> I've sure someone far smarter that I can explain why I'm amazingly naïve.
I actually like your plan a lot, but it's worth knowing the weak points of any plan.
> Additionally you simplify enforcement by narrowing the collection points considerably.
That's one weak point. As long as there's big money involved, there will be incentives to minimize, cajole, hide, smuggle, etc. For example, the tax burden for cigarettes is already rather high, so there's a market for legal (Native American smoke shops), quasi-legal (online ordering), and illegal (selling loose cigarettes on the street) cigarette sales to get the "tax free" discount.
Extrapolate that to taxes on all goods and you see burgeoning black and grey markets and the organized crime that goes along with them.
...and there will be incentives for fraud with the basic income reporting as well.
There may be less regulation and enforcement overall, but it won't disappear by any means, especially given enough time for fraudsters to become more sophisticated.
As I said in another reply, there is already tax-evasion at the business level. Only having to enforce tax collection at the business level allows more focus on ensuring compliance. I would think the penalties would be much higher as well.
As far as basic income fraud, I think it should a basic income for EVERYONE, no matter the income level. If you are a real person with identity documents and of a certain age, you get a check. Will people try to defraud that, of course. They already defraud all the existing government programs. But as with dropping income tax, with basic income you drop all other government merit based assistance programs and focus only on a basic income program. Your fraud detection is now focused on a single program.
I even like the FairTax idea of an across the board tax 'prebate' for poverty level spending. Then every eligible citizen gets a basic income AND doesn't pay taxes on spending below the poverty line.
The question would be, would the taxes collected on above-poverty spending fully fund the program AND federal/state/local government spending? That's where I'm totally clueless. I tend to think that it would work out if it was a complete changeover. All government assistance programs would need to be merged into a single program and the federal/state tax systems would need to be scrapped en masse and replaced with a flat federal sales tax.
Will it ever happen? Hell no. Even if it is economically viable, there are way too many special interests that would lobby against anything like it happening.
I actually like your plan a lot, but it's worth knowing the weak points of any plan.
> Additionally you simplify enforcement by narrowing the collection points considerably.
That's one weak point. As long as there's big money involved, there will be incentives to minimize, cajole, hide, smuggle, etc. For example, the tax burden for cigarettes is already rather high, so there's a market for legal (Native American smoke shops), quasi-legal (online ordering), and illegal (selling loose cigarettes on the street) cigarette sales to get the "tax free" discount.
Extrapolate that to taxes on all goods and you see burgeoning black and grey markets and the organized crime that goes along with them.
...and there will be incentives for fraud with the basic income reporting as well.
There may be less regulation and enforcement overall, but it won't disappear by any means, especially given enough time for fraudsters to become more sophisticated.