How Are Used Goods Handled under the FairTax?
From reader Jay Hinton:
Good afternoon, Joshua. I have another question that I would like to ask the bloggers.
Under the Fairtax system, how would consignment shops and used car dealers participate? I understand that once a we only pay the Fairtax once on any good or service received. However, while the shirt or car may be used, the thrift store or used car lot is providing a service.
Only taxing a portion of the sale would be like a VAT, and would complicate the simplicity of the Fairtax system. Does the Fairtax system tax these items?
Thanks for your help and all your time in keeping up this extremely informative blog.
Have at it, guys.
2 Responses to “How Are Used Goods Handled under the FairTax?”
The used car lot and consignment shop are purchasing a used good from you and selling it (still a used good) to someone else. There is no FairTax on either transaction.
“However, while the shirt or car may be used, the thrift store or used car lot is providing a service.”
Customers are buying the used goods, not the service of making the goods available for sale.