Every business isn't like yours.
do you know what the answer is to my post 221?
Dear rwrcpal,
Lots more companies are like mine than have dramatically high tax compliance costs. Especially small businesses. Small businesses are usually about the product or service provided, not about trying to figure out a way to make money specifically off the tax laws. And most businesses are small businesses.
My accountant works primarily with small businesses, and he tells me that I'm far more compulsive about compliance than many other small business folks.
There's plenty of government red-tape that I have to put up with as a small businessman. But tax stuff isn't the most of it. And frankly, most of my compliance stuff would remain under the so-called "fair tax."
I'd have to continue to track and report income of my employees to the IRS (or to some other govt agency). I'd still have to pay unemployment insurance, and thus, I'd still have to comply with federal and state laws concerning who is a contractor, who is an employee, etc. I'd have to continue to pay workers' compensation insurance (although that's private insurance, it's nonetheless based on a govt requirement imposed upon me).
Because I only sell services, currently, I don't need to report sales or use tax. But under the so-called "fair tax," I would need to be set up to collect sales tax, and I'd have to determine who is eligible to exemptions (most of my clients) and who is not (a few of my clients).
Because most of my clients are business clients, I'd have a lot more exempt clients than non-exempt, which would likely raise red flags with the govt auditing agency (the new IRS or whatever you want to call it) meaning that I'd likely be subject to frequent auditing.
As well, because I sell no products, I pay sales tax now on everything I buy. Thus, I don't have a sales tax exemption in my own state, and that also reduces my compliance costs.
The govt never asks me whether I'm using my sales tax exemption for personal purchases because I don't have or use one.
Under the so-called "fair tax," I will have to buy with a sales tax exemption (or pay an extra 30% for all the goods and services I need for my company), and the govt will then wonder whether I'm buying stuff for home use with my exemption. More auditing. More compliance. More cost.
There are literally several million small businesses like mine that sell services, not products, and are specifically set up to minimize tax compliance issues, as I have done. For folks like us, our tax compliance costs would jump 10 or 100-fold under the so-called "fair tax."
The folks whose costs would be reduced are mainly very large companies that have whole divisions of accountants dedicated to tax avoidance. I suspect that these folks will save, in absolute dollars, significant amounts of money. However, in terms of percentage of their revenues, it is unlikely that they'd save more than a percent or two by eliminating a division of accountants, no matter how well paid.
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