Rob,
Lets take another look at your bakery.
Level 1 is the farmer who grows the grain
Level 2 is the mill
Level 3 is the warehouse
Level 4 is the shipping company
Level 5 is the baker who sell to a retail customer
Another example.
Level 1 is the steel mill
Level 2 is the steel warehouse
Level 3 is the manufacturer
Level 4 is the manufacturer's rep
Level 5 is the production plant
Level 6 is the assembly plant
Level 7 is the retail sale of product
If you don't see how the tax that is imposed on level 1 is compounded each time the next level adds their profit margin, then I don't know how to help you.
Does the manufacturer's rep back calculate how much tax was paid by the manufacturer before calculating his selling price? No, he just adds 10-30% profit on top of the cost to him by the manufacture, and I guarantee that the manufacture passes along the taxes that he paid.
If the taxes aren't removed at each level, as the FairTax Plan is described by Boortz/Linder, they continue to be in the prices at each level and there is no savings to be gained. The only way to stop it is to take the taxes out of the cost by reducing the worker gross pay.
I would be perfectly happy for you to stop trying to "help me". I understand how pricing works.
The SQL squad as typified by Robby, s-test, and Nightie actually CANNOT admit that there is any such thing as embedded taxes in prices (or that it amounts to more than a "hill of beans" in their latest attempts). It destroys their arguments.
Instead they call any such illustrations "malarkey", "idiocy", etc. and try to marginalize the effect by claiming using various questionable means that any such figure is trivial in amount - when it clearly is not.
Glad to see you grasp the mechanism.