Is your example an C corp again? The C corp I work for paid nearly $300M in US Federal Income Tax in FY 04. It would sure be nice to simply add that to the bottom line, but knowing the competitive pressures in our market, I am convinced it wouldn't be possible. If your example is a C corp and taking 50k in salary with an effective rate of 15%, he's getting about $7500 increase in take home by eliminating the income tax.
Self-Employment- discussed, 7.65% returned to wage earner, 7.65% retained as cost savings
You again ignore the 15% of 50k, or $7500 in self employment tax that the S corp owner in your example will add to his take home. It is not "retained" unless the owner chooses to leave it in the business.
Hidden or Embedded- these are a fantasy of the FairTax movement,
I suppose you are like many, usually Union Democrat types, who think you can actually "tax" a corporation.
News Flash! You can't really tax a corporation. It is impossible. You can tax the stockholders of a corporation. Or you can tax the customers of a corporation. But you can not tax a corporation because it is only a legal entity and it has absolutely no assets to tax. Every penny in so-called corporate assets in reality belong to people. Those people will in most circumstances simply pass the tax burden along to their customers in the form of higher prices. When you add margin targets to higher prices through each step in the supply chain, there is without a doubt a cascade effect. If you do not believe that to be true, you must believe that no one is actually paying corporate taxes in the first place.
Nope, I agree that corporations really don't pay any taxes. Even the C corps that pay on average 1-2% of their sales as taxes jsut pass them along to the consumer. I think that the tax regulations we have now should have the corporate taxes eliminated. That is a pittance in the grand scheme of things when looking for 23% savings.
My example is an S-Corp.
You can choose your example any way you want, I wanted to bend over backwards and give the FairTax the most amount of savings possible and let the business save the same amount on the business owner self-employment FICA as the wage earner is saving the company on his employer half. If you want to take it out, there is another $6685 you need to find, or $150,000 in additional cost savings to keep bread prices stable for the consumer.
That should make you the #1 corporate taxpayer in the country. As a nation we collect less than $200 billion in corporate taxes.