I almost donated to the Gary Johnson campaign for president the other day. However the recent article stating that he believes the "fair tax" will reboot America made me change my mind. Instead I'm going to donate to R. Lee Wright's campaign.
No general tax is fair, nor will this scheme benefit America. Substituting one form of coercion with another is certainly not libertarian. The ideal tax would be 0%. In 2012 the U.S. took $1.4 trillion in income taxes while spending $2.5 trillion. To get rid of federal income taxes and replace them with nothing would require cutting federal spending back to $1.1 trillion. This would bring spending back to where it was in 1991. We probably would not need to cut spending this much because such a drastic cut in taxation would result in increased revenue in other taxes because of the increase in wealth, commerce, and employment our country would enjoy. Doable? Maybe. Libertarian? Yes! Realistic? Sadly, hell no.
The income tax is the biggest single intrusion suffered by the American people. It forces every worker to be a bookkeeper, to open his records to the government, to explain his expenses, to fear conviction for a harmless accounting error.
Compliance wastes billions of dollars. It penalizes savings and creates an enormous drag on the U.S. economy. It is incompatible with a free society, and we aren’t libertarians if we tolerate it.
- Harry Browne, LP 1996 and 2000 Candidate for President
We need real tax reform. A real tax reform package would need to be:
- Not transparent. We need to avoid hidden taxes and gimmicks. Americans need to be aware of what they pay in taxes. Today, too many taxes are hidden, rebates appear to people to be a good thing, and taxes are paid at way too many levels. How many people give thought to their total taxation. We pay federal income taxes, social insecurity taxes, medicare taxes, state income taxes, state sales taxes, property taxes, lots of miscellaneous taxes, plus hidden excise and sin taxes on the price of items. An additional hidden tax is imposed on us through the inflation of the money supply.
- Simple. Our current system is certainly not simple. American's on average spend 18 hours per year preparing their tax returns. The average spent is $230. In addition the complexity of our tax system requires a huge bureaucracy. The IRS employs somewhere around 95,000 employees and maintains lots of office space. The "fair" tax reduces the complexity somewhat, but still requires a bureaucracy to manage the complex system of monthly welfare prebate checks that will need to get sent out plus it requires all businesses to report their sales to the federal government every month.
- Lower. All Americans pay way too much in taxes. We pay too many types of taxes at too many levels. Real tax reform will not brag about being "revenue neutral."
- Flatter, but should not have those below a threshold paying any taxes at all. The poor should not be paying taxes, while we should not be trying to soak the rich.
- Not be overly disruptive. People have invested and planned their futures based on the current tax scheme. They have invested money in property and investments, expecting a certain tax structure when they retire. The "fair" tax plan fails miserably on this. The fair tax forces people who have put their income into investment vehicles that are not tax-deferred to be taxed again on this money when they spend it.
- Non-discriminatory. A married person should pay the exact same tax rate as a non-married person.
While no tax plan can be developed that meets all of these goals, we can do better than the "fair" tax. Taxation is almost always based on force and unfairness. Instead of embracing a misnamed alternative form of coercion, an LP candidate should be addressing the obscene size of the federal government and putting forth a plan that minimizes taxation. Plus any plan endorsed by libertarians should be prefaced with the recognition that all taxation is theft.
- The original title of this article was "How To Beat Someone Up With a Baseball Bat Instead of Shooting them With A Gun." I changed it because it distracted from the intent of this article and it disturbed those who can't see that most taxation is backed up with threats (and sometimes actual) violence.
- Stating that ALL taxation is not fair and is theft is not quite accurate. Taxation could be fair and non-coercive, but this is not the norm. For taxation to be moral it must allow people to opt out of the tax and the service it provides. The person opting out must be free to contract with someone else to provide the service or go without the service.
An example of a fair tax would be gasoline taxes, as long as the taxes collected goes to pay for the roads and are not used for boondoggle projects or social engineering. (There is a libertarian argument for private roads, but this is unrealistic based on our current society)
Governments often forbid competition with the service they are providing, quite often under the delusion that only government could provide this service. One example of this would be trash collection. Many municipalities provide this service and forbid any competition. In my town it is provided by private contractors. There are several to choose from and they compete against each other with their prices and services.
Sometimes a tax may be imposed to pay for something that is impossible to opt out of (e.g. national defense), in this case the tax is still not fair, and is still taken via threats of violence, however may be a necessary evil. (Our current state of national defense is a joke, but that is a different subject). The taxes discussed in this article (Income Taxation, and the Fair Tax proposal), fail all tests at morality and fairness.
This propaganda video makes me want to go duck hunting!