How do you not understand that corporations will pay 23% on everything they buy and then pass that on to the consumer/customer?
One of the claims of fair taxers is that their are embedded taxes in all goods. How would that disappear when a company has to pay 23% on (take a large printer, for instance) ink, paper, rags, chemicals, uniforms, electricity, etc? Everything they buy will taxed at 23% and they simple pass that on to the customer. Wouldn't the cost of producing something immediately go up 23%?
How is that any different than what is going on now?
Sales tax now is NOT charged on items intended for resale.
SEC. 102. INTERMEDIATE AND EXPORT SALES.
`(a) In General- For purposes of this subtitle—
`(1) BUSINESS AND EXPORT PURPOSES- No tax shall be imposed under section 101 on any taxable property or service purchased for—
`(A) a business purpose in a trade or business, or
`(B) export from the United States for use or consumption outside the United States, if, the purchaser provided the seller with a registration certificate, and the seller was a wholesale seller.
`(2) INVESTMENT PURPOSE- No tax shall be imposed under section 101 on any taxable property or service purchased for an investment purpose and held exclusively for an investment purpose.
`(3) STATE GOVERNMENT FUNCTIONS- No tax shall be imposed under section 101 on State government functions that do not constitute the final consumption of property or services.
`(b) Business Purposes- For purposes of this section, the term `purchased for a business purpose in a trade or business’ means purchased by a person engaged in a trade or business and used in that trade or business—
`(1) for resale,
`(2) to produce, provide, render, or sell taxable property or services, or
`(3) in furtherance of other bona fide business purposes.
`(c) Investment Purposes- For purposes of this section, the term `purchased for an investment purpose’ means property purchased exclusively for purposes of appreciation or the production of income but not entailing more than minor personal efforts.