That's an interesting point. The sales tax will be a pseudo-VAT on grey market activity, too, since many of their inputs will have been purchased and taxed.

Undisciplined

econ

A Few Thoughts About Replacing the IRS with Excise Taxes and Tariffs

>Without taxes on income/payroll/inheritance/capital gains/etc. the state loses most of its rational for its rampant invasions of our financial privacy.

Exactly, most of the hysteria around KYC / AML is *not* because they are trying to stop terrorist....most of it is tied to tax evasion concerns. I would say thats 90% of the reason. 

There is a corollary to this point: The gov will now capture all the revenue lost by gray market activities. Someone who sells a boat for cash and never deposits it because they are worried about the tax impact.....now that person spending will still generate tax revenue no matter if its cash or otherwise.

I suspect the "shadow economy" is an order of magnitude bigger than they think, and by ending the war on income they will capture much more revenue than their initial calculations tell them.  

 

