[SolidSupplySide]

That is not true with respect to illegal labor. Illegals don't pay income and payroll taxes in many cases today. However, they do buy stuff to consume. Yes, they do pay imbedded taxes now, but so do the rest of us. Under the FairTax, they would pay what we do at the register, but would not be eligible for the rebate. That means they would be moving from a tax advantaged position to a tax disadvantaged one.

But the contributions to the economy from illegal aliens will not be taxed under either system.

I agree that nannies and yard crews (and other cash-pay work done by illegals) don't currently pay income tax today. But they won't collect and remit sales taxes under a sales tax. The big difference between you and me is that you think a sales tax will capture the economic contributions of illegals. As I have said, there is no activity that a sales tax can capture that an income tax can't.

We both agree that the consumption of illegals is taxed today through so-called "embedded taxes". Consumption of illegals in the legal economy will continue to be taxed under a sales tax regime.

[phil_will1]

"Consumption of illegals in the legal economy will continue to be taxed under a sales tax regime."

Agreed. It is simply a matter of whether they are given a tax preference or a tax disadvantage, not that they are tax-free under one system and taxed under the other.