FairTax proponents argue that all embedded taxes are ultimately passed on to consumers by corporations, but it would seem to me that, at least based on economic theory, that they’re only passed on to the extent that the consumers are willing to tolerate the overall price of the product (supply and demand).
In other words, if the embedded taxes, plus the company’s profit margin are too much, consumers may potentially stop buying a product. To combat this, many companies end up lowering their profit margins to ensure that they’re able to sell their products.
In essence, if tax rates increase the price of a product will only increase to the extent that consumers are willing to tolerate the price? This seems to mean in theory, that not all embedded taxes are automatically passed on to the end consumer.