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URL:  http://boards.fool.com/i-wonder-if-a-flat-tax-would-stimulate-a-black-30290296.aspx

Subject:  Re: FairTax Date:  9/29/2012  11:49 AM
Author:  TMFPMarti Number:  116720 of 121316

I wonder if a flat tax would stimulate a black market?

Any tax system will have those who find a way to work around it. Such is the nature of the beast.

I see one impediment and one reasoning flaw with what's commonly called "flat tax." BTW, since this disussion began with a reference to the "Fair Tax," we should note that there's no relationship between that and a flat tax, which is still income based.

The impediment you've already mentioned. Everyone's idea of a flat tax is "flat except for [adjustments which benefit the speaker]." Teamed up with "money is speech" and the resulting enormous clout of affected groups (can you say "real estate lobby"?), it's a long row to hoe.

The flaw is that people think a flat tax would be simple. They don't realize that the vast majority of the current law is devoted to defining income. Any income-based system is going to retain some level of complexity unless you go to a tax on gross receipts.

Phil
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