7. Underground Economy still not taxed. The NRST advocates falsely claim that the underground economy now will be taxed. Nothing could be further then the truth. Sure, when the money re-enters the legal economy the money is taxed, but that is true today. But will the drug dealers and prostitutes remit sales tax for their goods and services under the NRST? Absolutely not, this portion of the economy is still invisible to the tax collector and therefore not taxed.
This is a strawman argument that completely ignores that even prostitutes and drug dealers DO NOT pay income taxes but they still have to buy groceries and appliances and furniture and automobiles. No matter how you spin it, this is a net GAIN for the government.
Nothing is gained. Whether it be a sales tax written on a receipt or embedded taxes that are hidden in the item, both capture the tax of prostitutes and drug dealers once they make a legal transaction. For BOTH systems, legal transactions capture tax, illegal transactions do not. It makes no difference in terms of collecting taxes from prostitutes and drug dealers. The same amount of illegal activity remains un-taxed, unless you think the prostitutes will submit their 30% tax for their services.
This is a strawman argument that completely ignores that even prostitutes and drug dealers DO NOT pay income taxes but they still have to buy groceries and appliances and furniture and automobiles. No matter how you spin it, this is a net GAIN for the government.Right, people engaging in illegal activity will miraculously become legal and we'll even send out government checks to them that could never become a scam.
Every druggie and prostitute I see is out there buying new cars, appliances, furniture, houses...I would say groceries for the kids too but they use food stamps for that.
OH and let's not forget the 23% of their gross sales they'll remit to the government for their (still) illegal products and services too....
IT'S A WIN - WIN for the government!
This is a strawman argument that completely ignores that even prostitutes and drug dealers DO NOT pay income taxes but they still have to buy groceries and appliances and furniture and automobiles. No matter how you spin it, this is a net GAIN for the government.But under the current system, the John and the drug buyer paid income tax on the money they are giving to the prositute and drug dealer. They wouldn't under a NRST.