EMBEDDED TAXES EXPLAINED

Embedded taxes are business taxes that are part of the cost of doing business. Business passes these taxes along to consumers when they set the price for their products. At the federal level, theses taxes are the corporate income tax, the self-employment tax and the employer share of Social Security and Medicare payroll taxes.

Businesses at every level of the supply chain are taxed and pass the taxes along in the price of the goods or services they produce. The Europeans call this a VAT (value-added tax). We call it embedded taxes (silent taxes that aren’t talked about and most people do not even consider when making a purchase). These taxes amount to approximately 22% tacked onto the price of goods and services throughout the chain of the manufacturing and marketing process.

The FairTax repeals all of these embedded taxes that business pays and passes on to consumers in their prices (corporate income, self-employment, payroll) as well as all income and payroll taxes on individuals, plus the capital gains tax, the estate tax and the gift tax. And under the FairTax, business doesn’t pay sales taxes on their purchases.

This means there will be no more embedded taxes in the cost of goods and services sold to the consumer and prices should decrease by 22%. With our competitive free-enterprise system, it shouldn’t take too long for these prices to be backed out. When the 23% sales tax is added on, the prices of goods and services should remain about the same.

You will have 100% of your income to purchase goods and services at approximately the same amount of money as before while paying your federal income taxes. Pretty much a wash! Pretty much a no-brainer!