[DH]

Your neighbor who does not report his income still pays the consumption tax when he buys toilet paper, fuel and any other thing that is purchased from a commercial enterprise.

That’s why the consumption tax is better for the simple reason that there is no way to avoid paying the tax. The more you make...the more you spend....and you pay the tax.

[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.