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[Final-Fan]

Eomund said:

Final-Fan said:

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).

Alright I have come across someone who has answered these questions, excellently if I may add. Here are the sources. http://www.fairtaxblog.com/20050828/evasion-potential-with-the-fairtax-vs-the-vat-tax/ and http://www.fairtaxblog.com/20050824/evasion-potential-of-the-fairtax/.

Both are articles and responses to a FairTax critic. He makes completely valid and rational arguments. He says that the VAT is not any more enforceable than the FairTax is. The FairTax requires all businesses to file sales to the "Sales Tax Authority" just as the VAT does. When conducting a Business to Business transaction, the selling business would need to have the buyer's tax exemption form on file, and if they do not have it on file, they would be required to tax them. The buyer would then claim a refund with the "STA."

Any experience with history of a NST lacks the current technology and tracking ability we currently have. Software that we have or can have is or will be extremely robust in ability to track statistics and patterns. If businesses start to claim unusual damaged or stolen goods numbers from the normal industry, we can flag them to be checked. The software could have extra routines that can be run to check for collusion between two businesses or between a business and an individual. If online poker sites can check for things like this, then why can't the "STA"?

His two articles answer a nagging question that I haven't been able to answer. Read them for yourself. The two above paragraphs are a very brief synopsys of the answer to this evasion question.

I would dispute that retail sales taxes are just as secure as VATs, but I don't need to. Let's suppose that VATs and RSTs are equally secure -- your source makes that assertion, so I presume you agree.

Now, RSTs and VATs are equally secure. As your source points out, "evasion of the VATs in Europe are also rampant." Is this not a problem? Modern technology has not managed to curb the problem across the Atlantic.

[edit: And even supposing the VAT and the RST are equally secure, there is still much, much more incentive to cheat a big tax that is collected all in one place than than to cheat a lot of little taxes up and down the supply chain.]

P.S. And as much as I don't want to get into discussing specific tax-evasion schemes, I didn't see anything in that article that could stop Kasz216's dastardly plan.