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Kasz216 on 07 January 2008
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Eomund said:
Kasz216 said:

I've worked for peopel who have avoided sales tax before. It's actually quite easy from what I can tell.

This is espiecally easy if you get your products overseas as you can always just pay for a certain number of products on the record at an inflated cost and have them ship more to you. These additional items just never being recorded in the sales logs with the extra profits pocketed.

The FairTax does not tax inventory, it doesn't even tax the number of units sold. Think of it as taxing the total sales @ retail. So having a few extra untis not accounted for in your warehouse means very little. If you were to sell them on the side and not record them in any sales log, that is a definate discrepancy in profit in the bank account and would be traceable. If they went another step further and were depositing that side money into a private account, it could go undected for a while, but eventually things surface and questions will be raised.

Having one point of sales just makes it easier because they can do it on a smaller level and reap the same amount of profits if not more.

If they were to do that it is not just a FairTax issue, but a blackmart type issue and could be prosecuted as a bigger criminal act.

Other commonly done practices include marking some units as either stolen, damaged during shipping or replaced with defects. Considering the large number of products that can be destroyed in some places this can be quite effective.

This is a very valid point. One that could be managed by requiring all DOA or Shipping Damaged goods to be returned to the vendor and counted, then reported to the State for cross-referencing. As far as stolen goods go, a company that did that would face similar issues as above.

For example, some distributors mark products as damaged, that were, the cans dented, boxes slightly ripped. (this hapens A LOT) and then turn around and sell these products to the workers at the plant/store to stores for cheaper goods or just to other people they know. (Or just pocketed themselves.)

There would be a much greater reason to "accidentally" rip the packaging on these items, or even just mark them as such like above.

The way this stuff is done, a looking over of the books or a manifesto isn't going to work, and even hands on inspections are pretty impossible to nail someone on.


I will answer above. You raised very good questions. But for now we rely on honesty in business already, and what would make the FairTax any different? I understand your concerns, but these things are, for the most part, enforceable and checkable.


 You miss the point of the Above.

 Say I have Clocks I get from China, I buy 10 for 10 dollars and sell them for 30.  Instead I can buy "10" for 20, get 20.  Then I sell them each for 30, not having to pay the tax on those extra 10.  Instant profit.  You can say it's traceable, but it hasn't stopped these companies before.

As for the Damaged goods... once again... what if these are from overseas.  There would be no Sales tax on these in the first place.  These are just some of the smaller "every day" exploits that go on.  It'd be scary to see what they would be like if the sales tax was higher.  

These are black market issues but it's the kind of things that happen every day and would continue to even on a higher scale with the fair tax, the evasion rate might even end up higher then the more complicated current rate.  This stuff even happens in the "bigger" stores.  It would also likely up how much the bigger stores get taken advantge of instead of lessing it.