The owner of the business will not pay 23% on the salary assigned to himself. On paper, you are an employee of the business. Employees' salaries will not be taxed.Not even when they spend it?
Any tax they pay when they spend money is a personal purchase that has nothing to do with the business. Under the Fair Tax, their business is not paying any taxes anyway. Neither would they pay taxes on any salary assigned to themselves as an employee of the business. They are currently paying an income tax. If they are fairly successful, you can bet it's higher than 23%. With the fair tax, they will pay their taxes in a different way. The benefit is the elimination of the IRS, and the fact that the Fair Tax doesn't punish productivity. like the current tax code does. The top 50% of income earners currently pay 96% of all federal income taxes. The Fair Tax shifts some of that burden off of the most productive people, and makes the folks who pay nothing start helping out. Even those folks will benefit, as the rebate check for basic necessities up to the poverty line will help them.