@TXFairTaxer how on earth would the FairTax reduce evasion? It’s completely unenforceable.
— Matthew Chapman (@fawfulfan) December 1, 2013
Completely unenforceable? The FairTax is the most enforceable tax plan ever created. This PDF will explain how.
As for How the FairTax reduces evasion, this is very simple to understand.
~165,000,000 = Estimated Total # of Individual Taxpayers in the US.
~ 22,000,000 = Estimated Total # of Businesses in the US.
~187,000,000 = Estimated Total # of Tax Collection points. These are the entities who currently report the “total income” to the IRS. First, let’s assume that 100% of the Businesses sell New Goods and/or Services.
Under the FairTax, consumers will no longer have to report taxes because we will simply pay taxes when we purchase new goods/services. It is the businesses who will have to report the income to their respective State. Therefore, the FairTax eliminates 165,000,000 points of collection (the Estimated Total # of Individual Taxpayers in the US).
187,000,000 – 165,000,000 = 22,000,000
22,000,000 / 187,000,000 = 11.76%
100% – 11.76% = 88.24%
However, we know that not all businesses sell new goods/services to retail consumers. Some of them only sell used goods (Used goods are not taxed under the FairTax), and many others only sell to other businesses (FairTax does not tax business to business transactions). Should we assume a conservative 90% sell new goods and/or services? How about a more liberal 75%?
90% of 22,000,000 = 19,800,000
75% of 22,000,000 = 16,500,000
From the equation above:
19,800,000 / 187,000,000 = 10.58%
16,500,000 / 187,000,000 = 8.82%
As you can see, the FairTax will reduce POTENTIAL Tax Evasion by at least 88.24% or by as much 91.18%.