Lee Wrights: The Fair Tax Isn’t Fair, It’s a Farce

“There cannot be a good tax nor a just one; every tax rests its case on compulsion.” Frank Chodorov

 by R. Lee Wrights

BURNET, Texas (Jan. 7) – The so-called Fair Tax is not fair; on the contrary, it is a farce based on fallacies and falsehoods. Sadly, some libertarians have fallen for the bogus arguments uttered by proponents of this national sales tax and bought into the idea that this is the “best we can hope to get.” This is a justification very similar to the flawed reasoning that induces some people to vote for the “lesser of two evils.”

One of the core values of libertarianism is the right of people to keep all the fruits of their labor. No taxes are fair. All taxes are, at their root, immoral because they involve the use of force to take money from people, money that rightfully belongs to them, and give it to others. That is why libertarians would fund most government services with voluntary user fees.

The most dangerous claim used by advocates of the Fair Tax is that it’s “revenue neutral,” that it will allow the federal government to collect just as much money as the income tax. Fair Tax supporters say this as if it were a good thing. It is not. The greatest danger facing our nation isn’t terrorism, global warming or the energy crisis. It is out-of-control, unbridled government spending. It is our $15 trillion federal debt, which grows every day.

This leads to the second most dangerous, and very disingenuous claim by Fair Tax advocates, that it repeals the income tax. It does not. The Fair Tax Bill merely repeals various sections of the federal tax code relating to the income tax. The bill leaves the 16th Amendment intact; most tellingly, it uses tepid language about the 16th Amendment, saying only that Congress “finds” that it “should be repealed.”

This clearly leaves an opening for Congress to reinstate the income tax once the national sales tax is in place. Given the addiction to spending and the lack of integrity that pervades our government, I’m convinced that even if the Fair Tax passes, it’ll be implemented without doing away with the income tax — thus giving us the worst of both worlds. In fact, I wouldn’t be surprised if some congressman championed “bringing back” the income tax as the only solution to a future “debt crisis.”

The most egregious and demeaning aspect of the Fair Tax, however, is that it puts every American man, woman and child on welfare. Here again proponents turn common sense, the meaning of words, and basic economic principles upside down. They call making all citizens wards of the state a good thing. Every household graciously receives a monthly check from the beneficent federal government. This dole is supposed to make sure all Americans can consume “their necessities of life free of tax,” according to FairTax.org. This is not an “entitlement,” they explain, but merely a “rebate (in advance)” of what they would pay in taxes. And it is “progressive,” say the Fair Tax folks, because everyone gets the same, whether they make poverty-level wage or a million dollars a year.

Of course, you get the “rebate” whether you pay the national sales tax or not. If you buy everything used, grow your own food, and never spend a dime on any taxable thing, you still get a check from the government once a month. And once government starts sending out checks, how many people will vote for anyone who promises to make the checks bigger, and against anyone who might make them smaller, or get rid of them?

The Fair Tax does nothing to solve the problem of a bloated, overspending, overreaching, tyrannical federal government. That is why I do not support this tax — or any tax — for any reason. The goal of the Libertarian Party is to get rid of big government, not find new ways of financing it. The most direct and effective way of ridding ourselves of the hundreds of federal programs intruding on our liberty is to cut off the means of funding them. Harry Browne said it best: “Abolish the income tax and replace it with nothing!”

“Our forefathers made one mistake. What they should have fought for was representation without taxation.” – Fletcher Knebel, historian

R. Lee Wrights

R. Lee Wrights, 53, a libertarian writer and political activist, is seeking the presidential nomination because he believes the Libertarian message in 2012 must be a loud, clear and unequivocal call to stop all war. To that end he has pledged that 10 percent of all donations to his campaign will be spent for ballot access so that the stop all war message can be heard in all 50 states. Wrights is a lifetime member of the Libertarian Party and co-founder and editor of the free speech online magazine Liberty For All. Born in Winston-Salem, N.C., he now lives and works in Texas.

Lee Wrights for President
Contact: Brian Irving, press secretary
press@wrights2012.com
919.538.4548

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69 thoughts on “Lee Wrights: The Fair Tax Isn’t Fair, It’s a Farce

  1. Thane Eichenauer

    I have met Gary Johnson and found him to be personally likeable. I still feel pain every time I see Gary Johnson bring up the Fair Tax. There are Fair Tax supporters all over the US but there are plenty of folks (probably more than there are supporters) who never liked it, tried to like it but aren’t ever going to like it. I predict that Johnson will continue his support of this tax scheme until the LP convention and that his opponents will use it as an anchor by which to sink his otherwise high chance of being nominated.

    Dennis Miller disclaimer: Of course, that’s just my opinion, I could be wrong

  2. Brian Holtz

    libertarians would fund most government services with voluntary user fees

    I would love to see a Libertarian candidate explain how their policies would change the following chart:

  3. Steven Berson

    Here’s a few ways I think the “Fair Tax” could be made less heinous:
    * make Repeal of the 16th Amendment an absolute necessary first step before enacting it
    * get rid of the whole “prebate” idea as it entails employing bureaucracy, invades privacy and can be subject to fraud – and instead to make sure that the tax isn’t punitively regressive on struggling lower income folks by just exempting the necessities of life as tax free – namely food and groceries that are not purchased at restaurants – and clothing items under say $100 per unit (and I’m open to other suggestions as to how to make this a non-regressive tax system)
    * as since anyone with existing savings ends up getting double taxed once they purchase goods with their money after it is enacted – make a transition holiday of say 1 – 3 months – so that people can reposition their savings into hard assets if they wish before having to be subjected to the national sales tax.

    Some possible alternatives to something like a national consumption tax run like this:
    * continue with our present system – with its large expensive bureaucracy and inconvenience to all that no one seems to like
    * convert to a flat income tax – which doesn’t fix most of the problems noted above but diminishes revenues and potentially puts greater burden on those who are struggling already in the first place
    * get rid of all taxation and either default on the National debt or print money to the point of hyper inflation – either case which most likely would quickly lead to currency collapse, a 2nd civil war, and generally a place the majority of folks will be seriously unhappy in with potentially ended liberties for many if not most.

    Anyhoo – in my utopian dreams I completely agree with Lee – but again the ideas I’ve seen floated as to how to deal with the national debt without using taxation to make a transition to a tax free completely voluntary society I’ve seen have been somewhat lacking in being based in reality considering how deep the whole we’ve dug ourselves. As going through all the scenarios would probably require a novel’s worth of typing I’ll leave everyone with a great article by Dmitri Orlov on the “Collapse Gap” that we could be looking at if we choose to continue down the path we are on currently – http://www.energybulletin.net/node/23259

  4. Common Tater

    I predict that Johnson will continue his support of this tax scheme until the LP convention and that his opponents will use it as an anchor by which to sink his otherwise high chance of being nominated.

    If Ventura runs, maybe.

    With the rest of the current field, Johnson will almost certainly get the nomination despite his support of this tax. I know quite a few people that oppose this tax but still support Johnson.

    If Paul runs for the LP nomination, Johnson won’t win anyway, and probably wouldn’t even keep running.

    If it’s Johnson vs. Ventura it could be a competitive race, and then this could make a difference.

  5. Gracemarie Collins

    Mr Wrights, sorry to hear you “think” the Fair Tax is a “farce based on fallacies and falsehoods.” I know you couldn’t be more wrong. The Fair Tax is based on over a decade of non partisan, scholarly research. with an investment of over 20 million dollars. It is based on sound economic principles and input from people like you and me. The principles arrived at by The Fair Tax research are exactly what our Founding Fathers set forth for us in the beginning of our nation.

    Only people pay taxes.
    Consumption taxes are the oldest form of taxation for many good reasons.
    Consumption tax rates are self-limiting.
    Consumption taxes, throughout history, have enhanced civil liberties and more.
    Direct taxes (income taxes/poll taxes/head taxes), throughout history, have been the tools
    of tyranny.
    Uniformity of taxation wards off special interest manipulation.

    I think most people agree the size of and spending by our government is out of control. It is sad that We the People settle for the “lesser of two evils” or “ the best we can hope to get” while as time goes by a vast majority of our elected officials have created nice lucrative political careers for themselves. However I do not see how we could ever fund a government based on purely voluntary user fees or “Abolish the income tax and replace it with nothing“(Harry Browne) – last one out of Washington please turn off the lights!” The Fair Tax is simple, fair and transparent .and it will help us to keep our elected official accountable for the money WE CHOOSE TO GIVE THEM. Yes the Fair Tax gives us the say in how much tax we pay. We can buy used goods – no tax. We can save our money – no tax. The federal government does not touch one dime of our hard earned money before we even get it. The Fair Tax companion legislation calls for the repeal of the 16th amendment so I would think that would appeal to any Libertarian’s sensibilities!

    Go Fair Tax! http://www.fairtax.org.

  6. Tom Blanton

    I would love to see a Libertarian candidate explain how their policies would change the following chart

    Shut down the federal government over a 3 to 5 year period after negotiating agreements between states to facilitate the transition, keep open borders, and free trade, etc.

    Put the federal government in receivership, unwinding debts and obligations over a 10 to 20 year period by negotiating settlements and selling assets, providing financing to highest bidders to minimize lowball sales to political cronies or the super-rich and to create an income stream to pay obligations.

    Then, begin work on eliminating the state governments.

  7. Thomas L. Knapp

    @8,

    Setting aside the fact that you answered none of Mr. Wrights’s specific objections to the “Fair” Tax, I find your preface interesting:

    “The Fair Tax is based on over a decade of non partisan, scholarly research. with an investment of over 20 million dollars.”

    How many decades of non-partisan scholarly research, and how much money, went into astrology? Or any of the various strains of socialist ideology?

    But, stipulating for the sake of argument that the research is sound, you might want to actually read what the “Fair” Tax advocates claim on the basis of that research.

    They claim that the 30% (when expressed as sales taxes have always been expressed rather than fraudulently trying to pass it off as 7% less) “Fair” Tax is “revenue neutral.” It’s designed to keep shoveling as much money to the federal government as the income tax did. How does that in any way rein in spending?

    They claim that with the attached welfare program (fraudulently described as an “advance rebate” even though it is in no way, shape, manner or form tied to actual payment of the tax), it is just as “progressive” as the existing income tax. How does that in any way reduce the harmful redistributionist effects of the income tax?

  8. ATBAFT

    Look, per #5, we Libertarians have to describe how we get from “here” to “there.” It is delusional to think that the vast majority of Americans – who, let’s face it, have not yet seen the beauty of our principles and proposals –
    will ever accept abolishing all taxation in one fell swoop.

  9. Ray

    It’s not the “so-called” FairTax. It IS the FairTax. It’s a copyright protected name. You reveal your ignorance in the first sentence. It’s like saying, the s0-called Coca-Cola blah blah blah. That’s its name so-called “Independent Political Report.”

  10. Thomas L. Knapp

    Ray@12,

    The scare quotes and the use of “so-called” aren’t meant to call into question the fact that that’s what its supporters call it. It’s meant to call into question the notion that it is, in fact, fair.

    And no, it’s not “copyright protected.” Names, titles and short phrases aren’t subject to copyright.

    “FairTax”® and “Fair Tax”® are in fact protected by trademark, as service marks of a Texas corporation (Americans for Fair Taxation) promoting the “Fair” Tax. But we’re not discussing that corporation, we’re discussing the tax itself.

  11. Michael H. Wilson

    If it is copyrighted then no one else can use that name, so can we call it the carnival tax or maybe the bazaar tax?

    I’ll let someone else be responsible for twisting the last phrase. Not I. I have already cause enough problems today.

  12. Robert Williams

    Mr Wright,

    The only “fallacies and falsehoods” here come from your own ignorance of the FairTax. Your first falsehood is calling it the “so called Fair Tax”. As Ray stated in a previous comment, FairTax is it’s name. The FairTax Act of 2011.

    Second, you say “Sadly, some libertarians have fallen for the bogus arguments” but you’re ignoring the fact that Democrats, Republicans, Liberals, and Progressives all promote the FairTax. This also negates your argument regarding the “core values of libertarianism”. The FairTax is not about any one political party, sir, it is about restoring power to the American People. I know this is something that you don’t want to hear, but while you liberals promote Big Government, we FairTaxers promote Big America!

    Third, your argument against a revenue neutral tax is the very reason Americans should accept the FairTax. Any tax that does not collect EXACTLY what our current slew of income based taxes collects today will cause an underfunding of programs such as Social Security, Medicare, our Military, our Borders, or any number of other programs required to keep this great nation running as it is today.

    Or worse, an OVER-funded government can lead to and over-BLOATED government. Any tax plan that cannot efficiently keep our current system in play as it is now, should not even be looked at. The FairTax, because it is revenue neutral (yes, that IS a “good thing”), will promote a stronger, more efficient America that will have the ability to pay off it’s $15 trillion federal debt within just 10 years after enactment; all without increasing the size of our government.

    Do you truly think any tax plan that is NOT revenue neutral could accomplish that?

    Fourth, if you knew even 10% of what you “claim” to know about the FairTax, you would KNOW that the FairTax puts into action the repeal of the 16th Amendment with its companion legislation HJ RES 16. Additionally, the FairTax includes a “Sunset Clause” in the unlikely case that the 16th does not get repealed within 7 years of the FairTax enactment date.

    And before you even go to the Congress can “reinstate the income tax once the national sales tax is in place” argument, think about the fact that they can do that right now if they truly wanted to. However, it would be political suicide for ANY congressman to even suggest we have both an Income Tax and a Sales Tax simultaneosly. The FairTax eliminates all Income Taxes in HR-25, there is no possible way for the same Congress to enact the FairTax AND reenact an Income tax.

    Fifth, another statement of yours that is undenaiably and categorically untrue is “it’ll be implemented without doing away with the income tax”. Again, if you knew even 10% of what you “claim” to know about the FairTax, you would KNOW that the FairTax ELIMINATES the Income Tax completely. It is in the bill.

    Sixth, “The most egregious and demeaning aspect of the Fair Tax, however, is that it puts every American man, woman and child on welfare.” This comment of yours is “The most egregious and demeaning aspect” of your entire argument. #1 The FairTax gives every tax paying individual their taxes back. It is not “putting them on welfare” and to make that faulty and unfounded claim is puerile.

    In addition to giving you your own taxes back for the necessities you purchase every month, it puts good, hard-working, legal Americans on an equal playing field as the illegal immigrants who come to America and cost less money because they can skirt the Income Tax system. Under the FairTax, those illegal immigrants will be forced to pay the full 23% FairTax Rate; whereas our American workers will be afforded the taxes for their necessities. If -you-, Mr Wright, don’t want your friends to think -you’re- on “welfare”, then don’t register for it. That will just be more money back in the pockets of our already bloated government.

    And lastly, I doubt you’re even aware that the FairTax rate -could have been- about 2% lower in 2011 if the FairTax were enacted in 2009. Studies have shown that the FairTax rate of 23%, in 2010, would have raised $260 BILLION dollars more than in 2009. That would have allowed the FairTax rate to actually DROP to keep a revenue neutral rate.

    Thank you Mr. Wright! For all your hard word and dedication to F-ing the American people!!

  13. Michael H. Wilson

    I believe that one of things we need to recognize is that a lot of what the Federal government does is in response to a lot of negative things that happen at the local and state level.

    The state and cities have passed laws and regulations, such a licensing laws, housing regulation, regulations that restrict urban transit which make life more difficult for many ordinary citizens. Then when problems occur others turn to the Federal government and expect the Feds to step in and solve that problem whether it is housing, health care, joblessness or some other problem.

    Much could be solved if we worked at opening the local marketplace to opportunities that people are now denied in order to protect someone who has more access to the halls of power than ordinary people.

  14. Brian Holtz

    ATBAFT, how about if Libertarians advocate that the federal government have only 50 taxpayers: the states, paying in proportion to their population?

    I oppose a federal “Fair Tax”, but I’d love to see states compete in designing the least unfair way to come up with their share of federal revenues.

  15. Cary Henderson

    @10
    I guess that by your logic that the standard deduction and personal exemptions are welfare programs also. Doesn’t one have to change the income tax based thinking to change to a consumption tax. In no way does it constitute redistribution as it is given to all citizens equally, and only up to poverty level consumption.
    Comparing the FairTax to astrology doesn’t fly, any research done for astrological purposes in no way relates to economics. Economists use mathmatical formulas to compare data in the real world, not possible conditions in a person life based on birthdate.
    The FairTax does do one thing about the out of control spending that he mentions, it makes it clear exactly how much of your money or mine the government is taking. That is hidden from us now.

  16. Thomas L. Knapp

    @17,

    “Any tax that does not collect EXACTLY what our current slew of income based taxes collects today will cause an underfunding of programs such as Social Security, Medicare, our Military, our Borders, or any number of other programs required to keep this great nation running as it is today.”

    Libertarians don’t want to keep things running as they are today.

  17. Thomas L. Knapp

    Cary@20,

    “I guess that by your logic that the standard deduction and personal exemptions are welfare programs also.”

    Um, no.

    The standard deduction and the personal exemption are your money, that you don’t get taxed on.

    The “prebate” is a check you get from the government, whether you paid one thin dime in taxes or not.

    Two different things entirely.

    “The FairTax does do one thing about the out of control spending that he mentions, it makes it clear exactly how much of your money or mine the government is taking. That is hidden from us now.”

    It’s also hidden in the “Fair” Tax’s own propaganda, in which a 30% tax is fraudulently advertised as a 23% tax.

  18. Robert Williams

    @21,

    If “Libertarians don’t want to keep things running as they are today”, then they need to look at the LONG TERM effects of the FairTax.

    This is what libertarians, including your High Commander, Ron Paul (a little 3rd Rock from the Sun humor there…Big Head…nevermind) don’t seem to understand: We can’t just “quit cold turkey”, our economy and way of life isn’t a pack of cigarettes or a bottle of whiskey. We must transition into it.

    The FairTax, although considered “revenue neutral”, will raise taxes in a more effective and more efficient way. This will allow taxes to be reduced and who knows, possibly even be reduced to the point where they are virtually unseen.

    But to completely dismiss a tax plan because it is a tax plan is utterly puerile. The FairTax ELIMINATES 9 different forms of taxes that are in place now. Just because it creates ONE more, you’re against it?

    Look, we are getting nowhere with the current tax plan and no politician in his right mind will vote to completely eliminate taxes knowing that things need to be paid for. It cannot and will not ever be done. And Ron Paul, as much of a Libertarian as he is, will find out soon enough (if me is elected POTUS) that everything he’s been telling you has been chock full of lies and deceit.

    The FairTax is in Congress and there are millions of people (including 74+ Congressmen and Senators) who are ready for this change. You Libertarians can either sit here and prevent us from getting rid of the most regressive and worst Income Tax system in the world, or you can LEARN about the FairTax, help us defeat D.C., and take back the Liberty that our forefathers fought so diligently for. It’s your choice, but I’m not sitting around and holding my breath for a single one of you.

  19. Robert Williams

    @22

    “The standard deduction and the personal exemption are your money, that you don’t get taxed on.”

    That is EXACTLY what the prebate is…EXACTLY.

    The Prebate is payment of the taxes that you are expected to pay in the following month for your necessities. $209 per month per adult and $74 per month per child. All this does is ensures that no family in America pay taxes on their necessities. You can seriously think that any person can treat that as “welfare” and live off of it without working.

    I’ll bet you would complain that “the FairTax doesn’t help the poor” if that prebate mechanism weren’t in place, wouldn’t you??

    The prebate not only helps the poor, it ensures that our working class are on a level playing field with the Illegal Immigrants who skirt the current income tax system, AND it prevents D.C. from picking winners and losers (see: AIG, Solyndra, etc.); therefore closing the loopholes that our current tax system have left the barn door open for.

  20. Robert Williams

    @22

    “It’s also hidden in the “Fair” Tax’s own propaganda, in which a 30% tax is fraudulently advertised as a 23% tax.”

    Nowhere! Never has anyone from the FairTax or any FairTax proponent tried to hide the fact that the EXCLUSIVE rate of the FairTax is 30%.

    Where your confusion is, is in listening to the opponents of the FairTax make the faulty claim that 30% and 23% are completely different values. They do this to throw you into a loop and get you to hate the FairTax. It’s a numbers game with liberals that they love to play because they think they’re smarter than everyone else.

    30% EXClusive = 23% INClusive

    There are a number of reasons that 23% was used instead of 30%. I’ll admit that one of them is the perception that 23% is less than 30%, but that is not WHY FairTax.org or any FairTaxer uses that number.

    Income Taxes are taken OUT OF your paycheck, therefore the rate at which it is taken out is INClusive. If you are in the 15% tax bracket, 15% is taken OUT OF your paycheck. The same goes for the 7.65% Payroll tax.

    Sales Taxes are ADDED TO the cost of an item. Therefore, they are EXClusive taxes. If you have an 8.25% Sales Tax, then your $100 item costs $108.25.

    The FairTax, however, is not added to the cost of any item, it is TAKEN FROM. So when an item on the shelf costs $10.00, $2.30 of that $10.00 is remitted as the FairTax. The cost of your item cost did not increase to $12.30. Therefore the tax rate that you have paid is 23%.

    FairTax opponents will also argue that retailers will have to ADD 30% to products in order to get to the shelf price. This is correct, but once again it is a numbers game with them. You will still only pay 23% FairTax and the retailer will still only remit 23% of the NEW goods and services they sold.

  21. Robert Capozzi

    22 tk: The “prebate” is a check you get from the government, whether you paid one thin dime in taxes or not.

    me: Or it could be viewed roughly as a citizen’s dividend for natural resource rents…

  22. Robert Capozzi

    more…

    Or consideration for imperfections in a justice system that is supposed to protect property rights…

  23. Thomas L. Knapp

    Robert @23,

    “You Libertarians can either sit here and prevent us from getting rid of the most regressive and worst Income Tax system in the world, or you can LEARN about the FairTax”

    1) It’s me you seem to be arguing with, so FYI, I am not a Libertarian.

    2) I have learned about the “Fair” Tax. That’s why I oppose it.

    @24,

    “‘The standard deduction and the personal exemption are your money, that you don’t get taxed on.’

    “That is EXACTLY what the prebate is…EXACTLY.”

    Nope. Not even remotely alike.

    Exemption/Deduction: You earn money. You don’t have to send some of it Washington.

    “Prebate:” The government sends you a check. It sends you $X if you paid, or will pay, $10 in taxes, it sends you $X if you paid, or will pay, $100 in taxes, and it sends you $X if you paid, or will pay, not one red cent in taxes. It is in no way, shape, manner or form linked to past or future payment of any tax. It is a welfare check, and that’s all it is. Period.

    “Nowhere! Never has anyone from the FairTax or any FairTax proponent tried to hide the fact that the EXCLUSIVE rate of the FairTax is 30%.”

    Except for the part where every time they talk about it they claim that it is a 23% rate.

    Hell, I could do that with the income tax. Hey, everyone! I recommend reducing the rate to 1% (but we won’t do returns any more — we’ll just assume that everyone makes $1 billion per year)!

    RC@26,

    “Or it could be viewed roughly as a citizen’s dividend for natural resource rents…”

    Except that it’s not tied to resource rents, nor is it exclusively paid, or paid pro rata, by resource renters.

  24. Robert Capozzi

    28 tk, yes, I said “roughly.” Perhaps “very roughly” might have captured the idea better….

  25. Matthew Dirks (a.k.a. MerlinYoda)

    This piece is so chock full of logical fallacies and/or misrepresentations that I hardly know where to begin.

    One blatant and underlying problem in this piece is one of conflating spending policies (or over-spending policy in the case of our current federal government) with revenue policy (e.g. taxation). Trying to “starve the beast” (especially by wiping out the income tax and replacing it with effectively nothing) does not work as the “beast” will simply “feed” elsewhere (and leave us on the hook for cleaning up the resulting mess). Various members of Congress have made it apparent by their actions and rhetoric that they have no qualms about borrowing and adding to our debt to fund “necessary” programs.

    Furthermore, Mr Wrights contradicts himself in his own article. He states that:
    “The greatest danger facing our nation isn’t terrorism, global warming or the energy crisis. It is out-of-control, unbridled government spending. It is our $15 trillion federal debt, which grows every day.” Yet in the very same piece pull the rug out from under himself with his own second paragraph: “One of the core values of libertarianism is the right of people to keep all the fruits of their labor. No taxes are fair. All taxes are, at their root, immoral because they involve the use of force to take money from people, money that rightfully belongs to them, and give it to others. That is why libertarians would fund most government services with voluntary user fees.”

    Just how are you going to collect the necessary funds to pay off our bloated federal debt (a problem created by *over-spending*, not *over taxation*) without some sort of “tax” (even if that “tax” is a self-imposed one through voluntary donations to our federal government)? Perhaps *after* we’d paid off our over 15-trillion dollar national debt, this could prove feasible … but not before. Are we just going to issue every man, woman and child a bill for their calculated share of the federal debt and ask them to kindly pay up even if they didn’t ask or utilize most of what those borrowed funds went toward? Even *if* we could cut programs and spending on the federal level to levels that would make everyone in the Libertarian Party (as well as libertarians like myself that prefer not to be affiliated with any “official” party) jump for joy, there’s still the natioanl debt dangling above our head like the sword of Damocles. We are beholden to pay down those debts and as long as we are indebted to other nations we are beholden to them to some degree and not truly “free” to enjoy the fruits of our labors as the quoted text would imply.

    I would agree (as would probably everyone commenting here) that our *current* income-based federal tax structure is markedly unfair and (despite the claims of political hacks like Harry Reid) rather involuntary and coercive. The FairTax (HR 25), on the other hand, is the most voluntary and self-limiting tax structure before Congress. The bill eliminates *all* income-based federal taxes and replaces them with a one-time consumption tax on *new* goods and services (used goods, i.e. previously taxed goods, are not subject to the FairTax) at the retail level (no taxation on business-to-business consumption). In order to not over-burden the citizenry with respect to their necessary consumption, the prebate preemptively refunds all taxes that would be paid up to the national level of poverty. The prebate is the functional equivalent of the standard deduction of our current income tax system and would be sent to all citizen households which *voluntarily* register for it in the same way that you *voluntarily* take a standard deduction when you file your income tax returns. One could opt not to take the prebate the same way one could opt not to take any deductions on their income taxes. However I don’t see to many people doing that as most (if not all) aren’t so sadistic as to want to give away their money to the government so freely and willingly.

    Lastly, Mr. Wrights displays a certain amount of “ignorance” (for lack of a better term at the moment) when he complains that the FairTax legislation “merely repeals various sections of the federal tax code relating to the income tax. The bill leaves the 16th Amendment intact; most tellingly, it uses tepid language about the 16th Amendment, saying only that Congress “finds” that it “should be repealed.””. What he doesn’t seem to realize that it isn’t a good idea to have a constitutional amendment as a “rider” on tax legislation (or any legislation really), because passing and amendment requires 3/4 the of the states ratifying the amendment (something that would be *harder* to do with non-germane legislation attached). The processes for bills and resolutions to amending the Constitution are (and need to remain) utterly separate processes. However, if Mr. Wrights would have actually *read through* HR 25 he would find that his fear of having both the current income tax system and the FairTax side-by-side is rather unfounded as the legislation calls for the abolishment of the FairTax and the re-implementation of the current tax code if the 16th amendment had not been repealed by 7 years after the implementation of the FairTax (the “Sunset Clause” noted in comment 17). Technically, we could wind up with a national sales tax on top of our screwed-up income tax system already … fortunately our representatives and senators aren’t that politically suicidal (yet).

  26. Thomas L. Knapp

    RC@29,

    Setting aside the question of whether or not a “citizen dividend” or some such is a good idea, my first blush counter to the idea of treating the “Fair” Tax rebate as one is simply that if we want a “citizen dividend” based on some asserted rationale, the argument should be made openly and clearly on that rationale, rather than under some other kind of initiative.

  27. Thomas L. Knapp

    Matthew @30,

    “Just how are you going to collect the necessary funds to pay off our bloated federal debt (a problem created by *over-spending*, not *over taxation*) without some sort of “tax”

    I can’t speak for Wrights, but speaking for myself …

    I don’t have a “federal debt.”

    Nor do I recognize any obligation to cover the tab that Congress ran up.

    If Congress’s creditors want to try to recover their poorly thought out investment, let them chase down e.g. Harry Reid, John Boehner, et. al, and garnish their paychecks, seize their second homes for auction, etc.

  28. Robert Capozzi

    31 tk: …the argument should be made openly and clearly on that rationale, rather than under some other kind of initiative.

    me: Ideally, I’d agree. But I’ll take what I can get…

  29. greg miller

    mr. wrght in the second paragraph claims all taxes require use of force to take an individuals money. the fair tax does not us force to collect taxes. the fair tax allows freedom to choose if you would like to purchase taxable new goods or untaxed used goods. no force involved. no tax is enjoyable the country must have the ability to pay its bills. or as george washington put it “it is essential that you should practically bear in mind that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant;”
    the founding fathers chose to fund the government with consumption tariffs and excise taxes ie taxing consumption. our government has grown and we can no longer run our government on such taxes. I am all for shrinking the size of the federal government, but spending and income are to separate issues. the fairtax focuses on the income side. user fee’s would fall way short of funding the government. how would you charge user fees on military spending? the post office is user funded and in the red. its a good idea in theory but impractical.

    I agree deficit spending is a major problem. taking the revenue away just makes the problem that much worse. ask anyone that has lost a job or taken a big pay cut. it didn’t make things better. the spending obligation was already there but now there was even less income to pay the spending. we need a balanced budget amendment to start fixing the spending problem, again the fairtax is not and was not designed to modify spending.
    by repealing the tax code you are repealing the income tax. the 16th amendment can not be repealed by a bill. there is a seperate bill that starts the process of repealing the 16th amendment. the fairtax bill does have a clause that if the 16th amendment is not repealed in 7 years then the fairtax is automatically repealed.

    the writer says the faairtax leaves an opining for an income tax and a sales tax. this is true until the 16th is repealed, or the seven years passes. it is also true that every since the passing of the 16th amendment it has been possible for both a sales tax and an income tax yet it has not happened because of the power of “we the people” there is no fairtax supporter that would support both the fairtax and an income tax. the probability of having both is the same as it is now.

    it is true that if you spent below the poverty level you would get back more then you paid in. it is hard to live below the poverty level. I have no issue with giving those people a slight hand up. every one has to spend some on taxable items. so the amount of “welfare” would be very small. the rest would be honest rebates of paid taxes.
    to make the checks bigger would require an increase in the tax rate, most people would not vote for that.

    what the writer is suggesting is closer to anarchy not libertarianism.

  30. Scrap Iron

    Steve Berson has a problem with the prebate.
    He worries about fraud. I guess a case could be made for that, but you just register you SSN witht the proper department, and you get your prebate.
    And we have the prebate so that YOU, the consumer< can decide just what your basic needs are, not some faceless, unelected bureaucrat.

  31. Scrap Iron

    To Thomas Knapp-
    The prebate acts LIKE the standard deduction.
    The standard deduction untaxes your first $X of earnings.
    The prebate untaxes your first $X of spending.

  32. George Phillies

    The prebate is a guaranteed minimum income dole payment, because it goes to people who are not going to pay the tax later. It does not act like the standard deduction, which only works if you have taxable income that can be deducted from.

  33. Andy

    “the fair tax does not us force to collect taxes. the fair tax allows freedom to choose if you would like to purchase taxable new goods or untaxed used goods. no force involved.”

    What a bunch of bullshit.

  34. greg miller

    andy would you please point out in the fairtax where it forces you to buy a taxable item. even mr.wright says that it is possible to not pay taxes under the fairtax by not purchasing taxable goods and services.
    what part of my comment was “bullshit” ? though I do see I forgot the e on use.
    you made the statement so its on you to prove it.

  35. greg miller

    both the standard deduction we currently have and the “prebate” un-taxes what the respective tax system taxes. in that sense yes the “prebate” works like the standard deduction. in the current tax system the standard deduction is not refundable in that sense then yes it is different.

  36. Thomas L. Knapp

    As has previously been my experience, I’m seeing that once again the absolute best way to indict the “Fair” Tax is to just let its supporters talk themselves into a corner.

    So, I think I’ll just shut up and let them destroy themselves now.

    Here are two of my previous analyses of the “Fair” Tax — part 1 and part 2 — for those who are interested.

  37. Andy

    “39 greg miller // Jan 7, 2012 at 10:44 pm

    andy would you please point out in the fairtax where it forces you to buy a taxable item.”

    So you think that it is OK for people to be forced to shop at rumage sales to avoid the tax. What a bunch of nonsense.

    How about you go out and buy used toilet paper? Buy a used tooth brush and used underwear while you are at it.

  38. FT Truth

    Mr. Wrights, why even take the time to write this piece? You proclaim all taxes as evil and only favor some nebulous voluntary user fees. Your readers seem to share your beliefs, so you’re preaching to the choir. It’s like someone who hates Mexican food writing a review of Mexican restaurants.

    All that aside, let’s look at what you have to say.

    You claim the FairTax is based on fallacies and falsehoods. There are several research articles made available on http://www.fairtax.org for analysis and the complete text of the bill HR 25 / S 13 is available as well. Could you specify the fallacies and falsehoods that were used as the basis for the FairTax, or do you simply mean you don’t like it and you regard all promotion of the FairTax as fallacies and falsehoods?

    You say a core libertarian value is the right of people to keep the fruits of their labor. The FairTax enables this to happen. All federal income taxes are abolished under the FairTax. A person’s paycheck would no longer have federal income taxes withheld, including payroll taxes for Social Security and Medicare. State income taxes may still apply, but that is the perogative of each state to decide if it will tax income, is it not? So how does the FairTax deny anyone the right to keep the fruits of their labor as far as the federal government is concerned? Is there another definition for “fruit of labor” that you are using besides the agreed upon wage/salary between an employee and employer for work done by the employee?

    The FairTax being revenue neutral makes it a feasible replacement for our current tax code. You are correct that the government spends significantly more than it takes in, but what does that have to do with how taxes are collected? The FairTax is not an appropriations bill. To complain that the FairTax does not address the national debt that is a result of overspending doesn’t make sense. Even if the FairTax was not revenue neutral and only raised a fraction of what our current tax code does, then politicians could/would borrow to cover the shortfall as they already do.

    You are the one who is being disingenuous with regards to the FairTax only partially replacing our current tax code. The bill clearly 100% replaces the federal income tax code. The 16th Amendment allows the income tax to exist, but it does not mandate an income tax. The FairTax bill HR 25 / S 13 does not have to repeal the 16th in order to replace the income tax code.

    Your fear of the income tax co-existing with the FairTax is unnecessary. Firstly, the nightmare scenario you describe could happen right now. Congress could pass a national sales tax (sans the prebate) right now. What is stopping them? Do you live in fear of Congress doing so, or do you think, as stupid as most politicians seem, they know they’ll lose their cushy job in DC if they were to call for such a measure let alone pass one?

    H.J. Res. 16 is companion legislation to the FairTax bill calling for the repeal of the 16th Amendment. Keeping this resolution separate allows for the FairTax to be enacted REPLACING the income tax COMPLETELY without the added burden of ratifying a Constitutional amendment that repeals another amendment that simply allows an income tax to exist. The FairTax bill has a clause stating that if the 16th is not repealed within seven years of the FairTax becoming law, the FairTax will be completely replaced by the income tax code it abolished.

    Your problem with the prebate seems to be that someone could lead a tax-free lifestyle (refusing to buy any new goods or services – good luck with that, btw), and pocket their prebate check. Essentially getting money for nothing. Sure, this is possible, but how many Americans do you think will be willing or able to pull this off? Enough to even be statistically relevant?

    By your definition, only the people who don’t spend enough to incur a tax burden greater than or equal to their prebate check will be receiving welfare. Because if it is indeed refunding taxes they paid with the fruits of their labor, then you’d have no problem with it, right? So you’re not really being serious (honest?) when you say it puts every man, woman, and child on welfare, right?

    So the FairTax should be completely disregarded because some people might be able to game the system for a couple hundred bucks a month? Even if they put that money in the bank and never spend it, at least it will be helping the private sector and not being held by the government. How about your voluntary user fees? Are the 100% evasion proof? Or that’s the whole point of them, right, that you don’t have to pay the fees if you don’t want to pay them. If you’re worried that a significant portion of Americans have the means and ability to avoid buying all new goods and services, then surely they can easily avoid something you claim is 100% voluntary. Even if America was run by a government with the size and scope of 1789, it would require some money, wouldn’t it?

    Your last statement that the FairTax does nothing to address government spending is completely accurate. Just as the bill that made Martin Luther King Jr. Day a federal holiday did nothing to address decriminalization of marijuana, a taxation bill does nothing to address spending. They are separate issues when it comes to legislation.

  39. greg miller

    Andy I prefer to buy new toilet paper if I can afford it. the same with underwear. both are a personal choice not mandated by law.

  40. Tom Blanton

    The FairTax, however, is not added to the cost of any item, it is TAKEN FROM. So when an item on the shelf costs $10.00, $2.30 of that $10.00 is remitted as the FairTax. The cost of your item cost did not increase to $12.30. Therefore the tax rate that you have paid is 23%.

    So, how is it then that under the “Fair Tax” people will see how much tax they are paying and demand smaller government? That is one of the talking points used by the Fair Tax statists to persuade libertarians to support it.

    People won’t see any tax if the purchase price for an item is the same as the shelf price.

    And what makes these Fair Tax clowns think nobody is familiar with their bogus tax scheme? Maybe they are just getting indoctrinated by the Fair Tax cult, but this crap has been around for 15 years. It’s been a bad idea promoted by liars and statists ever since the idea came about and it remains a bad idea, unless you are a Republicrat – then it’s a great idea, just like the $16 trillion national debt and $3.8 trillion budgets.

  41. Tom Blanton

    Mr. Wrights, why even take the time to write this piece? You proclaim all taxes as evil and only favor some nebulous voluntary user fees. Your readers seem to share your beliefs, so you’re preaching to the choir. It’s like someone who hates Mexican food writing a review of Mexican restaurants.

    I think it is fair for someone who hates Mexican food to do a review when there are Mexican restaurant owners running around prepared to force you to eat their food under threat of violence and prison.

    Take your so-called “Fair Tax” and shove it up Neal Boortz’s tight ass.

  42. greg miller

    tom where in the fairtax does it allow for force and violence? where does it require you to purchase any taxable item? where does it even require you to pay any tax?

  43. Tom Blanton

    So, Greg, where in the Fair Tax does it say it’s OK for me to not collect & pay over taxes when I provide a service to a client?

    I’m assuming that were I not to do so, the government would force me to cooperate, correct? There’s your force and violence. Or would the Happy Fair Tax Agents just say “pretty please”?

    What would happen if I picked up an item that cost $1.30 at the store, gave the cashier $1.00 and walked out? That’s either theft or tax evasion. Would Officer Friendly just look the other way?

    Since I ordinarily don’t purchase used food, I am assuming I would be required to pay tax, right? Unlike those who regurgitate the talking points of Fair Tax, Inc., I don’t consume food previously used by bulls.

    In the same way that the existing income tax doesn’t require you to work, I suppose you could say the Fair Tax doesn’t require you to buy anything. Hey, I guess the Fair Tax can be avoided by just stealing everything! A loophole!

  44. Tom Blanton

    You Libertarians can either sit here and prevent us from getting rid of the most regressive and worst Income Tax system in the world, or you can LEARN about the FairTax, help us defeat D.C.

    This bad legislation has been languishing in Congress for years. Is this because libertarians are against it? Judging by your zeal Robert, I’m assuming you are a newbie to the Fair Tax Cult, so it is probably you that needs to learn about it as opposed to internalizing your recently received wisdom.

    If learning about the Fair Tax would defeat DC, DC would have been defeated years ago. What nonsense.

  45. greg miller

    tom where does the fairtax require you to sell retail goods and services? if you choose to sell retail goods and services then the outcome of your choice would be that you collect and remit the fairtax.

    as to stealing there are laws against that in every state. enough said.
    on the food as Mr. wrights claimed in one of his posts the fairtax allows you to grow/raise your own food without paying the fairtax. if you decide instead to purchase your food then yes you would be required to pay the tax at purchase. if you limited your taxable purchase’s to your poverty level or below the prebate would cover those taxes and you would have a zero net tax or possibly a negative net tax. again it is your choice on what you purchase. freedom of choice is a great thing and one of the reasons I like the fairtax yet that freedom, as all freedom, has a price of responsibility for your actions.

  46. George Phillies

    ‘You don’t have to pay the fair tax, because you are not required to buy food or clothing (or shelter?)’ That’s even a better one than ‘23%’.

    By the way, I do buy health insurance, and at the moment here in Massachusetts I am legally required to buy it, so there.

    FT is indeed the Fraud Tax, or perhaps the Fony Tax law claims.

  47. ATBAFT

    How does the FairTAx compensate for the person, probably retired, who has already paid taxes and is now living on the “fruits of his labor” i.e. is spending his savings that remained after 45 years of paying federal income taxes, etc.?

  48. Tom Blanton

    Greg, your concept of freedom is much like the concept of tyranny. This is where everyone is free to do what the government allows and free not to do what the government does not allow.

    Freedom entails the ability to make choices and your concept of freedom severely limits choices.

    Currently, I already have the freedom to not buy food and clothing. I also have the freedom not to work, either for myself or anyone else. I have the freedom not to eat.

    I’d suggest that you contact your Fair Tax Cult leaders and ask for a new set of reality based talking points, the ones they gave you are nothing but used food.

    Here are my talking points against the Fair Tax I wrote back in 2005:

    http://www.pnar.org/fairtax.htm

  49. Tom Blanton

    You aren’t supposed to ask that question, ATBAFT. The Fair Tax Talking Points don’t address that. Of course, the Fair Tax does not require that retirees continue to live.

  50. Marc Montoni

    In March of 2004, the members of the Libertarian Party of Virginia voted to endorse a national retail sales tax. Here is the language adopted in 2004:

    WHEREAS taxing wages, earnings, investment, savings and, death destroys individual freedom and initiative; andWHEREAS eliminating the Internal Revenue Service is a positive step in the right direction to restoring individual liberty; andWHEREAS the 16th Amendment to the Constitution of the United States should be repealed; andWHEREAS passage of H.R. 25 would change the direction of government confiscation of private property in the favor of the citizenry; andWHEREAS the complexity of the current tax system causes arbitrary government enforcement and denies equal protection under the law; therefore be it:RESOLVED that the Libertarian Party of Virginia (LPVA) endorses the passage of H.R. 25 as a step, and only a step, in the right direction; and be itFURTHER RESOLVED that the LPVA encourages all members to contact the Virginia delegation for their support; and be itFURTHER RESOLVED that the LPVA encourages all members to attend the first national rally to eliminate the Income Tax on May 1st in the Hampton Roads area of the Commonwealth of Virginia.

    HR 25 was the “FairTax” legislation that was in congress in 2004 (I do not know if it’s been reintroduced under that same number).I have offered resolutions to overturn this endorsement at every state convention ever since.

    Our 2010 convention was no different. At our March 6, 2010 state convention, I introduced the following resolution:

    Whereas, the Libertarian Party has historically held the position that all involuntary taxation, regardless of form, function, or method of collection, is forceful and coercive in nature; and therefore represents legalized theft, and,Whereas, the state and national governments are collecting revenue even in these depressed economic times that are double or triple what was collected just a few years before, in most cases just 7 to 8 years, and,Whereas, this ‘revenue’ represents property stolen from individuals in mass quantities, Now, therefore, be it resolved that the Libertarian Party of Virginia hereby calls on all governments, to repeal the income taxes to serve as a real ‘economic stimulus’ for these tough economic times; and,Further, be it resolved that at no time should repealed taxes be replaced with new taxes, regardless of source, such as “sin”, corporate, trade, licensure, or sales taxes; and,Further, be it resolved that governments should operate under balanced budgets at all times, without incurring any debt, and should reduce expenditures to reflect current real revenue.

    During debate, I outlined just a bit of the many reasons I believe advocating any new tax, particularly the FairTax, is simply bad business for the LP. Fortunately, there is a great library of excellent articles about the FairTax. Here are a few:

    http://www.fff.org/freedom/fd0704d.asp

    http://www.fee.org/Publications/the-Freeman/article.asp?aid=5911

    http://www.mises.org/story/1975

    There are of course many more.

    Surprisingly, at the convention in 2010, the question went further than it had at both of the two prior conventions — it was only two votes shy of success in a (very) slightly amended form.

    Here are a few relevant facts.The individual income tax typically brings in about 40% of federal revenue. For example, 2009 federal revenue was about $3.2 trillion. The Individual Income Tax brought in $915 billion. Federal spending just TWO years earlier was almost that much (spending increased $500 billion in FY 2009 over 2008; $250 billion 2008 over 2007.

    I don’t want the tax system to be revenue-neutral. I want it to be coercion-free. When you have a $915 billion theft going on, it is simply wrong to allow that theft to continue.

    I intend to keep trying, until my colleagues learn that we cannot play the FairTax game. We’re not Republicans. Nor are we Democrats. We must be eternally vigilant against any stew they cook up — and the FairTax is a thoroughly Republican stew.

    I never thought I’d witness LP candidates openly advocating new taxes (some promote the FairTax, others promote carbon taxes). Yet here we are. How’s that working for us? Seems like the promised land hasn’t gotten any closer — the LP is still exactly where it was a few years ago, before we started hearing Libertarians proposing any new taxes.

    I do not believe promoting the FairTax gets us any closer to a free society. If I’m going to spin wheels, I’d rather spin them with a clean conscience. Advocating a new tax does not leave me with a clean conscience. The sound-good idea of the FairTax should be recognized for what it is: never-ending federal tax enslavement.

    If Libertarians are afraid to walk the libertarian talk, there’s not much point in working via a third party.

  51. Kristina

    2 corrections:

    • The FairTax has a sunset clause which will automatically repeal it in 7 years if the 16th Amendment is not repealed.

    • The FairTax is not written or intended to change the way government spends tax dollars. It is single-focused on what the best way for everyone in America to pay taxes.

    WE THE PEOPLE must continue paying attention, continue educating and continue voting if we want to reign in spending. Education is key.

    Like you noted, it is possible to pay nothing in Federal taxes under the FairTax. Without the possibility to ending Federal taxes today, what’s more Libertarian than having the CHOICE to pay when you make a purchase?

  52. George Phillies

    Well, under the F Tax, you do not have a choice. If you want to buy, you must pay. If you want to drive a car, you must buy insurance on the car, every year.

  53. paulie

    The FairTax (sic) has a sunset clause which will automatically repeal it in 7 years if the 16th Amendment is not repealed.

    As we all know, legislation is always passed exactly as originally proposed, and sunset clauses are never revoked or extended.

    WE THE PEOPLE must continue paying attention, continue educating and continue voting if we want to reign in spending. Education is key.

    I think you meant to say rein in spending, but the way you put actually is closer to reality.

    Without the possibility to ending Federal taxes today, what’s more Libertarian than having the CHOICE to pay when you make a purchase?

    Having the choice whether you have a job, and whether it’s on the books?

  54. paulie

    I prefer to buy new toilet paper if I can afford it. the same with underwear. both are a personal choice not mandated by law.

    ROFL.

  55. Diane J. Thalheimer

    “Taxes are immoral” Wrong Sir, taxes are needed to fund the government, there is nothing wrong with taxation. our Founders did not disagree with taxes, they disagreed with being taxed without a say in it.
    I sincerely doubt we will ever be “overfunded” that is an inane comment in an inane article.
    The FairTax is not intended to do anything about overspending in government.
    What Sir, type of plan have you to replace the irraparable 70,000+ pages of IRS tax code that have a stranglehold on the American economy?

  56. Henry

    Who is going to collect this so call Fair Tax? They will need an IRS type of agency to process it.

  57. Tom Blanton

    Agent Friendly from the Happy Fair Tax Bureau will collect the taxes and unlike IRS agents, he will not be armed with a gun, but only non-lethal weapons including pepper spray, tasers and brass knuckles.

    The Happy Fair Tax Bureau will not only collect the Fair Tax, it will also audit businesses and households for compliance. Unlike the IRS which requires you to visit their offices, the Happy Fair Tax Bureau will visit your home at a convenient time sometime between 1 a.m. and 5 a.m. to count family members for the purpose of determining the amount of monthly Happy Fair Tax Prebate checks.

  58. Andy

    “• The FairTax has a sunset clause which will automatically repeal it in 7 years if the 16th Amendment is not repealed.”

    So I take it that this means that we’ll get to pay BOTH the income tax and the FairTax for 7 years. Yippee!

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