Equality?

[DuncanONeil]

How does example two not get paid to the Government?

This is a basic misunderstanding of the FairTax as well.

Two types of taxes is not necessarily doubling the taxation. Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation.

Getting taxed X% sales tax for small X and Y% income tax for a larger Y is not double taxation compared to paying 30+% sales tax. For anyone who has Y around 30%, the sales tax is actually comparable.

When Ontario introduced the PST, they replaced an internal manufacturing tax, with an external sales tax. The tax was larger, but none of the savings from scrapping the manufacturing tax got passed on to the consumer.

As for free market success rates, my point is consider the following for two contractors with:

-Similar Quality of Work
-Similar Track Record

Offer 1:

$100,000 + 30% sales tax $30,000 =$130,000

Offer 2:
$77,000 + 30% sales tax $23,100 = $101,000

The only difference being in Offer 2 the sales tax never actually gets paid to the government. Offer 2 is not substandard quality, its a huge savings due to cheating on taxes.

[SadisticNature]

The person in example 2 defrauds the government and keeps the tax money for themselves. In an income tax model you are taxed on profits, so choosing to cheat on taxes is a matter of reducing profits.

In a sales tax model you are taxed on revenue, so the cheaters can easily drive the honest people out of business by offering far lower prices.

How does example two not get paid to the Government?

This is a basic misunderstanding of the FairTax as well.

[DuncanONeil]

So the provider of the goods or services is defrauding the Government by charging a lower price for his product?
Um if he charges a lower pirce for hias product the tax is less and still gets paid.
That is in fact on of the goals of the FairTax, lower prices and bigger paychecks!

The person in example 2 defrauds the government and keeps the tax money for themselves. In an income tax model you are taxed on profits, so choosing to cheat on taxes is a matter of reducing profits.

In a sales tax model you are taxed on revenue, so the cheaters can easily drive the honest people out of business by offering far lower prices.