Fairtax

[TheNiche]

Niche, there are no taxes previously paid on services, a significant portion of the economy.

As you can tell from the list, upper middle class and wealthy individuals...those who do not normally consort with small businesses...will pay the tax. The lower middle class and poor...and those who do not mind doing business with sole proprietors...will save money by cutting out the middleman. This is already common in poor neighborhoods. It will expand as consumers cannot afford the taxes.

I concur that this could be a problem. This is why I would advocate total digitization of currency. The only way to pay for a service without paying the tax, then, is to barter. And unless you, a well-off lawyer, is able to find a way to exchange legal services (or some other service that you are willing to do) with a poor day laborer, you'll have to pay them with goods on which you've already paid a tax. And if you exchange a service for a black market service, then unless they both need it and can't do it themselves, the transaction would seem exceptionally difficult to successfully negotiate in such a way as that it wouldn't just be easier to pay the tax or barter with goods.

"I'll cut your lawn if you trim my hedges" doesn't make sense, for instance, because nobody has an advantage over anybody else. "I'll cut your lawn if you fix my truck" doesn't work, for instance, because the disparity of value in the activities is too great." "I'll cut your lawn for a year if you fix my truck" might work, but only if the debt is enforcable, which since it is illegal, stands a large chance at not working out. "I'll cut your hair if you do my nails," isn't likely to bankrupt the government or cause any greater problems than those that already exist. And "I'll fix your truck if you have sex with me (or perform any given illegal act)" already exists in the current system in one form or another, so there's no effect on that one.

Does quality on the black market suffer? Are people willing to give that up?

If something is traded on the black market, quality is an inherent risk because if it doesn't work (i.e. marijuana with insufficient THC, attempted prostitution with a guy in a dress that looked like a really convincing female, or a poorly machined Class III Firearm) the buyer isn't likely to complain to the authorities.

The trick is that the black market becomes less transparent, less efficient, and most frequently viable only if someone is using a medium of exchange that has already been taxed.

[RedScare]

I concur that this could be a problem. This is why I would advocate total digitization of currency. The only way to pay for a service without paying the tax, then, is to barter.

You need to go back and read my post. Can you say peso? Sure you can. If the federal government takes away our money (something it would absolutely never do), the black market will find a new currency to do business with. In the prisons, it was common to use cigarettes. With many prisons going non-smoking, now the prisoners use scrip. If the government were to withstand the withering onslaught of abuse that would come with digital currency, the black market would simply use pesos. In the north, they would use looneys.

No matter what you propose to combat the problem, the black market will overcome. The reason is simple. The black market is the free market economy at its finest. And it is run by poor people and criminals...two groups that know a thing or two about squeezing a dollar. Your attempts to control it will fail. You cannot employ enough revenuers to find all of the non-taxed transactions. Frankly, I would love it!

[crunchtastic]

The trick is that the black market becomes less transparent, less efficient, and most frequently viable only if someone is using a medium of exchange that has already been taxed.

But unless you've raised tariffs to the point at which our trade partners would balk, a sales or consumption tax-based system is doomed to fail. That is the power of the black market. Not just on services, but on goods too.

I thought the point of this discussion was on how sales-based tax is the fair tax answer. Sure it is. It means I have any number of options to not pay my fair share of taxes. Good thing I have guns and metals, because the government won't be much use, since there's all that money they're not collecting.

Edited February 13, 2008 by crunchtastic

[TheNiche]

Like Red mentioned about making change in pesos; this is where Houston will thrive. I could see a huge quasi -legitimate second economy, such would be the stength of international consumers here. Add into the mix the newly lax trucking laws and the ever-corruptible border patrol? Homeland Security's utter inability to secure our ports?

Success!

All currency of any origin becomes electronic at the border. Hard currency is made illegal, with extreme penalties. A black market for physical Pesos would develop, with illegal Pesos inefficiently bartered at a sufficiently high price so as that the smugglers earn an effective premium that at least covers the costs and the risks of smuggling. The equilibreum value of the hard Peso ultimately settles at such a level that not only reflects smuggling costs, but the risks associated with holding, which *might* be just barely less enough to cover the taxed dollar. I'm guessing that it won't be.

A shift would take place to mediums such as precious metals or diamonds, but the typical person not being an assayer, cheating and fakery is common enough that the supply of real and fake mediums faces extreme inflation to the point that they are nearly ubiquitous and without value.

Why do you want to put retailers out of business with a policy that enhances what their competitor already does best? That seems so artificial.

You know, upon giving this further thought, I don't actually see how it would enhance any advantage. The relative differences in price for all retailers would rise proportionally. There is no advantage or disadvantage.

well, yes. if you're depending on sales tax rather than income tax, you've just reduced your tax revenue.

All monies that are earned are either spent immediately or invested so as to have a much larger amount of money to spend at some point in the future. Nobody invests or saves money in order not to spend money. That'd just be stupid.

The tax rate on consumer goods would reflect a revenue-neutral level of tax receipts by the government.

[RedScare]

Wow, Niche, for a libertarian, that is the most non-libertarian thing I have ever heard. BTW, it'll never happen. 30% of Americans do not even have bank accounts. And the country will never do away with hard currency. One power outage and the nation's money disappears.

[crunchtastic]

All currency of any origin becomes electronic at the border. Hard currency is made illegal, with extreme penalties. A black market for physical Pesos would develop, with illegal Pesos inefficiently bartered at a sufficiently high price so as that the smugglers earn an effective premium that at least covers the costs and the risks of smuggling. The equilibreum value of the hard Peso ultimately settles at such a level that not only reflects smuggling costs, but the risks associated with holding, which *might* be just barely less enough to cover the taxed dollar. I'm guessing that it won't be.

A shift would take place to mediums such as precious metals or diamonds, but the typical person not being an assayer, cheating and fakery is common enough that the supply of real and fake mediums faces extreme inflation to the point that they are nearly ubiquitous and without value.

Currency will always change hands. Period. Especially at the border. I know what you're getting at, and the theoretical concept is alluring, but it's just that-- concept. As distasteful as it may be, look to prisons and street level drug dealers for lessons on how the super-micro economy works. Always has, always will.

[TheNiche]

You need to go back and read my post. Can you say peso? Sure you can. If the federal government takes away our money (something it would absolutely never do), the black market will find a new currency to do business with. In the prisons, it was common to use cigarettes. With many prisons going non-smoking, now the prisoners use scrip. If the government were to withstand the withering onslaught of abuse that would come with digital currency, the black market would simply use pesos. In the north, they would use looneys.

No matter what you propose to combat the problem, the black market will overcome. The reason is simple. The black market is the free market economy at its finest. And it is run by poor people and criminals...two groups that know a thing or two about squeezing a dollar. Your attempts to control it will fail. You cannot employ enough revenuers to find all of the non-taxed transactions. Frankly, I would love it!

The tax margin would be insufficient for most people to put themselves at risk of engaging in a black market for the purposes of tax evasion, provided a sufficiently harsh penalty.

Goods that are freely available with prices set at such a level as reflects their real scarcity is incomparable to prison, where the value of artificially-scarce goods inflates their market value.

Edited February 13, 2008 by TheNiche

[TheNiche]

Wow, Niche, for a libertarian, that is the most non-libertarian thing I have ever heard. BTW, it'll never happen. 30% of Americans do not even have bank accounts.

It probably doesn't sound like a very libertarian policy because I'm not a libertarian.

30% of Americans do not even have bank accounts.

Well here's an opportunity to change that and promote financial literacy.

And the country will never do away with hard currency.

I agree. It won't. I said that many hours ago.

One power outage and the nation's money disappears.

The scary thing would be an EM pulse or some kind of exceptionally powerful astronomical event. But that's precisely why they still make vacuum tubes...they won't get fried. Between that and redundant shielded data centers, I really can't forsee any problem that we don't already face.

Frankly, if we had such a 'power outage' today, it'd probably be just as chaotic, if not moreso. Think about what is already effectively digitized (the difference between the M2 money supply and the M1), the amount of hard currency that most households have at any one time, and the disparity between the ratio of cash and tangible assets. It'd be chaos, with or without digitization.

[RedScare]

The tax margin would be insufficient for most people to put themselves at risk of engaging in a black market for the purposes of tax evasion, provided a sufficiently harsh penalty.

Goods that are freely available with prices set at such a level as reflects their scarcity is incomparable to prison, where the value of artificially-scarce goods inflates their market value.

Speak for yourself. 31% is a huge markup that many people will look to beat, and profit from. It happens routinely in the poor neighborhoods. I'm guessing you are not a smoker, so you've never bought a pack of smokes missing the 41 cent tax stamp on the bottom. A couple of years ago, that 41 cent tobacco tax amounted to only 12% of the price, yet small store owners bought bootleg cases all the time. Now that the tax is $1.41, the percentage of the price is 31%...almost exactly the same as your proposed tax. Bootlegging of cigarettes is a far larger problem, with tractor-trailers of them coming in from the Carolinas and Virginia, where the tax is low.

The risk would be low, because the abuse would be so widespread. For instance, a few weeks ago, you posted on this board that you hired a drug addict for some work. Did you get his SSN so that you could send him a 1099? If not, you broke the law. But, I bet you aren't too worried about it. Black market deals are made daily. Quadruple the tax burden and abuse will grow correspondingly. Besides, the crime is not committed by the buyer. It is the seller who must pay the tax. If the vendor at the farmers market does not report my cash transaction, it's no skin off of my back.

I am amused that you think there are so many honest people around.

[RedScare]

Read this Wall Street Journal article on bootleg cigarettes. Then, try to imagine this very same thing going on with alcohol, soft drinks, vegetables, appliances...just about anything. The profit potential is staggering. All this, because rich people don't want to pay taxes.

[TheNiche]

Speak for yourself. 31% is a huge markup that many people will look to beat, and profit from. It happens routinely in the poor neighborhoods. I'm guessing you are not a smoker, so you've never bought a pack of smokes missing the 41 cent tax stamp on the bottom. A couple of years ago, that 41 cent tobacco tax amounted to only 12% of the price, yet small store owners bought bootleg cases all the time. Now that the tax is $1.41, the percentage of the price is 31%...almost exactly the same as your proposed tax. Bootlegging of cigarettes is a far larger problem, with tractor-trailers of them coming in from the Carolinas and Virginia, where the tax is low.

The risk would be low, because the abuse would be so widespread. For instance, a few weeks ago, you posted on this board that you hired a drug addict for some work. Did you get his SSN so that you could send him a 1099? If not, you broke the law. But, I bet you aren't too worried about it. Black market deals are made daily. Quadruple the tax burden and abuse will grow correspondingly. Besides, the crime is not committed by the buyer. It is the seller who must pay the tax. If the vendor at the farmers market does not report my cash transaction, it's no skin off of my back.

I'm talking about the Federal level, not state, so the interstate cigarette smuggling example you provided isn't very applicable. Likewise, hiring individuals for work would not be so easily escapable, and to the extent that a service could be offered in exchange for the service, it wouldn't be efficient or necessarily even all that big of a deal in the grand scheme.

Besides, what's the penalty on bootlegged cigs? Whatever it is, I'm betting its not even remotely close to what I'd have in mind for bootlegged hard currency or bartering. It isn't enough to make something illegal; without consequences, nobody (myself included) will care.

Besides, the crime is not committed by the buyer. It is the seller who must pay the tax. If the vendor at the farmers market does not report my cash transaction, it's no skin off of my back.

In a digitized system of exchange, the tax is exacted automatically and on the spot.

[TheNiche]

Read this Wall Street Journal article on bootleg cigarettes. Then, try to imagine this very same thing going on with alcohol, soft drinks, vegetables, appliances...just about anything. The profit potential is staggering. All this, because rich people don't want to pay taxes.

States have effectively no borders where commerce is concerned. Moreover, enforcement is difficult, generally accidental, and the penalties not sufficiently harsh--whatever they happen to be. That example does not apply.

For what its worth, I like the VAT system that much of Europe uses.

...but I still want to digitize currency and to remind people with every transaction and with financial statements at the close of every year the amount of their expenditures that were attributable to the VAT.

Edited February 13, 2008 by TheNiche

[RedScare]

I'm talking about the Federal level, not state, so the interstate cigarette smuggling example you provided isn't very applicable. Likewise, hiring individuals for work would not be so easily escapable, and to the extent that a service could be offered in exchange for the service, it wouldn't be efficient or necessarily even all that big of a deal in the grand scheme.

Besides, what's the penalty on bootlegged cigs? Whatever it is, I'm betting its not even remotely close to what I'd have in mind for bootlegged hard currency or bartering. It isn't enough to make something illegal; without consequences, nobody (myself included) will care.

Yeah, the drug laws have worked well, haven't they? Your response to every problem is just like the approach to drug enforcement...increase enforcement, increase penalties, make more things illegal, including currency. Who's going to pay for the cops, courts, lawyers, judges, and prisons for these millions of new criminals you have just created?

[TheNiche]

Yeah, the drug laws have worked well, haven't they? Your response to every problem is just like the approach to drug enforcement...increase enforcement, increase penalties, make more things illegal, including currency. Who's going to pay for the cops, courts, lawyers, judges, and prisons for these millions of new criminals you have just created?

The mark-up on drugs is ridiculously higher than what would otherwise be the market price.

Those who pay for enforcement are the very same people that pay for it currently. It is a good investment (in this case, albeit probably not for drugs).

[RedScare]

You know what's really funny? Go back through your posts and see how you get progressively more fascist with each response. By the time you are done, you're hiring tens of thousands of new revenuers, and building hundreds of new prisons to hold the millions of new criminals you've created...all so that we can get rid of the IRS? It will dwarf the size of the current one when you're done.

I'm thinking we just keep the system we've got, if you are in charge of explaining it.

[TheNiche]

You know what's really funny? Go back through your posts and see how you get progressively more fascist with each response. By the time you are done, you're hiring tens of thousands of new revenuers, and building hundreds of new prisons to hold the millions of new criminals you've created...all so that we can get rid of the IRS? It will dwarf the size of the current one when you're done.

Given the realities of the situation, the outcome that you predict is in my opinion unlikely. Enforcement is necessary under any tax system; that is inescapable. The IRS could be abolished, but realistically something else would need to fill a vacuum.

I believe you misunderstand the true nature of facism.

I'm thinking we just keep the system we've got, if you are in charge of explaining it.

Although I could do a stupendous job at explaining the technical aspects to an audience of economists, I am no politician. You are right about that. Any attempt at explaining the intracacies to the general population would be an unmitigated disaster.

This is why it takes a Huckabee to come up with a term like "FairTax," or a Paul to come up with a slogan like, "Abolish the IRS."

[lockmat]

I'm curious how the FairTaxers propose to handle the massive Black Market that will be created when goods are taxed at 31.25% (23% fair tax + 8.25% local tax). Don't think it will happen? How many times will you pay $1,312.50 for that $1000 TV, when you can buy it from a black marketeer for just $1000...especially knowing that all of your neighbors are only paying $1000?

How many people are going to trust a black market supplier and give them $1,000? That's a good chunk of money without a warranty. Sure there are people out there who you might say already do, but they're already shady people anyway. And I do not believe people are inherently good, but still, I think most people are not willing to take the risk. Maybe on music and smaller purchases, but not on big item ones. My opinion.

[RedScare]

How many people are going to trust a black market supplier and give them $1,000? That's a good chunk of money without a warranty. Sure there are people out there who you might say already do, but they're already shady people anyway. And I do not believe people are inherently good, but still, I think most people are not willing to take the risk. Maybe on music and smaller purchases, but not on big item ones. My opinion.

It doesn't have to be the majority of people to cripple the system. It does not have to even be a large minority. Current estimates are that 10% of the economy is black market, with only a 6-8% sales tax. In high tax products like cigarettes, it is significantly higher. Estimates are that one half of New York City's cigarettes are sold on the black market. The estimates given do not account for black market losses. If 20% of estimated revenue is lost to the black market, how do you make up the difference? If you raise the tax rate higher than 23% to make up the difference, the black market becomes more lucrative, costing even more revenue.

It is well known in quality control circles that the larger the operation, the harder it is to control. The current tax structure relies on a comparatively few employers to withdraw taxes from paychecks. If you change that system to where there are millions more people required to report taxes, many of whom are dealing in cash, it is ripe for abuse. Remember the problems the State had collecting sales tax on used vehicle sales between individuals? They lost so much tax revenue that they had to change the system.

This is not even taking into consideration the effect on the economy. If the price of goods suddenly rises 23%, people will not buy them, regardless of the fact that they no longer pay income tax. If it suddenly cost 23% more to sell my house (currently I pay nothing), I will not sell my house...period. If buying a new $30,000 car suddenly costs $39,375, instead of $31,875, I'll make the old one last a bit longer. So, there are two pressures on the economy. Small items will be freely available on the black market, costing tax revenue, and large items will suddenly cost hundreds to thousands of dollars more, depressing sales, costing tax revenue.

It is a lose-lose proposition that is ignored by the proponents.

[lockmat]

This is not even taking into consideration the effect on the economy. If the price of goods suddenly rises 23%, people will not buy them, regardless of the fact that they no longer pay income tax. If it suddenly cost 23% more to sell my house (currently I pay nothing), I will not sell my house...period. If buying a new $30,000 car suddenly costs $39,375, instead of $31,875, I'll make the old one last a bit longer. So, there are two pressures on the economy. Small items will be freely available on the black market, costing tax revenue, and large items will suddenly cost hundreds to thousands of dollars more, depressing sales, costing tax revenue.

It is a lose-lose proposition that is ignored by the proponents.

I do kind of agree that there would be a shock period. And even though they'd know they have more money in their pockets from their paychecks, I don't think it would register upstairs and fear would set in. Emotions over fact would win.

[lockmat]

I have a hard time feeling that any tax on wages is a good idea, especially when it appears that the income tax is

(link) and there's no law requiring the average wage earner to pay income . If "dollar for dollar federal revenue neutrality" means that the revenue collected would match that currently collected including income tax, then that would still be wrong. The correct calculation should subtract current income tax revenues. Even then, we would still never recover those triillions that were confiscated from us over the years.

A friend showed me this

http://docs.law.gwu.edu/facweb/jsiegel/Per...s/IncomeTax.htm

[TheNiche]

It doesn't have to be the majority of people to cripple the system. It does not have to even be a large minority. Current estimates are that 10% of the economy is black market, with only a 6-8% sales tax. In high tax products like cigarettes, it is significantly higher. Estimates are that one half of New York City's cigarettes are sold on the black market. The estimates given do not account for black market losses. If 20% of estimated revenue is lost to the black market, how do you make up the difference? If you raise the tax rate higher than 23% to make up the difference, the black market becomes more lucrative, costing even more revenue.

It is well known in quality control circles that the larger the operation, the harder it is to control. The current tax structure relies on a comparatively few employers to withdraw taxes from paychecks. If you change that system to where there are millions more people required to report taxes, many of whom are dealing in cash, it is ripe for abuse. Remember the problems the State had collecting sales tax on used vehicle sales between individuals? They lost so much tax revenue that they had to change the system.

Black markets take advantage of just about any kind of system of taxation as you could propose. There's certainly a black market with repsect to sales taxes, as you point out (although most of your examples are interstate commerce as opposed to international commerce), and there's certainly a black market with respect to income taxes, as evidenced by our day laborers.

This is not even taking into consideration the effect on the economy. If the price of goods suddenly rises 23%, people will not buy them, regardless of the fact that they no longer pay income tax. If it suddenly cost 23% more to sell my house (currently I pay nothing), I will not sell my house...period. If buying a new $30,000 car suddenly costs $39,375, instead of $31,875, I'll make the old one last a bit longer.

So what you're saying is that rather than consuming goods that are still just as affordable, people will just sit on their cash indefinitely. If that were to happen, interest rates would plummet and much more credit would be available to people. What do you suppose happens then?

[memebag]

I'm in favor of any tax scheme that is simpler and/or more efficient than the current mess. A flat income tax could eliminate most of the IRS and all tax perparation services. There are problems with a flat tax, though.

A national sales tax would be simpler for the consumer, but what about the increased complexity for merchants? This gives them the burden of collecting federal taxes, making sure they are reported, all that. Sounds like a pain to me.

I agree that this would increase the size of the black market, which would punish law abiding citizens.

[lockmat]

I'm in favor of any tax scheme that is simpler and/or more efficient than the current mess. A flat income tax could eliminate most of the IRS and all tax perparation services. There are problems with a flat tax, though.

A national sales tax would be simpler for the consumer, but what about the increased complexity for merchants? This gives them the burden of collecting federal taxes, making sure they are reported, all that. Sounds like a pain to me.

I agree that this would increase the size of the black market, which would punish law abiding citizens.

I think we should at least try and head in a better direction. Do you(anyone) think this is a better plan than the system we have now? If not, what is at least a broad idea that would be better?

This sure seems more simple. And no system is perfect, so let's stop pointing out every single flaw (looks like we have come up with one or two so far) and start looking at how much better it is than the one we have now.

[RedScare]

Black markets take advantage of just about any kind of system of taxation as you could propose. There's certainly a black market with repsect to sales taxes, as you point out (although most of your examples are interstate commerce as opposed to international commerce), and there's certainly a black market with respect to income taxes, as evidenced by our day laborers.

So what you're saying is that rather than consuming goods that are still just as affordable, people will just sit on their cash indefinitely. If that were to happen, interest rates would plummet and much more credit would be available to people. What do you suppose happens then?

So, you acknowledge the effect of a quadrupling of the tax rate on the underground economy, then ignore it? Brilliant response.

So, let me just ask you point blank. Currently, if your house on the eastside increases in value by 20%, you may be tempted to cash in, and reinvest that profit in a larger house. If the new house comes with a 23% sales tax attached, is master economist Niche going to go through with the sale, knowing that the sales tax is larger than the profit he just made selling the other house?

With vehicles, it is even worse. New cars commonly lose 20% of their value once you drive it off the lot. After 2 years, when many consumers like to trade for newer models, the depreciation is commonly about a third. Now, in addition to the 33% depreciation hit, add a 31.25% tax. How many people, EVEN IF THEY COULD AFFORD IT, would pay 65% of a car's value for 2 year's use?

Frankly, I would expect an economy buff like yourself to be the first to point out its obvious flaws. I guess your ideology is overwhelming your interest in being considered intelligent.

[RedScare]

I think we should at least try and head in a better direction. Do you(anyone) think this is a better plan than the system we have now? If not, what is at least a broad idea that would be better?

This sure seems more simple. And no system is perfect, so let's stop pointing out every single flaw (looks like we have come up with one or two so far) and start looking at how much better it is than the one we have now.

I am in favor of massively simplifying the tax code. To do this, you must eliminate virtually ALL of the tax deductions, which is what complicates things. I am even willing to give up my home mortgage deduction for the greater good...but, ONLY if we REALLY get rid of the deductions. Otherwise, I may as well be as self-centered as everyone else.

If everyone paid taxes without deductions, we could exempt low income earners AND lower the highest tax rate. Makes too much sense, though, so don't look for it to happen.

[memebag]

I think we should at least try and head in a better direction. Do you(anyone) think this is a better plan than the system we have now? If not, what is at least a broad idea that would be better?

What RedScare said (as usual). The current tax code is obscene. The rules are so complicated that it is virtually impossible to be sure you are paying the correct amount of tax. It got this way because of our screwy "one dollar one vote" political system, but that's another thread. Start from scratch and simplify the whole thing.

[TheNiche]

So, you acknowledge the effect of a quadrupling of the tax rate on the underground economy, then ignore it? Brilliant response.

I acknowledge that any system is subject to criminal manipulation. I've admitted that a sales tax is not perfect (and that I'd support a VAT, which is also imperfect). But then, even as I've explained how your concerns are somewhat overblown, I never claimed that a sales tax could be made perfect. Is absolute perfection the goal? If so, you're going to be disappointed.

So, let me just ask you point blank. Currently, if your house on the eastside increases in value by 20%, you may be tempted to cash in, and reinvest that profit in a larger house. If the new house comes with a 23% sales tax attached, is master economist Niche going to go through with the sale, knowing that the sales tax is larger than the profit he just made selling the other house?

With vehicles, it is even worse. New cars commonly lose 20% of their value once you drive it off the lot. After 2 years, when many consumers like to trade for newer models, the depreciation is commonly about a third. Now, in addition to the 33% depreciation hit, add a 31.25% tax. How many people, EVEN IF THEY COULD AFFORD IT, would pay 65% of a car's value for 2 year's use?

Frankly, I would expect an economy buff like yourself to be the first to point out its obvious flaws. I guess your ideology is overwhelming your interest in being considered intelligent.

The convoluted tax system that we have at present distorts relative prices between many different kinds of goods, and does so in a way that is not at all transparent. If the current system was dismantled, the relative prices of many goods and services would adjust--some very quickly and others over several years. For instance, without a tax break on paying interest on a mortgage, the price of owner-occupied housing would likely take a pretty massive hit. With that in mind, if a politically-viable FairTax were proposed, I'd be looking to liquidate residential properties that have prices supported by owner-occupants.

With vehicles, it is even worse. New cars commonly lose 20% of their value once you drive it off the lot. After 2 years, when many consumers like to trade for newer models, the depreciation is commonly about a third. Now, in addition to the 33% depreciation hit, add a 31.25% tax. How many people, EVEN IF THEY COULD AFFORD IT, would pay 65% of a car's value for 2 year's use?

The resale of used goods would need to be untaxed, or alternatively, a tax rebate would need to be paid to the seller to account for a tax on the depreciation of the used good.

Frankly, I would expect an economy buff like yourself to be the first to point out its obvious flaws. I guess your ideology is overwhelming your interest in being considered intelligent.

As I pointed out several times, I'm a supporter of a VAT, not a sales/consumption tax. My interest in defending the FairTax is only that it has been mischaracterized by you and others in a way that is IMO intellectually dishonest.

[memebag]

The resale of used goods would need to be untaxed, or alternatively, a tax rebate would need to be paid to the seller to account for a tax on the depreciation of the used good.

Eek.