I had originally considered this as one of the closing chapters of my massive set of essays "Liberalism, Its Origins and Consequences" (starting with the post ""). I may still end up reworking this essay and using it there, but it was such an interesting topic, and it will be rather a long time until I reach the closing chapters, so I chose to write this now. Granted, the FairTax is not as visible as it once was, but as there are still a number of strong partisans, and, as most fall within the spectrum of opinions we dub conservative ( "The Political Spectrum", "Many Types of Conservatives", "The Need to Correct Ourselves", "What We Deserve", "Conservatives and the "Big Picture"", "The Party of 'No'?", "Activism As The Only Acceptable Position? ",), I have decided it would still be beneficial to point out that some of the unspoken assumptions underlying the FairTax, some of the features of which they are most proud, in fact, are identical to the assumptions of all liberal, and in fact all interventionist philosophies.

Before we begin, let me point out that I am no fan of the FairTax, I have been a critic for any number of reasons over the life of this blog. My criticisms have mostly been economic, but I have also criticized many of the details of implementation as well, as I believe many assumptions made, from the uniformity of "embedded taxes", to the revenue neutrality, to the low administrative cost, are faulty. But those topics, damning as they may be for the FairTax, are irrelevant here. The only purpose here is to show how the assumptions expressed in the theories of the FairTax are based upon premises consistent with liberalism and big government, rather than individual liberty and limited government. (For those interested in my writing on the FairTax from other perspectives, I will list my complete writing on the topic in the postscript.)

As it is not relevant here, I was originally going to ignore the probability that at least half of all comments (assuming I get any) will start "So, you like the current tax system?" I wrote about this logical error in "Gardasil and Logical Errors" (and mentioned it earlier in "Reply to FairTax Comments" and "Why Do I Bother?", as well as in "The Runaway Stagecoach",  "Ch-Ch-Changes" and "Recurring Bad Argument "), but for the purpose of avoiding such foolish complaints, let me pretend it is a valid argument. No, I do not like the present system, but that does not means I must like the FairTax, there are alternatives. For example, ideally, each state would be left to choose its own tax system, making it a truly federal system, consistent with the Constitution, and lacking a single national taxation scheme. However, if we must have a national scheme, for reasons I elaborate in "What we need", "Making Taxes Hurt" and "A True Conservative Platform", I believe a flat income tax without deductions, exemptions or minimum income requirements would be most fair. It too is based on premises inconsistent with free citizens, but it has the advantage over the FairTax of not claiming to be the "ultimate solution", admitting it is but a step toward the right answer, as well as resulting in far less cost and economic dislocation. (You can find all my essays on tax reform in the postscript as well, if only to avoid having to answer the same, largely irrelevant, questions several times.)

So, with that out of the way, let us begin. It is pretty clear from the introduction what I intend to prove here, and that being the case, this should be a rather terse essay. To keep it that way, let me do away with any rhetorical introductions and simply state outright the question many are likely asking, "How can you say the FairTax has anything in common with liberalism? What about it is related to authoritarian government? It is based upon freeing individuals, it allows them to set their own tax levels, how can that be coercive?"

But that last point actually points out the problem, embodied in one of the FairTax proponents' favorite claims. Many times I have heard those proponents claim the FairTax is "voluntary", as one can choose to pay less tax by choosing to spend less. Ignoring for a moment that the same could be said of the current system, as one can refuse to work and thus choose to pay less income tax, there is another problem with this argument. It is based upon the idea that spending is something to be penalized, and that tax payers should be "encouraged" to spend less and invest more.

In fact, the entire FairTax is premised upon that theory, and many proponents admit it. The wholesale/retail distinction, besides trying to avoid comparison to the VAT (which is known to cause massive economic drag - see "The VAT Versus The FairTax"), is intended to favor production and investment over consumption. Likewise, attaching taxes exclusively to spending, and to consumer spending alone, the FairTax makes it clear it finds consumption a negative beyond certain minimums. It even goes so far as to include a "prebate" to tell what it considers the proper amount of "survival consumption", beyond which tax penalties will begin.

In other words, the FairTax is every bit as loaded down with social engineering as our current system, it just hides it better and targets different goals. But it is no less an embodiment of the premise I describe in "The Right Way", as well as "The Most Misleading Word" and "Luxury and Necessity", than any liberal scheme. The FairTax essentially argues that individuals, left to their own devices, would choose to consume "too much" and would invest "too little"*, and so they need to be guided by a wiser government into the correct action.

As I have argued in countless places ("The Inherent Disappointment of Authoritarianism", "Our View of Our Fellow Citizens", "Those Other People", "Seeing People As Stupid", "Man's Nature and Government", "Deadly Cynicism", "The Citizen Dichotomy", "In A Nutshell", "Cognitive Dissonance Part 2", "The Right Way", "The Danger Inherent in Banning "Bad Ideas"), those assumptions (incompetent public, objectively better choices, and a wise elite), are the same underlying both liberalism and all modern interventionist, authoritarian governments. Not only that, but as I argue in both "Inescapable Logic" and "The Endless Cycle of Intervention", not to mention the larger essay to which this post was once intended to belong, holding those beliefs is not only necessary for one to hold interventionist beliefs, but those holding such beliefs will inevitably turn toward liberal and eventually authoritarian beliefs.

I am sure this will shock most FairTax advocates, but it is logical. Allow me to explain.

Whether or not you follow through on your beliefs to their logical conclusions, they will inevitably either lead you there, or else make you marginal by forcing you to show the contradictions in your own ideas. If you doubt this, just look at the Republican party, holding a mix of freedom favoring policies and old big government policies. As it admits the need for big government to "protect people from themselves", the Republicans cannot effectively argue against Democrats who take those premises and extend them ever farther. And so, despite holding some beliefs favoring freedom, the inconsistencies of the Republican belief system open them to attack, allowing the left to win every argument. ("Giving Away the Game", "You Lose When You Think You Win", "Defending Freedom?",  "Why We Lose")

And the same holds true here. When the FairTax advocates admit they design the system to favor savings over consumption, they admit both that the tax system should be used to cause individuals to act in desirable ways, and that it is the purpose of the government to change people's behaviors to something other than they choose, for their own good. And that opens the door to both manipulate the tax system and to turn the government into an omnipotent entity.

After all, if the FairTax can be used to discourage consumption or encourage savings and investment, then what could be the argument against modifying the prebate to favor the purchase of organic foods? Or "green" energy? Or domestically produced goods rather than imports? Because the law says it shouldn't? So what? Once you admit the purpose of taxes, even in part, is to modify behavior, what argument can you have against other modifications? That you don't like them? Once you admit the principle, your wants no longer matter. The logic does. And the same logic that forces savings in the FairTax also allows for pro-organic or protectionist prebates, varying tax rates for favored goods, or any other idea that can be sold as being for the good of the citizens.

Similarly, the basic principle, that what the citizens want doesn't matter, that their betters can force them to make the "objectively" correct choice through law, allows one to argue for any government power at all. Once we admit the citizen is incompetent and needs to be protected, there is no argument against any expansion of government. And make no mistake, the anti-consumption bias of the FairTax argues for just that. And so, once you embrace the FairTax, there is no limit to what government program can be justified by the same logic**.

Rather than continue with examples, I will make a simple point. The purpose of government is to protect rights, not to make us "do the right thing" by someone else's principles. Provided we do not violate the rights of another, our choices and actions should be a matter of indifference to the government, it should not make our tax bill change, our legal status differ, or land us in jail. The government does not need to force us to act properly beyond the bare minimum of protecting us from one another. It certainly doesn't need to make us save more than we wish. But that is the basis of the FairTax, and that is why I argue it is inconsistent with personal freedom.

Taxes, as I wrote in "Truths About Taxation" exist to raise revenue, and that is all. They can be better and worse, but the only real argument in their favor is that they raise the most revenue with the least pain. We do not want or need tax policy to shape our behavior. As I said elsewhere, I would truly favor state or even regional tax schemes, to allow for all the experimental benefits of federalism, and also to allow individual choice in terms of taxes, but, barring that, I would still not choose the FairTax. Not only is it much less beneficial than is claimed, but when we accept its principles, we effectively accept the basis of all liberalism. And if we do that, we might as well simply give up and join the other side.

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* This is a common trope among both conservatives and liberals, that we "spend too much" and "don't invest enough". It is implied that we are somehow to blame for our own economic woes because of this, and that the people of the US are for some reason especially reprobate and deserve to be surpassed by other nations. However, as I argue in "Debt", the behavior they malign is a logical, in fact financially prudent, response to constant chronic inflation. Consumers are not fools, and they recognize when debt can be discharged in dollars worth less than the money they borrowed. With the government eroding value at a constant 3%-8%, and artificially depressing mortgage rates to 4%, home equity lines win more years than they lose, making it profitable to borrow. Likewise, if return on safe investments, such as CDs and bonds falls below the rate of inflation most years, it makes little sense to put money in such "safe" vehicles. So, if the government and theorists want us to spend less and save more, they should advocate for sounds currency, rather thans cold us or pass the FairTax. (See  "Monetary Issues Made Simple Part I", "Monetary Issues Made Simple Part II", "The Inflation Engine", "Inflation and Uncertainty", "Bad Economics Part 7 ", "Bad Economics Part 8", "Why Gold?", ""What Is Money?" and "What Is A Dollar? ".

** It is no accident that Huckabee, the biggest government conservative in the 2008 race, also favored the FairTax. Most of his platform centered on making people do the right thing despite their wishes, so the FairTax's arm twisting in favor of frugality fit very well with his plans.

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POSTSCRIPT

A list of many of my taxation posts can be found in the postscript to "The Problems of Spending and Taxes". From those, one can follow links back to older essays. For those interested in my most recent essays, I would suggest reading "Why I Dislike the FairTax ", "The Best Argument Against the FairTax " and "The Foolishness of Corporate Taxes ".

Update (05/25/2010): I am surprised I overlooked this one, but an analogous situation, a group claiming to be "pro-freedom" but tacitly endorsing statism, can be found in what I dub "The Libertarian Left". Check out the essay and see if it does not remind you of FairTax proponents. For that matter, the group I dub the Libertarian Left often includes FairTax proponents, so that may not be so surprising.