The drug dealer, through his lawyer, paid over 30% in taxes today. Without the drug dealer, the lawyer would have paid nothing.
I could have just as easily said the drug dealer, through the yacht dealer, paid X percent of $500,000 in embedded taxes today. That "X percent" averages 22%. What we would collect under the Fair Tax is anybody's guess.
My point is that we're collecting tax on the drug dealer today. True, we're not collecting income tax on the drug dealer's $3.2 mil -- but we won't be collecting the Fair Tax when the drug dealer earns that $3.2 mil either.
Unless you're telling me that the drug dealer is going to add the Fair Tax to the price of his drugs, then send that money in to the federal government?
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To make the following example simpler, let's assume the embedded taxes are 23% instead of 22%. Humor me.
Existing system:
Taxes collected from the drug dealer today: $115K (embedded) through his yacht dealer.
Taxes collected from lawyer today: $30K (actually financed by the drug dealer) + $11,500 (embedded) on the BMW (actually financed by the drug dealer).
Income Tax paid by the drug dealer: $0.
Total collected from the drug dealer today: $156,500.
Fair Tax system:
Taxes collected from the drug dealer: $115K through his yacht dealer + $20.7K through his lawyer.
Taxes collected from lawyer: $11,500 on the BMW (actually paid by the drug dealer).
Fair Tax collected by the drug dealer for drugs and sent to the federal government: $0.
Total collected from the drug dealer: $147,200.
We collect less from the drug dealer under the Fair Tax than we do today. Go figure.
LOL!!