The Fair Tax would seem to be a boon to seller of used goods and parts. It seems inevitable that a federal government agency would have to get involved determining defining what is a "new" good and what is a "used" attorneys. That also means jobs for attorneys in litigating the various determinations and trying to keep clients out of trouble.
Below Mark discusses his take on the loophole. It is copied in its entirety from his blog.
Mr. Haney from "Green Acres," and a hypothetical about the Fair Tax
Yesterday, October 19, 2011, 6:05:14 AM
Let's say the so-called Fair Tax is enacted. As I understand the Fair Tax, new goods are subject to taxation. Used goods are not.
What constitutes a "new good"? Let's look at automobiles. One new tire on a used car does not a new car make. On the other extreme, one used tire on a car fresh off the assembly line, I think most people would agree, does not make the car "used." What about "refurbished" cars? The State---and I use the word in the general sense of sovereign---would have to monitor such things. A company could drop rehabbed bodies onto new frames with new engines and voila! They could say the car was used. There would be no tax. Sure, the parts underneath the body would be new and subject to taxation, but remember, part of the Fair Tax consists of getting rid of the IRS. The State would need a policing/collection agency for such things. In the meantime, the auto industry, already in bad shape, would go down the tubes. Only the rich---a little more than one percent (1%)---would be able to purchase cars brand-new. They probably would own the companies that would rehab the cars I described. They probably also would obtain tort immunity from Congress for any products liability claims, if they even had to do so. After all, the goods sold were used.
Take this example across the board. We suddenly become a country of Mr. Haney's from "Green Acres," driving around in beat-up pickup trucks selling (a bill of) used goods.