The basic premise of the VAT is that at each stage of sale that a sales tax is paid. That means that if the lumber company sells a load of wood to the furniture manufacturer that they pay the tax there. Then the furniture manufacturer sells furniture to a furniture store, and that is taxed there. Then the furniture store sells to the customer who pays a tax at the register.
As it stands, the fair tax wants the only “sales tax” to be to the final consumer. I’m saying that exemptions already exist for sales taxes, and that those exemptions will either continue or will eventually reappear under the fair tax. I am not entirely opposed to them. For example, I believe that a church is constitutionally untaxable. However, I can argue that their purchase as an end customer had nothing to do with the purchase that the furniture manufacturer made from the lumber company. So, they are not really being taxed when they purchase an item that has costs embedded from previous stages bringing that item to market. The only taxation on them would be the tax at the point of sale when they purchase. That tax, they could constitutionally protest.
A VAT would also ensure that those who tried purchasing and selling under the table would have at least some taxes embedded in the prices of what they purchase.
I know what a VAT is, and I don’t like it, primarily for its huge administrative overhead cost, which you so neatly pointed out. Each level of taxation imposes an administrative burden to the company that the FairTax simply does not.
You must realize that ALL taxes are paid by the final consumer. If you deny that fact, then we cannot have this discussion.
The FairTax is no more prone to “cheating” than the VAT. In both cases, it requires at least a two-party conspiracy, and there is a paperwork trail that the law can follow.
Please drop the idea of a VAT and throw your support behind the FairTax.