[chimera]

Yes, I understand it is not completely underground. I was just wondering how much more economic activity would be driven underground if the sales tax were to balloon to the point of funding things that are not paid by income taxes from the middle class. People will usually do things in their own economic interest first, and then worry about funding “other” things. The settlers of Plimouth Colony learned that lesson a long time ago, and moved away from communal funding to more individual incentives.

[DH]

“I was just wondering how much more economic activity would be driven underground if the sales tax were to balloon to the point of funding things that are not paid by income taxes from the middle class.”

The beauty of a consumption tax is that the tax rate applies to everyone...and everyone knows what that tax rate is. Believe me, it makes no difference whether you are low income, middle income or wealthy, everyone pays the same rate.

Having said that, everyone knows what the rate is and if it rises to a rate that is out of control, “heads will roll” in government as the people throw them out of office and the rate will reduce to a justifiable level once again.