Equality?

[DuncanONeil]

So the provider of the goods or services is defrauding the Government by charging a lower price for his product?
Um if he charges a lower pirce for hias product the tax is less and still gets paid.
That is in fact on of the goals of the FairTax, lower prices and bigger paychecks!

The person in example 2 defrauds the government and keeps the tax money for themselves. In an income tax model you are taxed on profits, so choosing to cheat on taxes is a matter of reducing profits.

In a sales tax model you are taxed on revenue, so the cheaters can easily drive the honest people out of business by offering far lower prices.