Ahmm, you missed the issue, Dimples is talking about the person who evades the payment of the tax under the income tax system.No, you missed the point. That was just an example. There are many more examples.
I meant to say "after the FairTax" (you couldn't figure that out?). After the FairTax, I start a "business" to buy my computer and it's is no longer in the PCE. Your denominator is reduced.After the income tax, I start a "business" and buy that same computer tax free.Which was my point, such a computer purchase is not entered in PCE now, and thus not part of the denominator yielding a higher computed tax rate not a lower one. Thus the rate computed represents an upper boundry for the revenue neutral rate given equal amounts of tax evasion/avoidence incomparison with the income/payroll tax system.
I meant to say "after the FairTax" (you couldn't figure that out?). After the FairTax, I start a "business" to buy my computer and it's is no longer in the PCE. Your denominator is reduced.
I see, in your world self-employed types and small businesses persons don't already declare personal use PCs as business deductions under the income/payroll tax, in their effort to limit or evade income taxes and thus reduce PCE because those computers and other equipment and commodities and services are improperly declared as business expenses.
Sorry the scenario already is in place and in use, reducing PCE due to many such evasions across the board.
AFT assumes (for rate calculation purposes) the same folks doing it now will continue to attempt to do so under a retail sales tax system. In fact the same self-employed business folks not declaring cash income now, are also purchasing personal use computers declaring them as a business expense to increase capacity for evasion into their above board transactions.
In fact this form of tax evasion is pervasive and stretches to the individual employee who receives a PC from his employer for business use which he then engages in his private personal affairs, to the small business owner willing to stretch his tax return deductions to the limits of IRS in capacity to audit them on top of the under-the-table cash transactions he engages in to evade the income tax outright.
You may come up with all the theoreticals you wish, the reality is the evasion and essential MO is already in operation discounting PCE and by the same folks who would be inclined to try continue there evasions using the equivalent MOs they are used to and currently using under the income tax system.
Your theoreticals do not in any way detract from the concept that PCE and revenue yields are already derated for the evasion that exists today continuing at the same levels will not change the calculated "revenue neutral" rate in any appreciable degree.