Quote:
Originally posted by Munchkin03
How will illegal activity such as drug sales and prostitution be taxed? 
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Under the current system, underground market activity is not taxed because we tax productivity rather than consumption. If we had a national consumption tax, instead of a productivity tax, every time someone (like drug dealers) purchased something, they would have to pay taxes.
ETA the argument that a national sales tax would bring in revenues from an underground economy might be specious. This is because a political climate that would allow a national consumption tax, instead of income taxes, might also facilitate the legalization of drugs, prostitution, etc.