You're right, that's yet another good point - small business owners can pay taxes after they've been collected, rather than having to estimate and pay taxes on money that hasn't even been earned yet.I agree about the estimated taxes but if collecting more money for taxes is that easy what's stopping you from doing that now?
Actually, as I understand it, my business wouldn't have to collect the FairTax since we sell capital equipment to companies.You're right, you wouldn't have to. But since you're business savvy (I'm not being sarcastic) and knowing your take home pay would be taxes yet to be paid when you spend it, could you lower your prices (gross income) 23% as the Fairtax suggests?
The general answer is that my competitors aren't doing that. The answer more specific to my business is actually that I do try to charge what the market will bear for each sale, but since the sales are to businesses they wouldn't be subject to the FairTax anyway.
You're right, you wouldn't have to. But since you're business savvy (I'm not being sarcastic) and knowing your take home pay would be taxes yet to be paid when you spend it, could you lower your prices (gross income) 23% as the Fairtax suggests?
Again, assuming my customers were paying the FairTax, I could lower prices somewhat. Probably not 23%, because not all of my costs are wages taxable to my employees (if they were, I could feasibly cut prices 23%, with a corresponding cut in wages). But the equilibrium is some combination of decreased wages (with an increase in actual take-home pay as a result of the wages being earned tax-free) and decreased prices, the sum of which will add up to about 23%.
I see what you're saying. It's the FairTax, not the MagicTax; you don't get prices at the original pretax level and 100% of pre-FairTax wages in your paycheck. The only money that is actually added to the system is that spent on compliance costs, which is maybe 10% or 20% of the entire burden (but still nothing to sneeze at). The advantage that I see is that you have a system where each person may choose when and how much tax to pay, and doesn't have to pay taxes on money not yet earned or used.