[There are obvious ways around that. For example, selling "new" at a very low price, on which the tax is paid, and then selling at the real price, "used", with no tax.]
That is an example of a dodge easily countered. The total volume of business inputs that received a deferral of the FairTax can be tied to a deferral certificate#. When that business remits the FairTax for its sales, and the remittance is less than the deferred amount on its inputs, we can flag that business to be audited. Actually, the FairTax enforcement agency at the State level will have more info than that to work with. A business' FairTax remittance had better far exceed the deferred amount -- otherwise how is the business paying its employees ?
The States are earmarked to receive 1/4 of a point of the FairTax collected. That is 0.0025 * $2T = $5B available for auditing of 30 million businesses. The IRS, in contrast, is spending $12B enforcing a much more complicated Tax code on five times as many returns. As a mathematician, you should be able to appreciate the increased odds of auditing that a business would face under the FairTax.
Of course--but it can only be countered by means of new legislation. Each "dodge" will provoke new legislation. The result will be the same sort of complicated mess that we have today with income tax--and we'll still have income tax, to boot.
we can flag that business to be audited.
An audit will find nothing: the law doesn't say that a good's "new" price must be greater than its "used" price. A new law will be required to effect that.
In a 2005 test of the system by the Treasury Inspector General, 35% of answers were incorrect. The Treasury Inspector General tested the system again to measure the quality of the taxpayer assistance during the 2005 filing season.
The bad news, according to a Nov. 15 Government Accountability Office report: The accuracy rate for responding to tax law questions was basically unchanged from 2004.Since 1988, Money magazine has conducted an annual study where 50 tax professionals, including attorneys and certified public accountants, have been asked to complete a tax return for a hypothetical family.
The results have been unnerving. The professional preparers come up with different results each year -- with spreads of as much as $1,000.The bad news is that IRS advice is not binding -- whether given in person or in print. You also can't rely on IRS publications, even the famed Publication 17, Your Federal Income Tax. If there's a mistake in print -- tough! MSN Money - Can you turn to the IRS for tax help
One famous demonstration of excessive complexity comes from Money magazine’s annual test of tax experts, who are asked to compute taxes for a hypothetical family. In 1998, the 46 experts surveyed came up with 46 different answers; their calculations of taxes owed ranged from $34,240 to $68,912.IPI Publication Quick Study- IPI Policy Report - # 168
60,000+ pages of tax code is an invitation to cheat and very easy to make mistakes. Plus, the IRS uses the code and it's power to abuse taxpayers. See IRS Abuse Reports.
Any business that had an operations manual that's as convoluted as the federal tax code would never survive let alone get off the ground in the first place. Not, IBM, not Exxon/Mobile, not Wal*Mart, not General Electric, not Microsoft, not Citibank and certainly not any medium or small business.
The tax code is huge. It's an ocean of accidents waiting to happen. It's everywhere and nowhere. Understanding and accurately applying the tax code is like trying to nail Jell-O to a wall. And they call it law. It's not objective law -- it's chaos.
I'm afraid he not THAT type of mathematician. More like what Looey does.