Press "Enter" to skip to content

Bob Barr: ‘We must both reduce and simplify taxes’

In a press release issued today, Libertarian Party presidential hopeful Bob Barr calls for an overhaul of the federal tax system.

“We must both reduce and simplify taxes,” he adds. That could mean replacing the income tax with a consumption tax. It could mean a low, flat income tax. But, he emphasizes, “the bottom line is that taxes are too high and too complex. It’s time for Americans to say that they are mad and aren’t going to take it anymore, just like they did in California three decades ago.”

Barr, an alleged supporter of the Fair Tax, has not come out for any specific tax reforms. Unlike Republican Ron Paul, Barr does not call for the abolition of the income tax to be “replaced with nothing.”

Barr’s running mate, Wayne Allyn Root, detailed an interesting tax proposal weeks before falling short in his bid to gain the LP’s presidential nomination. Root called for a return to proportional taxation, under which the federal government’s power would be greatly curbed.

The Libertarian Party requires members to pledge: “I hereby certify that I do not believe in or advocate the initiation of force as a means of achieving political or social goals.” Most Libertarians consider taxation to be a violation of the pledge, however, reductions of taxation are considered by some an acceptable incremental step.


  1. G.E. G.E. Post author | June 6, 2008

    And as is well established by non-conspiracy mongering anti-Fed intellectuals, the government’s power to tax is not only physically finite, but politically finite as well.

  2. G.E. G.E. Post author | June 6, 2008

    I hate to disagree with the distinguished professor, but the power to create money is what backs government bonds. Government’s power to tax is finite. Economic activity does not create paper tickets called dollars. The one thing assuring the repayment of outstanding debts is the government’s monopoly on the printing of those tickets.

  3. Bill Woolsey Bill Woolsey June 6, 2008

    The government can borrow because it has the power to tax. Future taxes can be used to pay interest and principle as well.

    I suppose that if all the government could do is issue money, then it still could borrow a little, but not much.

    There are two kinds of default. An explicit default and an inflationary default.

    Governments borrowing in terms of their own fiat currency can always avoid explicit default because of the possiblity of inflationary default.

    However, when the probabilty of either kind of default rises, the immediate effect is that the interest rate the government must pay will rise.

    (It does make a difference what the government does, and I think the opportunity for inflationary default is a bad power for the government to have. The possibility of inflationary default disrupts all credit markets.)

    Still, the only way to avoid one kind of default or the other is for the government to collect taxes to pay interest, and principle too, if needed.

    The government can borrow, not because it can print money, but because it can tax.

    Well, I suppose a government could borrow if it purchased assets that it could credibly pledge to pay off the debt. Or, if it generated revenue from user fees…

  4. G.E. G.E. Post author | June 6, 2008

    Okay, Prof. Woolsey, poor choice of words on my part.

    How about this: The Federal Reserve, if need be, will buy up as much debt as necessary — thus giving the government carte blanche. The Fed buys between 20% and 30% of the government’s bonds now, correct? Since the Fed IS a government institution (contrary to the conspiracy theorists) this, effectively, means the government is “printing up” about 20%-30% of the money it needs to finance its deficit — and it could make it 100% if need be. Or, in other words, that percentage could increase as need required.

    And the real culprit is the fiat-money central banking system; not the Fed itself, per se. In other words, the government is allowed to spend in excess of its receipts and issue these future promises to pay (bonds) because it controls the printing presses and can always “make good’ on its debt by creating the money. The vehicle to do this, right now, is the Fed.

  5. Bill Woolsey Bill Woolsey June 6, 2008

    The U.S. government finances its budget deficit by selling bonds. It borrows money. If the Federal Reserve didn’t exist, the U.S. treasury
    could continue to sell bonds and increase the national debt.

    If money were trully privatized, then inflationary default would become impossible. Sadly, even without the Fed, the treasury could easily use inflationary default by repaying bonds with legal tender treasury notes (just like in the war between the states.)

    The Federal Reserve buys U.S. government bonds. But the amount it buys doesn’t depend on how much the government needs to sell to fiance its budget deficit. The Fed buys and sells government bonds in order to manipulate interest rates, total spending in the economy, production, and inflation. Currently, they are aiming to cause an inflation rate between 1% and 2% a year. (This has been their goal for some time, though perhaps they aim to allow for more inflation during the current year.)

    Usually, this allows for increasing ownership of government bonds by the Fed, so the budget deficit is partly financed by the inflation. The reality, however, has been that Congress and the President choose to run much larger deficits than what the Fed currently will finance through inflation, and so the Federal govenment goes deeper and deeper in debt.

    In other words, the Treasury sells more bonds than the Fed will buy.

    During the last year, the Fed has _sold_ over $100b worth of government bonds, while the treasury has sold more than $100b to finance the current budget deficit.

    (The Federal Reserve has lent about $160b more to banks, so money creation has continued unabated. This is something new in the modern era of the Fed. For decades, the Fed has only made an insignicant amount of loans to the banks, and instead has created money by purchasing government bonds. This has changed in the last year.)

  6. Bill Woolsey Bill Woolsey June 6, 2008

    Barr “fiscal policy” is very similar to that of Paul.

    Cut federal spending. Reduce the size of government. Not a whole lot of specifics, but plenty of general information.

    The difference is that Paul says nothing about the tax side until government is cut back 90% so that the income tax can be abolished and replaced by nothing. (And Paul doesn’t say anything specific about how much must be cut
    or the timing. )

    Barr, on the other hand, proposes cutting government spending some unspecificed amount and then replacing the income tax with a consumption tax or else changing the income tax so that it is flat. Barr says nothing about
    how much should be cut so that the tax rate on
    a consumption tax or single rate for a flat income tax would be tolerably low.

    Barr is implicitly rejecting the approach of reforming the tax system now, implemting a
    national sales tax with a sky high rate, or else a flat tax with a sky high rate, and then working on cutting goverment spending.

    I don’t know how effective it will be, but he
    is reaching out to those who want tax reform now, but refusing to accept the “revenue neutral” approach, insisting that the size of
    government must be reduced right away.

    I think it is clear that some Paul supporters believe that Paul was promising to abolish the income tax right away. I don’t think so. I think he kept it purposefully vague. I think part of it is because some of his early supporters favor 90% cuts in spending right away. Others have unrealistic views about the budget. (That the
    income tax revenues are used to pay profits
    to the owners of the Federal Reserve.)
    Others, like me, understood that he was promising to fight to cut spending as much as he can. With so many people dependent on government, cutting it back enough to end the income tax is something that can only maybe might be acheived in the distant future.

  7. trinman trinman June 6, 2008

    Hardy, does Bonnie know you are saying these things? ;{

    Seriously, Bob Barr needs to clarify his positions on so many issues, before us longtime hardcore libertarians can honestly endorse him as the LP nominee, or even do anything but apologize to our many friends and associates outside the LP structure, who are all wondering WTF happened!

    If he were even as clear as Ron Paul on even a few of these contentious (GOP vs. actual libertarian) issues; if he were willing to make a real statement about taxes, or the Drug War, or — hell, if he was even repudiating the further funding of GOP Congressional incumbents with LP opposition …

    He would be worthy of our concern and our energy …

    So far, not so much

  8. G.E. G.E. Post author | June 5, 2008

    Yes it is. But there is a budget deficit WITH the income tax, so that fact alone is not an argument for keeping it. What are you saying: That taxes should be raised to equal spending?

    Taxation is immoral and its most immoral when the tax assessors are least accountable — i.e. the federal government.

    The vehicle by which the federal government spends in excess of its revenues — the Federal Reserve — is another issue Barr/Root is unwilling to tackle.

  9. darolew darolew June 5, 2008

    “You do realize that government expenditures currently exceed revenues, right? How is that an argument against getting rid of the income tax?”

    As Lew Rockwell once mentioned, inflationary spending is actually worse than taxes…

  10. Fred Church Ortiz Fred Church Ortiz June 5, 2008

    Definitely mainstream, and likely to appear more realistic to voters. But will it galvanize them to vote for a third party? I don’t know.

    As for being noncommittal to any one plan – at best, it’s a gamble. There’s being receptive to new ideas – and then there’s winging it. Barr’s creating the latter impression by not outlining and aggressively pushing his own program.

  11. G.E. G.E. Post author | June 5, 2008

    If the LP nominated Hillary Clinton, she’d be polling at about 50% instead of 5% or 0.5%.

  12. G.E. G.E. Post author | June 5, 2008

    Shouldn’t Barr be a “lightning rod” for liberty, too, as the LP’s candidate?

    You do realize that government expenditures currently exceed revenues, right? How is that an argument against getting rid of the income tax?

    So taxation is not the initiation of force, Hardy?

  13. hardymacia hardymacia June 5, 2008

    You need to downsize the government first. There is a political reality to take into consideration. Paul could say abolish the IRS and replace it with nothing because his roll was the lightning rod.

    Most Americans won’t go for just the abolishment of the IRS (government income will fall short of expenditures). I’m sure if Barr could get government to be cut enough to not need the income tax then he’d do it. But he is being realistic and that will attract more small government and centrist voters because of it.

    And most Libertarians don’t consider taxation to be a violation of the pledge. The pledge was simply to keep the bomb throwers out of the party. Only the anarchist faction of the party believes it means no taxes.

    I find Barr’s stance of major reductions in the size of the government and an overall of the IRS to be mainstream and attractive to many voters. Maybe that is why he’s polling around 5 percent instead of only 0.5%.

  14. Fred Church Ortiz Fred Church Ortiz June 5, 2008

    Actually, I’ll correct my last comment: it wasn’t an email to donors, it was a tax day statement posted on TPW, but not found among the press releases on Barr’s site.

  15. Harold S Harold S June 5, 2008

    Barr is a fraud. A complete waste of time and effort. Abolish the IRS. End of story. He is still a Republican. No Barr in 2008.

  16. G.E. G.E. Post author | June 5, 2008

    I’d say the specifics are pretty damn important.

    And there’s no reason for the federal government to decide those specifics.

    Only Root seems to have figured that out.

  17. Fred Church Ortiz Fred Church Ortiz June 5, 2008

    Re: “I think it’s pretty weak for a candidate for the presidency not to have this issue sorted out yet.”

    I think he has sorted it out. As this press release shows – he doesn’t care. As long as the tax burden is lowered and the paperwork trimmed, it could be a consumption tax, a flat tax or the FairTax. This reminds me of an email to donors he sent out earlier on that stressed that the specifics weren’t so important.

    I guess this could be called… benevolent indifference? Now it’s just getting weird

Comments are closed.