On the high end, it would be rife, too.
Say you're buying a new set of tires - $250. If you evade the tax on this single transaction, you save $75. The reward of evasion is very great compared to the chance you'd get caught in this single act.
This type of evasion requires the collusion of two parties, not just a single cheater.
Evasion will exist in any system. Reasons for evasion include marginal rates, perceived fairness, ease of understanding, and likelihood of being caught, among others.
The marginal rate seems high, but is less than we're paying now by a good margin. We pay about 25% in tax on every single retail purchase right now (although many folks don't know this) plus we pay income and payroll taxes. Also, folks will have their whole paycheck with no federal deductions to spend, ameliorating this irritation.
The Fair Tax really does seem fair to those who are asked. It's flat, necessities are not taxed, and it's very easy to understand. You add 29.87% to every taxable shelf price so that 23 cents of every dollar you spend is tax.
Under our income tax, it's really easy to cheat... just underreport income or overreport expenses and you've cheated- liklihood of being caught is low. Under then nrst, it would take two people colluding to evade. Further, about 80% of all retail transactions go thru 25% of retailers, making nenforcement much more effective and efficient...the chances of getting caught are obviously much higher. Would K-mart risk it's life to save you $75 on a set of tires? No. Joe's Neighborhood Tire Barn may risk it - but there are comparativley few transactions thru Joe's.
Take a look at FAQ- it's short and to the point.