I'm still wondering how retail purchases (hotel, car rental, plane tickets, airplane tickets, auto fuel, meals, office supplies, printing, trade show supplies, capital goods like TVs and laptops, etc used for business) are going to be sheltered from the FairTax without requiring compliance costs to prove the business usage, and at the same time keeping many people from abusing the system since there will be no paper trail?
No idea off the top of my head.
There have been rumors of an employee at my company [not mentioning who :-)] who found out a local computer store had the company's tax ID for sales tax exempt sales entered into their cash register. That employee just said he was from my company and the purchase came up tax free.
The other problem I see is that there is an incentive to hire people rather than pay their employer. For example, I could pay for a lawn care company and pay 23% tax on it. Or, I could hire the same guy as a part time groundskeeper as an employee for a couple hours a week and not pay taxes because he's an employee.
This is the opposite of the current tax incentives where an employer benefits by saying a person doing work for them is a private contractor who gets a 1099 instead of an employee who gets a W-2. There are all sorts of complicated IRS rules defining who is a W-2 employee and who is a contractor.
Those are valid questions. Let me answer you.
I don't know.
Section 705 of the act address mixed use property and services, but is not specific on how this will be implemented. The act does say "In all disputes concerning an exemption claimed by a purchaser, if the seller has on file an intermediate sale or export sale certificate from the purchaser and did not have reasonable cause to believe that the certificate was improperly provided by the purchaser with respect to such purchase (within the meaning of section 103), then the burden of production of documents and records relating to that exemption shall rest with the purchaser and not with the seller." So if you give the seller a resell certificate he is off the hook. I assume that like any tax law there will be Treasury regulations that will be issued to tell us how to handle certain facets of the act. Congress has never really put the nuts and bolts in the laws.
But just think about it this way, all of the things you have listed can be abused under the current system, no? There WILL be a paper trail, because you will have given the seller a certificate. I could buy a laptop right now in my business and take it home for my kids to play with and deduct it off my income taxes as business use. Nothing stops me, except the fear of an IRS audit and my conscience. The state sales tax department can audit me too.