The Great “Fair Tax” Debate

The Objective Standard has posted a three-part debate on the “Fair Tax,” a national sales tax intended to replace the income tax.

In my opening salvo, “‘Fair Tax’ Looks Ugly In the Details,” I point out that the “Fair Tax” is still relatively complex, and it would require many Americans to submit the tax. I also discuss the tax’s “prebate” and its potential for corruption. I conclude, “Yes, advocates of liberty should look at strategies to make tax collection less burdensome. But fundamental tax reform, which must include serious cuts in net taxes collected, becomes possible only with significant cuts to federal spending.”

John Keel wrote a lengthy reply, “Concerning ‘Fair Tax Looks Ugly in the Details.'” He argues that the tax is simple, it would impose low compliance costs, and it would reduce rather than expand the black market.

In my reply to Keel, “‘Fair Tax’ Offers Neither Fairness Nor Simplicity,” I expand my criticisms of the tax. I point out that, yes, the tax would require extensive paperwork for compliance. The so-called “prebate” not only adds another layer of bureaucracy, but it poses the risk of expanding into another welfare program. The “Fair Tax” would become easily corrupted, and it would in fact promote an extensive black market. The tax could also lead to a dual system of federal taxation, complimenting rather than replacing the income tax, and it could morph into a Value Added Tax.

However, I point out, if a sales tax actually followed the repeal of the Sixteenth Amendment, that would be a lot better. But still the major goal of the liberty activist should be to reduce federal spending and restore individual rights.

Read the first, second, and third articles in their entirety!