Is Fair Tax 23% or 30% of the product cost?

As I understand it, a $1.00 item marked for sale at a price of $1.00, will cost you $1.30.
Now the .30 cents is to be forwarded to Washington.

If one divides .30 tax by $1.00 dollar cost one gets 30% tax on the sale!

However, if one divides the .30 cent tax by $1.30, the customers cost, one gets 23% as a number!

Now, what am I buying: a dollar item for $1.30, or am I also buying some tax?

I suspect that the fair tax people will say, "but yeah, the price would be more than $1.00, as marked, if you want to figure that way!"

If you agree with that last statement, I guess figures don't lie, but liars do figure!

Don't we have a 7% sales tax now?
I pay $1.07 for an item marked a dollar.
The sales tax is advertised as 7%, I think!

Folks, it is a "mark-up" of 30%, but it ia 23% of the total of the product cost plus the sales tax!

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Submitted by Nitpickers on Sun, 09/21/2008 - 7:01am.

It comes about when people are talking about the difference in "mark-up," and "Gross Margin."

If I sell something at 35% mark-up, it sells for $1.00 X 35% plus the dollar, or $1.35.

However if I want to make 35% "Gross Margin" on the sale, I can't use that 35% number!

Gross margin is calculated subtracting the merchants cost (what he paid for it) of an item from the price rung up on the cash register (forget sales tax), and then dividing that result by the final sales price.
So, if an article cost the merchant $1.00 and he sells it for $1.35 (plus tax), he has a 35% mark-up on the dollar cost (his), but made only 26% Gross Margin."
$.35 divided by $1.35 = 26%

Fair Rax people use the "Gross Margin" Method to get a smaller number!

Now, if you don't understand any of this, don't try. Just say no to a stupid "fair tax" benefit for people making a ton of money, to which I have no objection, as long as they pay most of the taxes!

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