It's not a wash at all. Many drug purchases are made with stolen money, not earned income and so your argument fails.
In fact, you have no basis for the statement at all since it is just as likely as not that the John & drug buyer paid little or no in the way of income taxes. That asumption is equally as valid as to the flight of fancy you came up with.
Under that assumption none of the 4 paid much or any income taxes so the government got nothing whereas with the FairTax they will derive much more tax revenue. There is no "wash".
In fact, you have no basis for the statement at all since it is just as likely as not that the John & drug buyer paid little or no in the way of income taxes.You have no basis for that statement. Unless these people are using counterfeit money, all money in the underground market can be traced to legitimate sources.