I agree in principle, but what is to stop people from "hiding" consumption... aka, a new black market?
I agree in principle, but what is to stop people from "hiding" consumption... aka, a new black market?
Just what would be new about such a black market?
If evaders hide income through cash transactions today, they can continue to hide sales the same way though at greater risk as the purchaser becomes a part of the evasion if such is taken advantage of in any meaningful manner. Where, in a self assessing income tax situation, it only takes one not reporting income to sucessfully evade, in a sales tax situation it takes customers gaining a benefit to attract them from legitimate venders, as well as the seller that fails to collect and remit a tax from his customer. That makes for much higher visibility of the activity and subsequent risks of exposure and prosecution of the seller. Under the system proposed it is the seller at liability for the remittence of taxes required to be collected from customers.
Those that are engaged in cash economy now to avoid income and SS/medicare taxes must and will take a substantive portion of their incomes and spend them at legitimate businesses under a sales tax system that does collect the NRST from them right along with every other person entering their establishments.
Don't mistake one bottomline fact, there will be tax evasion and fraud in any tax system no matter how onerous or tight it may considered to be. Tax evasion however will be no greater and for many reasons can be less under a retail sales tax system than an income tax system at the same marginal rates. In broadening the taxbase, reducing the maximum marginal rates impressed on the individual coupled with the increased risks taken by the sellers, less not more tax evasion behaviour tends to be promoted.