Lets take this hypothetical (but mathematically accurate) example:
My company pays me $100. My income tax liability is 20%, Social Security withholds 7.282%, Medicare withholds 1.7%. This is an aggregate of 28.982%. This leaves me with $71 after paying the $29 in taxes.
I go shopping with the $71 and spend it all. The sales tax rate where I am located is 8.25%. This means I was able to spend $65.59, and paid $5.41 in taxes.
If the merchant's profit margin is 30%, they made $19.67. Corporate profits are generally taxed at around 40% (or more). This means that they keep $11.81 and 7.87 goes to taxes.
At this point, the government has received a grand total of $42.28 of the original $100.
Assuming that the labor costs of selling the merchandise to me are 10% of what I spent (before tax), the company spent $6.56 in labor to order, stock, sell the merchandise to me. Their employees also have to pay income tax, Social Security, Medicare, etc. That takes approximately 15% out of their pockets. This leaves the employee with $5.85 and the government with another $.98.
The employee spends his/her $5.85, paying 8.25% in sales taxes. This means they received $5.40 in merchandise and paid $.45 in taxes.
I am not even going to get into taxes paid on electricity, etc. At this point, the government has received $43.71 of that original $100. I don't see how companies stay in business.
