Posted on 09/17/2007 11:29:12 AM PDT by Man50D
Its done because illegal diesel is cheaper than legal diesel. Pretty simple.
The tax rate is beside the point too, since the Fair Tax would keep the overall tax rate the same or lower, only changing where and when it's collected.
Arguments that a sales tax won't create black market activity because comparative rates with the income tax are favorable are totally irrelevant. It is the opportunity to avoid that the FairTax creates through single point collection, and lack of third party reporting that is the problem.
Theoretical examples of people avoiding taxes are entirely useless in this debate. The question is whether they will be more likely to evade the Fair Tax than they would the Income Tax.
Evasion will be more likely because opportunities for evasion will be expanded. If I'm a plumber, who will know if I've collected sales tax from my customer? If I collect the tax, who will know if I've sent the tax on to the government? The customer is not required to report anything. How will government observe transactions and compel compliance?
With the exact same opportunity available, do most (or even many?) retailers evade existing sales taxes?
Evasion will be more likely because opportunities for evasion will be expanded. If I'm a plumber, who will know if I've collected sales tax from my customer? If I collect the tax, who will know if I've sent the tax on to the government? The customer is not required to report anything. How will government observe transactions and compel compliance?
Again, the opportunities for evasion are exactly the same now, but with local sales taxes instead of national. Why isn't there rampant black-market tax evasion today?
Well, yes they do. I'm surprised you missed this
According to an announcement by Manhattan district attorney Morgenthau, Kozlowski has agreed to pay $3.2 million in taxes, fines and penalties in connection with evading New York State and city sales tax on purchases of artwork totaling more than $15 million....
The Kozlowski sales tax case was part of an ongoing investigation into galleries, dealers and customers who may have avoided paying sales taxes. As a result, the New York County District Attorney's Office has recouped $37,548,000 in unpaid sales taxes and fines to New York State and City. Kozlowski is the former CEO of Tyco
http://www.northcountrygazette.org/articles/051206TycoTax.html
With an expanded black market, however, consumers will have shopping options outside established and legitimate retail business.
Again, the opportunities for evasion are exactly the same now, but with local sales taxes instead of national. Why isn't there rampant black-market tax evasion today?
No, they not exactly the same. With income tax withholding, the employer is required to report an employee's earnings to the IRS and to SS, and the employee is also required to report his earnings to the IRS. Even so, we have instances where the employer hires illegal immigrants and neither report wages.
Have you wondered why the construction industry has contracted in recent months and unemployment numbers have remained stable?
What about the black market in drugs? Do you expect drug dealers to collect the sales tax and send it along to Washington? With the FairTax, evasion is easier because it only requires the tax collector to report sales and taxes. It relies on service providers to be honest in reporting work done and prices charged.
BTW, internet sales will also be taxed, how will government do that without becoming intrusive?
AMEN!
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