Recently, I have become extremely annoyed by many in the LP that have become mindless automatons preaching the virtues of the so-called FairTax. Unfortunately, they are apparently not too bright. Yes, I am going to bad mouth the proposal and advocates within the LP, and rightfully so. Philosophically, a cardinal belief in Libertarian thought is that taxation is government sponsored THEFT.
Theft is theft, it doesn’t matter if it happens when you receive your paycheck or at the cash register, it is still government sponsored theft. The goal is to eliminate government theft, not find a more convenient form. Now, on to the more valid criticisms of the so-called FairTax, claims that the “FairTax” is fair are dubious at best, and an outright exaggeration at worst.
First, there is the claim that the “FairTax” will increase purchasing power. Unfortunately, this ignores basic economics and common sense. Here’s an example to demonstrate my point: Let’s say you, the reader, are building a house. You’re purchasing manufactured materials (bricks, rebar, concrete, electrical wires, plywood, 4x4s, etc). All of those materials would be taxed at the Florida sales tax rate of about 7%. Under the “FairTax,” you would have to add an additional 23% sales tax. That dramatically increases the cost of building the house, and increases the cost for end consumer/purchaser of that house.
Even though the purchasing power of the wealthy will increase and they could easily afford such a house, lower & middle income people would be priced out of housing market. The same would apply to the materials to produce cars, all electronics, even processed foods, as the tickle down effect of this tax regime will dramatically increase the cost of living without proportionally increasing the disposable income of average Americans. Rather than increasing the purchasing power of average citizens, it will create a new group of citizens who have to rely on a government handout in order to pay for essential goods and services.
Second, the very nature of the proposal requires the same amount of government meddling as under the current tax system. The claim that the “FairTax” would eliminate the IRS isn’t exactly true. Although the agency known as the IRS would be eliminated under the proposal, in order to enforce “FairTax” compliance, there would need to be some overbearing IRS-like government agency that would need to ensure businesses paid their portion of the FairTax and destroy the tax-evading black-markets that will pop up the FairTax system. To believe that a change in tax system is going the overall abusive and oppressive nature of taxes and government enforcement is naïve at best. Additionally, the “prebate” is nothing more than a grandiose scheme to handout convenient cash and create government dependents.
Why try to earn more, when Uncle Sam guarantees a check every month? The FairTax “prebates” can also be used to artificially stimulate the economy according to the needs of government, regardless of market forces. Why actually reduce government regulations that hurt the free market, when the government can just increase the monthly “prebate” stipend of every American to prop it up? The FairTax is too easy for the government to exploit.
The FairTax just doesn’t sound Libertarian when you break it down. It’s no better than the current system, and it certainly won’t reduce the size and scope of government.
Joseph Wendt currently serves as Convention Committee Chair. Joe is from the Tampa area and is a previous two-time candidate for local public office, and a US Navy and Iraq War Veteran.