[VRWC_minion]

The guy wrote one book and sold ONE book. The ultimate tax just on the book sales is a tax on millions of books, plus the tax on millions of showings at the movies. From either the selling side or the purchasing side the gov't is taxing the products of his labor millions of times.

If their were zero tax on anything, the authors income would be much higher. His income is based on a function of the total economic bottom line. He is in essense being charged the full tax on every individual sale and because there are multiple sales its taxed multiple times.

I have some questions about the paper in our book. The lumber company purchases trees and harvests them for its use to produce products and uses some of the byproduct to heat his factory. Is that taxable ? The lumber company then creates wood products which includes paper and it sells the paper to the printer. The printer uses the paper to create adverstisments to promote its own company as well as for internal office supplies and prints the books for the distributor. Is that taxable ? The printer sells the printed material to the distributor who gives complimentary copies to his best customers and friends for their personal use. Is that taxable ? The distributor sells to the book stores and the book stores sells to the customer. I assume thats taxable. Then the customer sells the book on e-bay. Is that taxable ? What if a relative of the distributor who was given a number of free copies sold books on e-bay ? Is that taxable ? The second person to buy the book, reads it and sends it to recyle plant. The recycle plant makes newspaper and sells the paper to the NYT's. When the NYT's sells the newpaper, is that taxable ?

Final question about procedure. Each step along the way, taxes might be due from folks who are not ordinarily considered retailers. Tell me again how the IRS would not be needed ?

[kevkrom]

The guy wrote one book and sold ONE book. The ultimate tax just on the book sales is a tax on millions of books, plus the tax on millions of showings at the movies. From either the selling side or the purchasing side the gov't is taxing the products of his labor millions of times. If their were zero tax on anything, the authors income would be much higher. His income is based on a function of the total economic bottom line. He is in essense being charged the full tax on every individual sale and because there are multiple sales its taxed multiple times.

The product of his labor is the income he receives from selling the rights to the book to the publisher. Which is compeltely untaxed. Period.

I have some questions about the paper in our book. The lumber company purchases trees and harvests them for its use to produce products and uses some of the byproduct to heat his factory. Is that taxable ?

No.

The lumber company then creates wood products which includes paper and it sells the paper to the printer. The printer uses the paper to create adverstisments to promote its own company as well as for internal office supplies and prints the books for the distributor. Is that taxable ?

No.

The printer sells the printed material to the distributor who gives complimentary copies to his best customers and friends for their personal use. Is that taxable ?

Yes. Tax is due on the fair-market value of the item.

The distributor sells to the book stores and the book stores sells to the customer. I assume thats taxable. Then the customer sells the book on e-bay. Is that taxable ?

The resale of the book on eBay is not taxable. If the person selling on eBay had purchased the book only to resell it, then the original bookstore purchase would not have been taxable but the eBay purchase would have been.

What if a relative of the distributor who was given a number of free copies sold books on e-bay ? Is that taxable ?

As in the case described a little ways above, tax would have been due on the fair-market value when they were converted from business inventory to personal property but not when re-sold on eBay. Again, if this was a business arrangement, then the free copies would not have been taxable, but the eBay sales would be.

The second person to buy the book, reads it and sends it to recyle plant. The recycle plant makes newspaper and sells the paper to the NYT's. When the NYT's sells the newpaper, is that taxable ?

Yes. The new product created by the NYT would be taxable. Note that the NYT would not pay tax when they bought the recycled paper.

Final question about procedure. Each step along the way, taxes might be due from folks who are not ordinarily considered retailers. Tell me again how the IRS would not be needed ?

It works the same way as any state sales tax, and would be administered locally, not in DC.