Wouldnt a large sales-tax just drive people to underground economies where taxes are avoided?
There would be cheating, yes. Hard to imagine the cheating would be anywhere near as prevalent as under the current system though. Current income-based tax system cheating methods Individuals do not report income Usually requires collusion between wage-payer and wage-earner Businesses under-report profits Usually requires a fancy accountant, phony books, etc Fair Tax system cheating methods Businesses sell un-reported goods at retail and dont collect the sales taxes they are supposed to This assumes the businesses bought the goods or raw materials at wholesale themselves; if they didnt then they had to pay the sales tax and no more retail sales taxes are due on the item For any business to even be allowed to buy at wholesale fairly severe accounting measures will be required so the IRS can track goods that still contribute to retail sales of goods or services. IRS doesnt care if the final consumer pays the retail sales tax or the business does. Even if the business decides to sell good
