There's more that's certain than just death and taxes ... you have to include evasion. It will be there in ANY sort of tax system that can be imagined.But some more than others.
In fact, even the IRS admits to something like a 20-25% revenue "shortfall" due to evasion for the present income tax.It's more like 15-17%.
In view of that fact,As I showed, it's not a fact.
how is it that you believe the FairTax is, somehow, deficient in that regard?More than anything else, common sense. All the tax is collected at one point in the chain and there is no verification of the transaction (no double reporting). The only way to know if a business is cheating is spot audits.
It shouldn't surprise anyone the all the other panel members "had issues" with the FairTax on evasion since each was proffering a different and competing tax plan. That certainly gives no credence to any evasion issue - all those plans have them as well!Again, different plans have varying degrees of evasion/avoidance. The NRST is the only plan I can recall the panel expressing concern about, though. I would be shocked if they suggested a NRST when the same thing could be accomplished with a VAT.
Since you seem, from your comments, to be opposed to the FairTax, what sort of tax system do you prefer (VAT, flat, other) and how does that preferred system eliminate or minimize evasion?Flat tax or a VAT. Neither collects all taxes at one point and both have more than one reporting of most transactions.
That's misleading to use inclusive rates! /sarc
pigdog: In fact, even the IRS admits to something like a 20-25% revenue "shortfall" due to evasion for the present income tax.
Your Nightmare: It's more like 15-17%.
It should be noted IRS falls short of the true evasion of income taxes going on by a long shot.
from YN's link, http://www.irs.gov/newsroom/article/0,,id=137246,00.html
Components of the Tax Gap
The tax gap can be divided into three components: nonfiling, underreporting and underpayment. Nonfiling occurs when taxpayers who are required to file a return do not do so on time. Underreporting of tax occurs when taxpayers either understate their income or overstate their deductions, exemptions and credits on timely filed returns. Underpayment occurs when taxpayers file their return but fail to remit the amount due by the payment due date.*** snip ***
The tax gap figure does not include taxes that should have been paid on income from the illegal sector of the economy.
The measurement of that IRS version of the tax gap leaves out one whale of a lot in the way of evasion as it only creates an estimate based on tax delinquency investigations, audit results and errors rates found in review of returns submitted. That IRS measure is substantially less than even the AGI gap reported by NIPA measures.
And the AGI gap does not address losses due to the under ground cash economy and illegal activites:
http://econwpa.wustl.edu:8089/eps/dev/papers/0312/0312003.pdf pages 18&19
Fiscal-NIPA discrepancies - Unreported income
In those nations that rely heavily on some form of income or consumption tax, it is possible to obtain estimates of unreported income by examining the discrepancy between income estimates derived from tax data sources (typically tax returns) and those derived from national income and product accounts (NIPA). In the U.S. the Bureau of Economic Analysis (BEA) regularly calculates the discrepancy between actual adjusted gross income as reported to the Internal Revenue Service (IRS) and an independent estimate of adjusted gross income derived from NIPA based estimates of personal income. This "AGI gap" discrepancy measure represents a carefully constructed discrepancy measure that attempts to estimate unreported income. The AGI gap would be a conceptually approximate estimate of unreported income under the following conditions:1) personal income (PI) was accurately measured, that is, there is no unrecorded income; 2) correct adjustments are made for all conceptual differences between the economic income measure PI and the fiscal income measure AGI.
Although the AGI gap is unlikely to yield an empirically exact measure of unreported income (due to the difficulties of measuring many of the large reconciliation items required to make PI and AGI conceptually compatible), it is nonetheless of interest since it highlights the conceptual similarities and differences between NIPA accounts and tax-based source information. These conceptual interdependencies are crucial for an understanding of how under reporting of tax source information will ultimately impact NIPA measures of GNP and PI.
The AGI gap measure is best interpreted as a rough measure of noncompliance in the reporting of taxable income. It tends to understate total unreported income insofar as it takes no account of underreporting of other types of taxes nor does it capture unreported illegal income since the latter is not typically included in NIPA estimates of personal income. Moreover, to the extent that the NIPA measure of personal income is understated as a result of other unrecorded income, the AGI gap will correspondingly understate unreported income.
As the AGI gap measure depends on GDP data, which does not include anything from the underground and cash economy sectors at all. Only data from reporting entities get registered in the NIPA data series and folks involved in evading the government for whatever reason don't go reporting there financial goings on to either the IRS, Bureau of Economic Analysis or anything smacking of government period.
Well - no. The IRS site you gave discusses what they lovingly call the "tax gap" which they defing as:
"The tax gap can be divided into three components: nonfiling, underreporting and underpayment. Nonfiling occurs when taxpayers who are required to file a return do not do so on time. Underreporting of tax occurs when taxpayers either understate their income or overstate their deductions, exemptions and credits on timely filed returns. Underpayment occurs when taxpayers file their return but fail to remit the amount due by the payment due date."
They go on later to say:
"The tax gap figure does not include taxes that should have been paid on income from the illegal sector of the economy."
... so you see that the 15-17% figure you offer from their website is obviously low. It seems to me that the 20-25% figure is the more accurate one.
All that aside, though, you didn't respond to my request to be specific about the VAT/flat tax system flavor you support and there are several with quite a few differences. Please be more specific - which do you support and can you provide a link to it so it can be viewed in detail?
I differ with some of your comments in post #39 as well as the evasion amount but will have to defer responding until a bit later.
One thing that seems at odds with your debating technique in general, though, is to throw out a comment like "But some more than others." when referring to the certainty of evasion without offering readers any concrete numbers of which ones are "... more than others ...", by how much - and sources for those numbers. Seems you often attack the FairTax proponents (on some of the threads where I've seen your posts) for not being specific, not providing numbers, etc. and yet here you do the very self-same thing to try to shut off debate.
Isn't that a tad offbeat since you apparently believe it necessary?
To #39 "The only way to know if a business is cheating is spot audits."
You get your records from the folks who have nothing at stake... the wholesalers and producers. if the retail does not come pretty close to the supply going in, you can address the problem then and pretty efficiently conduct minimal audits.