> I.e the same thing as having no inflation and a 12% tax. If we assume there is no inflation, then after one year the foo widget is still $1 [1] and you have

> I.e the same thing as having no inflation and a 12% tax. If we assume there is no inflation, then after one year the foo widget is still $1 [1] and you have 80¢ [2] – a 20% tax. [1] $1.65 - $0.65 = $1.00 [2] $1.45 - $0.65 = $0.80