First, there will always be an IRS. The difference with the Flat tax is that 95% of the agents will need to find a new job because 5% is all we will need. You really think if the feds get their money from sales taxes that there will be no federal agents to make sure everyone is paying said tax? give me a break. If anything they will need more agents because grey market “untaxed” goods would be rampant.
You say the Fair Tax is only applied to new retail purchases, buy used. Well that’s my point exactly. People will QUIT buying new stuff and will only by things they absolutely need. Take a guess what that little fact will do to businesses and ALL the people that work for those businesses. You got it. They will GO OUT OF BUSINESS.
Another problem: some states have no sales tax at all. when the federal tax hits at 20% or greater guess what? The people in that state just got their income cut by 20%.
In states like Texas you will be facing a 30% or greater tax on everything you buy. Want to go new car shopping? Want to be in the new car business? How about nice jewelry? Still want that $3,000 watch that with tax now comes to over $4,000. I’d hate to try to make a living at the jewelry store. How about heading out to best buy to look at a new ipad2? It’s $600 now but after the fair tax in Texas it’s now over $800, still want it?
The trick is to buy used but in really good shape. No sales tax. Already been paid once.