More on the Fair Tax II
Thanks to the handful who wrote rebuttals to my previous post with arguments of their own. If I understood correctly, they boil down to the following counterarguments:
1) Your fears are not based on the proposed legislation, but rather on what might happen.
I am pretty confident in my predictions, in that they fit public choice theory. If one looks at the actual history of government, one sees politicians repeatedly breaking down limits on their power and finding new ways to reward their cronies. I think the rise of the income tax itself is quite instructive; it was originally conceived as a method to shift the tax-burden away from the poor by reducing consumption taxes. Its originators claimed that it would tax only the ultra-rich and the rates would never rise above 8% or so. However, when in World War I the tax revenue from imports collapsed, the U.S. government wasted no time in exploiting this new source of revenue.
2) Politicians won’t bring back the income tax. It will be easier simply to raise the consumption tax rates
Ah yes, but what if we have another depression? When the economy is contracting (and the current monetary system ensures that we will continue having booms and busts into the forseeable future), people curtail their spending, either by buying used goods, or by doing without. Guess what that would do to government revenues? ;)
3) The fair tax expands the tax base.
This, to me, is not a point in its favor. Making it easier for the government to comandeer additional resources away from genuine consumer wants leaves us all worse off, and I say this as a small-businessman who is really being screwed by the current regime. To those not familiar with my political views, I am an anarchist. Even if the taxes levied by government amounted to one penny levied on some poor soul by lot, I would be railing against the high taxes.
4) Coward! At least we are not giving up! You must be one of them French Surrender Monkeys!
I really get irritated by this argument. First, it assumes that it’s either the Fair Tax or nothing. This is a false dichotomy. I think the Fair Tax will make things worse. That statement does not imply that I think the current system is good, or that I think we should just surrender and give up. Hell, you could really shake things up simply by ending payroll withholding and requiring people to pay their income taxes quarterly.
5) What do you mean people don’t care! Everyone I talk to loves the idea!
That’s wonderful, but completely beside the point. My point is that people don’t care about the total amount of taxes they or their neighbors pay. They may want the burden to be distributed more “fairly”. However they are quite comfortable with the size of the burden.
6) The Fair Tax is a great idea because it encourages savings.
I actually agree with this. I think it is one of the strongest things going for it, especially since it is savings that fuel economic growth.