[RobFromGa]

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.

[Principled]

This is another stupid example where no value is added at any stage and each successive stage has only the single input and tax.

Other costs don't affect the savings %. Have you ever tried to construct a sheet?