This is our fifth and final entry about the Fair Tax (perhaps). This analysis has not explored every nuance and consequence that would occur should we radically transform our system of federal taxation from an income-based to a consumption-based model. For example, there are estimates that compliance costs for the present tax structure range from $250 billion to $400 billion per year. With a consumption oriented and simpler tax system, many of these non-productive wasteful costs would be redirected into the general economy. Consider it a “non borrowed stimulus” wherein the taxpayers or businesses choose how the resources are allocated rather than mandated by complex indecipherable tax law. Certainly there would be some application or administrative costs for the Fair Tax and those costs would be higher in the beginning because of the fact that six states are not presently structured to levy the tax at the cash register, but overall the compliance costs should be dramatically lower than we are experiencing in the current system.
As an ardent supporter of liberty and individual choice, I find that the opportunity to have more personal power over my tax liability to be an appealing prospect. I do understand, however, that many of my fellow citizens will not be persuaded by a freedom-based argument. These citizens resist taking responsibility for their government and often confuse government involvement with security. As I stated earlier, I believe that if we could implement the Fair Tax, then a significant portion of the electorate would embrace their new freedom. Perhaps they’ll become motivated to expand their liberty and opportunities. So, how do we sell this puppy? How do we market the concept of enhanced liberty to our cohorts? How, pray tell, do we get it done?
First, we must identify and neutralize the opposition. In my view there are four significant clusters of interest that will forcefully resist any attempt to change the present federal tax mechanism. The first group is comprised of the entrenched political power structure. The politicians and their bureaucratic sidekicks relish the complexity of the current system because it allows them to tweak, to alter, and to manipulate the system to advance their preferred social agendas or to reward/punish various sectors of the nation’s citizens. The second source of fierce opposition will be the Internal Revenue Service bureaucracy and the legions of people throughout the fruited plain who benefit from trying to decipher the snarled convoluted tax code. Their livelihoods are anchored to the impossible-to-understand, always potentially punitive system that current intimidates so many of our citizens.
Corporations and special interest groups who are reaping benefits from extra consideration in the existing code will battle to retain their favored status. They are the ones who have proven themselves adept at manipulating the system (with the assistance of their treasured politicians) for their own benefit. Sometimes the tax code provides them an advantage by negatively affecting their competitors. At any rate, they may resist a more level playing (paying?) field. The final groups who will scream and howl if the Fair Tax is chosen are those individuals who gain from the current system through the Earned Income Tax Credit (EITC) and the child deduction. The prebate aspect of the Fair Tax may squelch a lot of their discontent, but there are many advocates for the tax-break recipients who will forecast massive starvation in the streets if the EITC, in particular, is ended. The opposition will be fierce and relentless, but I, nevertheless, hold to the proposition that implementing the Fair Tax will provide a large enough taste of freedom that our citizens may be more willing to consider constitutional government.
So, how do we sell it? First we have to acknowledge that many of us have a sense of entitlement that has been nurtured by the Nanny State, so appeals to the constitution, smaller government and more individual freedom will not resonate for a large portion of our audience. The bottom line is to replicate the tactics of the progressives by promoting blatant self interest, opportunism and perceived class warfare. Self interest is “keeping all of your check.” The approach would be to encourage everyone to carefully examine her/his check…the gross, then the net, and sell the sizzle: the all new Fair Tax will give you an instant raise by allowing you to KEEP YOUR OWN MONEY.
Winning the support of the political class is more difficult, but it can be done with a good amendment, a workable transition plan and raw political power. The power aspect will arise after the initial sales campaign to the citizenry. Following an “underground orientation” period to inform and develop the key cadre of supporters, then the massive education campaign for the citizens, the next step would be to organize “committees of correspondence (sound familiar?)” to bombard the legislators and other political types. As it develops, the organizational structure should be wide and deep enough to convince the politicos that the movement is real and is strong. We must remember that freedom is merely a byproduct for the average American. Keep your own money is the primary motivating message.
The business and special interest classes should be persuadable through reason and number crunching. I do understand, however, that they are not homogeneous…that each sits in a different niche. The Fair Tax, though, would drastically reduce paperwork for them, and make budgeting and planning much easier. The subsidized poor would probably embrace the concept of the Fair Tax with the prebate, but the real hostility will come from the poverty lobby. They have the same reverence for an easily manipulated tax structure as do the corporate honchos and the political harlots. Theirs will be a noisy, accusative, screeching, cacophony of doom that will occur if the Fair Tax is implemented. In a sense, they may be the most difficult constituency to counter because many in the mass media will provide them with a platform. This inevitability requires that an aggressive media campaign be implemented concurrent with the roll-out of the concept.
Can the Fair Tax be an effective and reasonable improvement over the present labyrinth of taxation? Yes, I believe, although I still have constitutional and philosophical reservations about it. I do believe that it is vastly better than what we now have. It is fairer (a little). It is less intrusive (somewhat). It allows for more personal freedom (it’s a step). It is too much money (that revenue-neutral thingy), but we can limit it to a percentage of sale maximum or a calculated amount based on a percentage of GDP.
It is a start, only a start. Our liberty has yet to be secured.
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