[taildragger]

My thought is noncompliance will go up dramatically as the nefarious types will try to increase their business by jacking the goods and selling it hot and people will be tempted to buy. It is a temptation is not their in prevalence, unless you count those buying Cig’s in North Carolina and selling them in other states and gaining the tax difference. That is a microcosm of what the Mob will take advantage of, they will not buy it, they will just steal it and then charge no tax. I really see the Fair Tax as the Mob Re-Employment act of 20xx whenever it becomes a reality.

[Principled]

ok - that’s fine. I see it just like evading taxes on income. The mob does it. Criminals do it. Try to stop it if you can of course.

[phil_will1]

“My thought is noncompliance will go up dramatically...”

I disagree and here’s why. It occurs to me that there are 3 “choke points” in the consumption economy that will be the revenue base of the FairTax.

1. Big box retailers - Here in GA, the big grocery store chains are Kroger’s and Publix. There are several more that are just below them in sales volume. Then you have the electronics superstores, Wal-Mart, Target, etc.

2. Auto dealers - while used cars are sometimes sold by individuals, news cars (the only ones taxed by the FairTax) are always sold through some type of dealer.

3. Real estate closing attorneys - New houses will still have to go through a formal closing process to change ownership.

I would hazard a guess that these three types of consumption account for 60 to 75% of the consumption economy. None of these three “choke points” will conspire to cheat on the sales tax. Why? Because the risk/reward ratio just does not make sense. It would be too easy to catch these guys. Can you imagine what would happen if one of the big-box retailers did not charge the sales tax to their customers? Or if the remittances to the state authority from one of those retailers stopped or went down significantly?

We could get a very high level of compliance with relatively few resources allocated to enforcement from that sector of the marketplace. We already know that there are enormous economies in compliance enforcement due to the fact that there are so many fewer points of collection/enforcement under the FairTax than under the current system - more than an 80% reduction in the number of filings. Then you have well over 50% of that greatly reduced number that will require very little oversight resources allocated to it.

On top of all that, you are talking about a greatly reduced and much, much simpler system to enforce. According to CCH, the current system (NOT just the IRC BTW) numbers in excess of 72,000 pages. The FairTax is less than 150 pages. Anyone who has been through a sales tax and an income tax audit will tell you that sales tax audits are trivial compared to income tax audits.

All in all, I think we can get a higher level of compliance with less resources allocated to enforcement under the FairTax than under the current system, or any modified form of income tax.

Of course, that is not good enough for some who raise this issue as a red herring. They insist on a perfect tax system where there will be zero problems with compliance. This is, of course, impractical and unreasonable and strongly suggests that they have some other agenda and that concerns over compliance are merely diversions to mask their vested interest in perpetuating a highly dysfunctional system that serves them personally even if it is hugely damaging to the economy of this nation.