[dorchadas]

> There are quite a few people who take cash and yet do not report it as income. However, in the case you are describing a business would have to sell something illegally (without reporting their sales to the IRS). In my mind controlling businesses is far less burden on the IRS than individuals (how many returns are audited again? less than 1%?).

You can easily do the same thing. Just take the cash from selling stuff and don't report it as income. Hell, you could report it as a loss at that, and maybe even get some benefit from that. There's still ways around it, and they will be found by those who have the money to find them.

> Not only that, if that money is then used to purchase legitimate goods the tax is still received.

But it's not. The tax on what the new person bought is, but not on the original purchase. The tax of the original purchase still isn't received.

Either way, it hurts honest people and the poor, who likely don't have the connections or money to get around paying taxes; not to mention it's a much higher percentage of their income that's being taxed, so it doubly impacts them if it's sales-tax only.

[nightski]

This narrative that it hurts the poor is just not true. You get a prebate for basic consumption. It only hurts the poor who spend beyond their means on luxury goods, which is a hopeless situation anyways. (hurts is a poor term, because the cost of goods might not go up at all even with the tax included due to reasons stated elsewhere)

If anything, it allows the poor to pay less tax and save more of their paycheck if desired. It puts the choice in their hands.

Before it is claimed that the poor don't pay tax now anyways - that is only true if you consider gross income to be representative of financial status. You can make an above U.S. average salary and still be poor depending on where you live. This system does not discriminate based on gross income. It's like a no-limit IRA that you can withdraw from at any time.

[dorchadas]

You're assuming they give a prebate. Most people I know just want a flat sales tax, without any prebate. Which does harm the poor.

> This system does not discriminate based on gross income.

But it does. It still impacts those who make less more. It costs more of what little income they do get to keep after bills, and applies it to all necessities. It's a horrible idea.