Since under the FairTax a taxpayer pays the tax at the time he makes a retail purchase, I'd be interested in complete detail on what you see as the "black market". Please define and quantify it and provide some links to some definitive studies that characterize it. Just claiming there is one isn't sufficient.The black economy is made up of two constituent activities: ................1.. Legal activities that are not reported to the tax authorities and the income from which goes untaxed and unreported. For instance: it is not illegal to clean someone's house, to feed people or to drive them. It is, however, illegal to hide the income generated by these activities and not to pay tax on it. In most countries of the world, this is a criminal offence, punishable by years in prison. .......2.. Illegal activities which, needless to say, are also not reported to the state (and, therefore, not taxed). ................These two types of activities together are thought to comprise between 15 percent (USA, Germany) and 60 percent (Russia) of the economic activity of a country (as measured by its GDP).
Right now, employers take out taxes before the employee gets his hands on the money. The employer will not risk losing his business for the economic benefit of one of his workers.
With a 23% Federal sales tax, each buyer will have to decide if it is better to buy goods and services "retail" or "under the table" for a 17% savings after the illegal seller gets his 5% cut for selling "under the table".
Governments have been around for something like 6,000 years - since the time of the ancient Sumerians and all governments tax in some manner since they themselves intrinsically have no money ... so what???
Exactly. And for all those years, governments have been battling black market tax evasion. Income taxes, and therefore income tax evasion, is, historically, a recent invention.
If you think that the disappearance of the Income Tax means the disappearance of the Tax Police, you will be in for quite a shock.
The Tax Police hold a news conference in Moscow. Igor Tabakov, photographer.
The items you highlight in red - and in fact most of the content of your post deal with tax evasion (in the form of unreported or underreported income) which is a different matter than black market activities which relates to the unlawful selling of things outside of the tax system.
Your post shows nothing about black market sales nor has any definitive paper ever been presented that delineates the "black market".
Your claim that taxpayers would buy things by bribing a merchant with, say, a 5% bribe holds little credence since the seller would under the law still be liable for the full 23% tax. Why should he risk his business for a measly 5% to help you (or anyone else for that matter) when the 23% is not paid for by the merchant but by the buyer - and the merchant has agreed in writing to collect the tax and is paid to do so. That would be theft of government funds.
Claiming there will be large scale black market activity is all you've done. No one has ever shown this to be a real consideration as most folks are fairly honest and, after all, their effective FairTax rate will be lower than the income tax rates they now pay. Due to that it's far more likely that any black market or any other sort of tax evasion is being done now since it is more profitable to the "doer".