The FairTax, Join in!

[Final-Fan]

Eomund said:

Final-Fan said:
"Why is/isn't this happening now at the rate of what you expect it to be under the FairTax?"

Perhaps because the current sales tax is a mere fraction of the FairTax?

I will agree with that. I was asking the question to get this type of answer. However if prices decrease so much as that the FairTax will keep them at the current levels, people will not notice much, if any, difference in their budgets. Since this size of a sales tax has never been tried before at a national level, we do not know the effective evasion rate, whether good, bad, or indifferent. An underground economy could pop up, but I don't know how many people would want to deal with it. Perhaps everyone will, perhaps not many will, I don't know. I can find the research that American's For Fair Taxation did and come up with an answer, and I will post that too, but we simply do not know how the economy will respond. I predict it will respond favorably though.

1. See my posts above regarding the VAT in Europe. It's not nearly as big as the FairTax would be, but it's the best example I know of of large sales tax implementation.  And keep in mind that, again, VATs are to the best of my knowledge more tax-evasion-resistant than a retail sales tax.

2. I think you're thinking that people will be choosing, "hmm... do I go and buy it legally or do I go and buy the tax-evading product?" I'm sure that will happen, but there is also the issue of businesses doing it to pocket the difference and the customer never knowing anything was different (or maybe just thinking he got a really good deal).