Americans For Fair Taxation: Ask the Expert"As a percentage of gross domestic product (GDP), tax evasion in 2001 is beyond 2.6 percent, compared to 1.6 percent in 1991. This represents over 16 percent of taxes due."
Do you think that statistic is wrong? 16% tax evasion existed in 2001, so it is hard to imagine that a fair tax would be much worse.
Also, I find it really interesting that if only a sales tax is used for federal revenue, then there would a around a 90% reduction in files for taxes.
If anything, a sales tax would function better, and with the increased economic growth of eliminating the income tax, revenues are sure to be higher in the future with a sales tax instead of an income tax.
Anyone still has the same reasons to evade any taxes that they might have, so there needs to be more evidence for a claim that a universal sales tax would have more tax evasion then the current income tax.
and regardless, even if there is tax evasion, there is models that factor in pessimistic assumptions, and that will just mean that the rate must be higher to get more full revenue from large companies that are guaranteed to pay full taxes.
It seems like the rate would be between 40% and 30%, and if that is, then so be it. Tax evasion doesn't refute that, because predictions have it factored in.
FactCheck.org: Unspinning the FairTax"Using a formula that corrects for the faulty assumption about government spending, William Gale, director of the economic studies program at the Brookings Institute, calculates that a 39.3 percent exclusive rate would be necessary for revenue neutrality. (We used the lower Advisory Panel number). A more recent study by FairTax supporter and Boston University economist Laurence Kotlikoff – working from Gale’s formula and adopting the same basic assumptions – determines that a 31.2 percent exclusive (or 23.8 percent tax-inclusive) rate would be sufficient."
I just think that if someone is against a universal sales tax for distribution reasons, because it would increase the percentage of the tax burden to the middle class from what we have now then that is understandable. but the whole idea of some insane levels of tax evasion is being used as a scapegoat.
Lets just assume that it would be 39.3%, to give the pessimists the benefit of the doubt, and the proposal still holds up.