It's Not broken, And doesn't need to be fixed.
It's working as intended.
If people are undercutting your price, it means you are to greedy and market is correcting itself.
3,000 g -- imanidiot <--- This one is yours.
4,999 g -- iunderstandbasicmath
5,000 g -- idontundercutbythousands
5,001 g -- ilikemakingmoney
5,100 g -- ironicretainername#5
In this case.. undercutting buy 1 is pointless.
You need to undercut by the tax so your item is cheapest regradless of tax. So it selll 1st. ya that may not be 2k but still 4700 wouldn't be a bad undercut.