nrst, pretax prices could've fallen from 12.16 to 11.00 by eliminating the 5% at each stage.
That is a 1.16 savings or 9.5% savings. That is obviously more than 5%.
This is only 4 stages of production and only a 5% savings. Rob said earlier 8 or 9% is what a business will save due to tax cost savings.