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Here’s what I wrote:
So, let me get this straight…you think that a system which was designed by American Economists to help the American Economy, is comparable to a Mexican Tax system that was designed by a corrupt Mexican Government? Laughable!
First, the FairTax is a Consumption Tax, not a sales tax.
A few things…
1) Under the [IVA] system, businesses must supply (but rarely do) other businesses with official sales receipt known as a “Factura”.
I’ll assume you’re right about the “Factura” system (I don’t know). I DO know, however, that that more closely resembles the VAT (or, Value Added Tax). The FairTax, however, is nothing like the VAT.
Under the FairTax, the Federal Government collects the tax from each of the 50 States. Each state collects the FairTax (much like they do now with their State Taxes) from businesses on a monthly basis (not quarterly, not annually). Businesses will “visibly” include the tax in the cost of their goods/services (unlike now where the costs are hidden).
2) First, although designed to be the primary federal tax system, [IVA] is just one more form of tax applied by the federal government (so much for one and only tax plans).
Again, the VAT! In most countries that employ a VAT, additional taxes are needed because the VAT is generally insufficient. The FairTax, however, was designed and studied for over 16 years before the rate was set. Very detailed numbers have been published showing exactly how much tax is needed to replace the taxes that are in effect today.
Let me point out that our politician in Congress can implement, at any time, both a Sales and Income tax. The reason they don’t is “We The People”…Americans. They know if they did implement both types of taxes, they would be committing political suicide.
Additionally, it is written into the FairTax to remove all forms of Income Taxes BEFORE the Consumption Tax is enacted.
3) Most Mexican businesses silently opt out of the Factura system and work in the cash market instead.
That’s because the “Factura” system allows them to do so.
(from my blog)The FairTax reduces evasion in the US, 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%.
4) There is nothing stopping the federal government from installing additional federal tax systems to make up lost ground.
As I alluded to above…What is stopping our Congress from implementing additional taxes today? Absolutely nothing. But again, as the FairTax is written, it will reduce the possibility of Congress adding additional taxes.
Why? Simple. Today, all of our taxes are spread out so thin that we don’t see them. But we sure do feel them…in the cost of the good/services we pay for, and in lower wages because businesses are forced to pay these taxes that we cannot see. The FairTax, however, will eliminate those hidden taxes and put them all in one place so that EVERY person in the US who ever purchases anything will see them.
5) And there could never be enough IRS agents to police the tax so most of the US economy would move underground (which would impact everything, including the US’s ability to borrow money on international markets)
As pointed out above, the FairTax would abolish the IRS. There is no need for an IRS like agency. Follow this tax trail…
Consumers —> Businesses (FairTax is included in price)
Businesses –> State Gov’t
States ——> Federal Gov’t
As you can see, neither the State or Federal Governments have any contact with Consumers. States deal with businesses in their respective states (as 45/50 states do now). And the States pass taxes on to the Federal Government.
I hope what I’ve written has helped you understand where you’re wrong. If you’d like more clarification, you have my email.