Effects On Tax Code Compliance
One avenue for non-compliance is the black market. FairTax supporters state that the black market is largely untaxed under the current tax system. Economists estimate the underground economy in the United States to be between one and three trillion dollars annually. By imposing a sales tax, supporters argue that black market activity would be taxed when proceeds from such activity are spent on legal consumption. For example, the sale of illegal narcotics would remain untaxed (instead of being guilty of income tax evasion, drug dealers would be guilty of failing to submit sales tax), but they would face taxation when they used drug proceeds to buy consumer goods such as food, clothing, and cars. By taxing this previously untaxed money, FairTax supporters argue that non-filers would be paying part of their share of what would otherwise be uncollected income and payroll taxes.
Other economists and analysts have argued that the underground economy would continue to bear the same tax burden as before. They state that replacing the current tax system with a consumption tax would not change the tax revenue generated from the underground economy—while illicit income is not taxed directly, spending of income from illicit activity results in business income and wages that are taxed.
Read more about this topic: FairTax
Famous quotes containing the words effects on, effects, tax, code and/or compliance:
“Corporate America will likely be motivated to support child care when it can be shown to have positive effects on that which management is concerned about—recruitment, retention and productivity. Indeed, employers relate to child care as a way to provide growth fostering environments for young managers.”
—Dana E. Friedman (20th century)
“The machines that are first invented to perform any particular movement are always the most complex, and succeeding artists generally discover that, with fewer wheels, with fewer principles of motion, than had originally been employed, the same effects may be more easily produced. The first systems, in the same manner, are always the most complex.”
—Adam Smith (1723–1790)
“If you tax too high, the revenue will yield nothing.”
—Ralph Waldo Emerson (1803–1882)
“Hollywood keeps before its child audiences a string of glorified young heroes, everyone of whom is an unhesitating and violent Anarchist. His one answer to everything that annoys him or disparages his country or his parents or his young lady or his personal code of manly conduct is to give the offender a “sock” in the jaw.... My observation leads me to believe that it is not the virtuous people who are good at socking jaws.”
—George Bernard Shaw (1856–1950)
“I am not of the opinion generally entertained in this country [England], that man lives by Greek and Latin alone; that is, by knowing a great many words of two dead languages, which nobody living knows perfectly, and which are of no use in the common intercourse of life. Useful knowledge, in my opinion, consists of modern languages, history, and geography; some Latin may be thrown into the bargain, in compliance with custom, and for closet amusement.”
—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)