Before snow took me off line, I wrote "Why I Dislike the FairTax" explaining my many specific problems with the FairTax. Or, rather, my specific objections to the tax as implemented. I have additional worries, specifically concerns that many of the claims made by advocates are incorrect, as I explained in "A Partial Reply to yt_knight", "Another Reply to Yt_knight", "Reply to FairTax Comments", "Reply to Fair Tax Comment II", "Reply to FairTax Comment III", "Two old ones (plus three)" and elsewhere. However, having written all that, I think there is a single argument which makes all of this irrelevant*. And so, rather than read all those posts I just cited, I would suggest simply continuing to read this one. (Not that I would mind if you checked out my older posts. Please, fell free to do so. I will still be here when you're finished...)

The largest problem by far is the same problem I have with our current system, and with most plans for reform, including the FairTax and the flat tax. Yes, even the plan I list as my "best of a bad lot" suffers from the same problem. Though I advocate a flat tax on every dime of income earned, without exemptions or minimum income, and with no other taxes, fees or tariffs, paid quarterly with no withholding, even that plan has the same problem.

And that problem is that it grants the federal government taxing powers.

The constitution did not allow the federal government taxing powers, and for a good reason. The federal government is an association of sovereign states, and, as such, is answerable to the states. Once it has its own taxing powers, it has the ability to pay off states, to favor one state at the expense of others, and so on. In short, it suddenly gains the ability to control states, making the federal government the master, rather than the servant. It is not accidental that the massive surge in federal power came after it gained power of direct taxation. Nor is it coincidental that Lincoln, whose administration tried forcefully to expand federal power, also tried to institute a federal income tax. ("The Best Historical Example")

Some will argue that this is an absurd complaint, that the federal government is not going to give up the taxing power, and that we should not hold up reform to get some far-fetched improvements. I would argue otherwise. The FairTax represents a tremendous change in the entire system of taxation. If we are going to undergo the disruptions of such a massive change, and risk the uncertainties attendant upon any such massive change, should we do so to get only superficial improvements? Or should we get a real change? A true reform?

After all, looked at objectively, the FairTax is just a change in how the federal government directly taxes individuals to an excessive degree. We do not reduce spending. We do not change the power of the federal government. All w eget ofr introducing huge changes is a change in technique.

Why not make such a disruption worthwhile? If the federal government is deprived of the power of direct taxation, it means there will be real change.

First, pork will disappear. Pork only exists because the federal government has an independent source of revenue. If the states fund the federal government, they will have no interest in giving $100 to get back $50 or $75 in pork. They will become forces for fiscal restraint when every dollar the federal government spends is a dollar they must surrender.

Second, spending will become a state issue. States will fall into three categories. Those who don't care, who happily tax and spend, and tax more to let the federal government overspend as well. Those who want to spend a lot locally, but feel the need to rein in the federal government to keep more money home. And the fiscally restrained states who want to spend little locally or federally. How many of the first are likely to exist? And fi they do, how many citizens will likely leave them for the other two? We might have many of the second, traditional liberal states, but even in that case, their desire to spend on local needs will still make them fiscally conservative on federal questions. And that is the biggest triumph here, turning both conservative and liberal states into fiscal conservatives on federal questions.

And that is why I say the FairTax is not a good reform. It may make some cosmetic changes, it may, if we accept all the assumptions are right, reduce the overhead somewhat. It may even allow you to "control" your taxes, but only if you agree with their goals, and try to spend less**. But it does not change the entire system. It does not curb spending. it doe snot curb federal power. It does not return authority to the states. It does not allow for 50 or more different tax systems among which citizens can choose.

In short, it achieves no real conservative goals. It is a bookkeeping reform, making slightly more efficient the dunning process of a bloated government, all while leaving massive centralized big government intact and as bloated a sever. That is not a policy a conservative should support.

------------------------------------------------------------------------------------------

* Actually, one more argument is something the advocates claim as a merit, the promise that it is "revenue neutral". While I disagree with the assumptions on which this claim is based, and think it will have quite a significant impact on the economy, causing not only changes in revenue, but tremendous economic shifts as well. However, even allowing that it is will be revenue neutral, I think that is a mark against the FairTax, rather than for it. After all, if we are spending too much, as most agree we are, why do we want to reform our tax system on the basis of letting the government continue to over-spend? If we are going to make changes, shouldn't we slim down spending at the same time? So, in my mind, "revenue neutral" is a mark against the FairTax as well.

** This is one of my other complaints with the FairTax, that it attempts to impose the values of the creators on everyone, making the assumption that it is "right" to make everyone save more and spend less. As it is not the purpose of government to tell others how to behave, I find this a bad idea, and their declaration "you can control how much tax you pay", with the implicit condition "if you behave as we want you to", to be a very authoritarian position, and makes me surprised so many conservatives and libertarians endorse this policy. See "The Right Way", "The Danger Inherent in Banning "Bad Ideas"", "My Political Philosophy", "Deadly Cynicism" and "The Inherent Disappointment of Authoritarianism".

--------------------------------------------------------------------------------------------

POSTSCRIPT

It is funny. I wrote "Why I Dislike the FairTax", and in the introductory paragraph admitted that the topic had seemed to fall out of the public consciousness, but I still felt the need to explain why it would be a bad idea, just in case the topic arose again. As soon as I wrote that, I began to see posts like this one, promoting the FairTax once more. Seems I really am about 15 seconds ahead of the curve.


POSTSCRIPT II

Obviously, I am a huge supporter of federalism, and think the FairTax is not a good position for federalists to adopt. For those interested in my thoughts, I recommend  "Why I Am Not A Libertarian", "The Benefits of Federalism", "Consolidation and Diffusion", "My Political Philosophy" and "A True Conservative Platform". I also recommend, on the subject of taxation "Why I Dislike the FairTax" and "The Problems of Spending and Taxes", as well as the articles to which they link.