[Always Right]

The logic is anything but flawed since it was precisely the hooker that was the subject discussed; not the John. The discussion was not about taxing the illegal activities themselves.

The discussion was about taxing the underground economy, so yes it is exactly what we are talking about. You are merely attempting to change the argument by changing the parameters now that you see you've lost it.

The arguement has not been lost, you just fail to understand the facts.

In any event the FairTax captures tax revenue from he underground economy even if it gets it only from the hooker and not the John

Again, this is no different then the current system. When the money is spent on a legal transaction today, it creates income for the retailer which flows down the entire supply chain and even back to the producer. You claim there is 20-30% embedded taxes in consumer goods today. If that is the case, then what's the difference? Legal transactions taxed, illegal transaction illegally avoid taxes. If there is a $1 Trillion underground economy, both systems are missing out of collecting a lot of owed taxes. Certainly that most of that money flows into legal transactions, but no system captures the taxes that are legally due from underground transactions. Taxes are avoided.

[pigdog]

I'd have to observe that the John spending money on the hooker (which may be a transaction but I'd not call it a legal one) is certainly not going to cause her to report that as income. The only tax revenue revenue derived from this downstream side of the transaction is the small amount that represents the profit on the portion of her retailer's costs (and thereby her price) that have been inflated by embedded tax effects.

The difference is that the IT captures money from the underground economy only indirectly by the retailer's portion of increased IT due to the embedded tax effects - however much those are - and not at all directly.

With the FairTax, the taxable transaction captures 23% of the sale as sales tax - a greatly larger sum not adressed by the present system.

And I repeat again (since you seem to have missed it and offer that erroneous refrain again) - no one is saying that the illegal transactions themselves are taxed but that the FairTax picks up far more in tax revenue than the present system.