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.
Never have a 5 year old in your lap when FReeping!
This is another stupid example where no value is added at any stage and each successive stage has only the single input and tax.
There would not be a tax component of 5% on the second and later stages under your example because there is nothing being done that is taxable, these fictitous businesses are simply purchasing an item for a price, and reselling them at no profit, with no other costs, no employees, no buildings, no other costs.