Selling the Fair Tax to the LP

Re: http://www.blogtalkradio.com/SteveKubbyShow/2008/04/08/Steve-Kubby-Show-1 

 

Steve, thanks for being fair to Sen. Gravel -- and  for letting me dial in to the discussion.  I hope Sen. Gravel's silence at the end just meant that we lost his phone connection, and not that the Senator didn't like being graded on his libertarianism.  :-)   It's incredibly exciting that the increasing relevance and core principles of the LP are calling home such longtime advocates for peace and liberty as Mike Gravel.

 

I don't think it's impossible for Sen. Gravel and  Rep. Barr to sell a Fair Tax to the LP .  What's bad about the Fair Tax is

• the new prebate entitlement 
• the possibility of ending up with both a federal income tax and a federal sales tax
• the creation of a uniform nationwide federal sales tax infrastructure
• the uneliminated deadweight loss of taxing a good (consumption == unsaved production) rather than a bad (e.g.  pollution, congestion, extraction of resources from the commons, free-riding subsidies to land value through municipal services)

What's good about the Fair Tax is

• a switch from taxing income to taxing consumption is effectively the untaxing of savings and investment  -- something every libertarian should favor 
• it eliminates the IRS and 60,000 pages of requirements for reporting income
• it has a built-in ceiling on tax rates, since compared to income it's easier to take consumption underground or just postpone/move/cancel it.  (That its Laffer Curve thus peaks at a lower tax rate and lower level of revenue is a good thing, not a bad thing.)

One way to sell the Fair Tax to the LP might be

• link it -- weld it!  -- to repealing the 16th amendment
• link it to an interim/fallback tax-cutting plan, such as Kubby's annual increase in the personal deduction
• call it a Federated Fair Tax and say D.C. will bill the states by their population, tempting the 45 states with sales taxes to pay the bill by increasing their sales tax rate
• point out that it would take  many decades for state consumption taxes to become as loophole-ridden as the current 60,000-page federal income tax
• point out that it's much easier to move your consumption (or residence) to a low-tax state than to hide from a federal tax

Ideally, the five states without sales taxes would pay their bill using a Land Value Tax, and thus would begin the competition among the 50  "laboratories of democracy" .  As a good geolibertarian, David Nolan correctly tried to steer Gravel toward  property taxation.  The list of libertarian economists who call a Land Value Tax  the  "least bad tax"  starts with Milton Friedman and is longer than I have space to include here. 

 

Decentralize taxing authority, and cut taxes all the way down to the ground!