I think this description is about the income tax, but the writing in general in this article is VERY convoluted.
No it is about the combination of Federal income and payroll taxes as well as the costs associated with complying with them.
Consider, 23% taxes plus costs of compliance with those taxes, (removing the effect of taxes passed through to wages and dividends) are embedded with in the at price paid at the cash register. Remove those costs and taxes, $77 actually goes to paying for the goods(where no business income or payroll taxes are present).
I also refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.
"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.
Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1
From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.
Those tax components which will not change prices as a consequence of enactment of HR2525
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Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1186.5/1945) = 20.5% in consumption prices
Which compares well with the Jorgenson empirical study of 22% fall in producer prices.
The two sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
Remove the impact of the Income/Payroll tax system then implement a 21-23% NRST on all goods and services, the total price paid by consumers at the register remains constant or decreases in comparison with current price levels. Add into the mix, the consumer gets to actually receive full gross pay(no withholding) and compensatory monthly pre-payment of retail sales taxes on the poverty level of goods and services for all legal residents, everyone ends up in a much better economic position than the current income/payroll tax system provides.
I hope that this author gets a better editor.
Some might hope one might become a better reader, looking for the guts of an article rather than style.