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Monday, August 08, 2005 

Fair Tax Question... what about building costs?

While proponents of the Fair Tax plan have said that costs will remain close to the same since the “imbedded” taxes will be removed from the cost of production, what about the costs of buying supplies for production.

This seems like a circular argument, but at some-point, someone is paying more for supplies, for production. If I am buying the wood to build a house, I have to pay the new and improved sales tax on the wood. Now shouldn’t the wood cost more because the saws and chemicals used to make the finished lumber cost more? And shouldn’t the saws used to cut the wood down cost more to make since raw ore and machining equipment will now also have a 23% sales tax on them?

My question is where exactly is the embedded taxes that are going to be removed, at the beginning of the production chain (think food chain), that will keep all the costs down until we get to final consumer (end game)?

If I dont get an answer from anyone here, I will be forced to actually research this on my own. I dont want things to come to that point. Comments welcome and encouraged.