An item that costs $100 under the FairTax, i.e., after the embedded taxes and compliance costs are removed, would have $23 in tax added to the price of the item at the point of sale, making the final cost after the FairTax is added $123, not $130.You may want to figure out the difference between inclusive and exclusive sales tax rates before you go on. You've been duped by FairTax.org and it's supporters. (Don't worry, you're not the first... or the last.) The tax would be $30. The 23% comes from the fact that $30 is 23% of $130.
From the FairTax.org FAQ:
I know the FairTax rate is 23 percent when compared to current income and Social Security rate quotes. What is the rate of the sales tax at the retail counter?
30 percent. This issue is often confusing, so we explain more here.
When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” For every $100 earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.
We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.
Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax." This is a 30-percent sales tax. Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.
Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.
Spend that same $100 under a sales tax, you pay that same tax of $30, and the rate is quoted as 30 percent.
Perhaps the biggest difference between the two is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.
I have been duped by no one. I'm an engineer. Math is my thing and I have a thorough understanding of not only my engineering diciplines and math, but also the concept of inclusive and exclusive taxes. I find it utterly amazing how many people do not understand simple percentages. FWIW, I founded and oversaw the day to day operations of 3 successful engineering companies that employed dozens of people before I sold those interests and retired at 38. I am fully aware, IOW, have first hand knowledge, of the corporate taxes and compliance costs of the current tax system. I am also acutely aware of the nightmare that our current system is to business owners and employees alike.
The explanation that you posted is exactly as I described it, although it is poorly worded. I went into a little more depth with my explanation to make it easier to understand for those who are mathematically challenged. Clearly, you are the one that does not understand the math behind the FairTax or the concept of embedded taxes and compliance costs as they are reflected in the cost of an item, and how those taxes and compliance costs would be removed under the FairTax, and therefore are, as I said previously, are comparing apples to oranges. Simply put, an item that costs $100 now under the current system would not cost $100 under the FairTax once the embedded taxes and compliance costs are removed. It would cost about $77 before taxes.
Under the FairTax the cost of goods will go down due to the removal of hidden taxes and the compliance costs embedded to deal with those hidden taxes. Market forces will insure that this happens. That is a fact that you and the other opponents to the FairTax are overlooking, probably intentionally, but it could be just ignorance. The 23% figure is the amount that the economists who have studied this concept believe is the amount currently added or "embedded" in the cost of the goods we purchase at the retail level. If you look into this figure you will find that the way these economists arrived at this number is very well documented. I suggest that you pick up a copy of the Boortz/Linder book and actually read it.
Another thing that opponents of the FairTax do not wish to recognize is the FairTax is applied to what you spend, rather than what you earn. This, in and of itself, should make even the most mathematically challenged want to support the FairTax. But, I guess the indoctrination by our gubmint skools is a little more thorough than I originally thought.
What I will say in regard to the adaptation of the FairTax and my support of it is this; I will support the FairTax if and only if it is passed without any changes by Congress, and if and only if the 16th Amendment is repealed and if and only if a Constitutional Amendment is passed that eliminates any chance that any form of taxation removed by the FairTax would ever be reinstated unless a super majority in Congress and Presidential approval is achieved.