The point is that there is no transaction that the sales tax can capture that the income tax doesn't. Sales taxes can't capture the underground economy any better than income taxes.
i disagree. I think the point is that under an income tax, underground income earners pay only a portion of their tax burden - the portion embedded in prices (the do NOT pay income or payroll taxes).
But under an nrst, illegal income earnes pay 100% of their tax burden.
"The point is that there is no transaction that the sales tax can capture that the income tax doesn't. Sales taxes can't capture the underground economy any better than income taxes."
That is not true with respect to illegal labor. Illegals don't pay income and payroll taxes in many cases today. However, they do buy stuff to consume. Yes, they do pay imbedded taxes now, but so do the rest of us. Under the FairTax, they would pay what we do at the register, but would not be eligible for the rebate. That means they would be moving from a tax advantaged position to a tax disadvantaged one.