Quote:I'd be even more spartan about it than Fair Tax, applying the same tax to used item purchases that would be applied to new item purchases. Infinite taxation? Yeah, but there are two pros to that:

 

1. It eliminates fraud committed by marking a new item as used to steal business from competitors with lower tax rates.

 

2. It would allow for the effective tax rate to be lower.

 

I also think Adam Smith would have something to say about a used-based economy in the Fair Tax scenario. As more and more people flocked to used items--let's say cars for this example--the demand for those used cars would go up, as would the prices. Meanwhile, dealerships would be sitting on new cars they struggled to sell, and those prices would be lowered. Eventually, some Clark Howard wannabe would notice that it costs less to buy a brand new Ford Focus than it does to buy a three-year-old Ford Fusion with 50,000 miles on it, and you'd see people shift back to the new-build market to take advantage of lower prices to compensate for higher taxes. The new/used equilibrium would balance itself out over time, and we'd be right back to people with cash burning a hole in their pocket buying new cars, and people who want to save money on taxes buying used, but they'd buy those used cars at a premium.

 

It should also be noted that most of what we buy physically can't be purchased used. I don't know about you, but I'm not interested in toilet paper from Goodwill.