Posted: Oct 13, 2005 By: Presten Witherspoon

Subject: Rebuttal of Panel claim:

Comment: Here, I re-post section B9 of the Americans for Fair Taxation report of April 29, 2005.

"B9. The FairTax ensures greater compliance with less intrusiveness. The FairTAX reduces the current $312 to $353 billion 'tax gap' (the difference between what taxpayers should pay and what they actually pay on a timely basis) for several reasons. First, compliance is inversely proportional to the marginal rate or the reward for being non-compliant. Because marginal tax rates are the lowest they can be under any sound tax system, cheaters profit less from cheating. Second, because the FairTax reduces the number of tax filers by as much as 80 percent as individuals are removed entirely from the tax system, enforcement authorities can catch cheats by monitoring far fewer taxpayers. More than 85 percent of the sales tax is collected by less than 15 percent of the retailers. Third, simplicity and visibility add to enforcement. Today, taxpayers can cheat in the privacy of their breakfast table and bury their cheating on 227 million tax returns in the unnavigable 7,000 code sections with plausible deniability that the taxpayer even understood the law. The FairTax increases the likelihood that tax evasion will be uncovered and leaves little room to hide between honesty and outright fraud (to say nothing of the well-established efficiency of current state sales tax authorities, well experienced in detecting such infractions). In short, tax collectors focus enforcement resources on far fewer taxpayers, using consistent and vastly simpler forms, with far fewer opportunities to cheat, diminished incentives to do so and a far greater chance of getting caught if they do. Much of the tax gap today is attributable to confusion and mistakes that are eliminated under the FairTax.

"Currently, an estimated 18 million, wage-earning Americans have dropped out of the income tax system entirely as 'non-filers'. This aspect of the underground economy is successfully taxed at the retail level under the FairTax.

"Finally, no tax is perfect. Although one can cheat under the FairTax, this cannot be viewed in a vacuum. With many fewer returns, all consistently simple returns, a major concentration of points of collection and the fundamental requirement that it takes two to cheat, compliance under the FairTax is vastly improved when compared to the current income tax system."

The Panel's 'concern' is invalid and is being used as an excuse to dismiss this brilliant and life-changing idea of FairTax.