Quote Originally Posted by David88vert View Post
There are many things that will still have to be answered before Fair Tax can work. Take the example of the automobile industry that Fair Tax supporters have been unable to answer so far.

Under Fair Tax 2011, new cars would be taxed, but used cars would not. How do you define what makes it new or used?

What we typically consider a new car, like a GM/Ford/Honda/etc, will have the tax added. Your 20K car would be 25K. And I doubt that the tax would be financeable, so you will need to pay a lot more when you go to purchase one. This will mean that people will keep their cars longer, which will reduce auto sales, and lower the amount of taxes collected on new cars.

How about companies that take refurbished bodies (old ones), and drop them on a new driveline? It would not be decalred new, and I suspect that you would have a lot of companies pop up quickly that perform this refurbishing. No tax under Fair Tax for it, and who would police it if the IRS was abolished? On top of that, since it was used, the companies would be tort exempted, allowing improperly built cars onto the roads.

Killing the auto industry so that you can pay a little less tax might not be fair to the American auto workers.

There are lots of situations that need to be thought out before enacting a "Fair" Tax.
A few things here.

1. that 20k car would not be 25k. It would still be about 20k. The difference is that all of the taxes that were paid in piece parts would be gone and replaced by the fairtax that is collected at the point of sale. Sales taxes are financable now, no reason to believe they wont be after the fairtax.

2. Enforcement and collections would still be done, and it may even done by an agency called the IRS. The difference is that it will be noting like what we think of it now.

3. NTSB and state agencies would still be around to regulate what vehicles would get on the road. Just like I cannot rebuild and license a vehicle today, these pop up companies will not be able to do it because of the fairtax.

4. Specific regulations would still need to be written to cover specific industries. This is true with any piece of legislation, no matter how major or minor.

5. New cars will still be purchased by the people that purchase them now. There is no reason to believe any particular market, except tax preparers, will be destroyed by the fairtax.