The FairTax

Here‘s a paper by Bruce Bartlett arguing against the FairTax (via the Volokh Conspiracy‘s Ilya Somin, who has his own Libertarian reservations).

The FairTax people have a rather ad hominem response here to a previous Bartlett article (in part about the FairTax and its roots in Scientology!).

Another incontrovertible piece of evidence that the FairTax is a bad idea: Mike Huckabee and Ron Paul are for it.

For the record, I too think our income tax system is appallingly, wastefully, hideously overcomplicated. But that’s not because it’s an income tax, or because it’s progressive (I’m talking to you, Steve Forbes).  Tax brackets are a trivial complication; it takes a few seconds to look something up in a table and you’re done. The problem is all the damned deductions and different income classes, which came about through a combination of well-intentioned social engineering (which mostly results in unintended consequences) and ill-intentioned special-interest lobbying.  Were I king, I would keep the progressive income tax but get rid of ALL deductions, including our beloved mortgage and state income tax deductions. Everyone would fill out a 1040-EZ.

[Yes, I just said some stuff with no supporting evidence at all. Finding some is left as an exercise. I’m too lazy right now.]

[Also, I admit I don’t know what to do about capital gains taxes, a major complication. Two options I see:

  • Tax capital gains as income. Yes, there are good reasons to encourage long-term investing over short-term. But see above.
  • Eliminate them, and raise corporate taxes commensurately.

I think I prefer the first option.]

It should go without saying that there is no chance at all of any of this happening any time soon, so the whole discussion is really only for theoretical and rhetorical purposes.

UPDATE: I should note that I have no idea whether Bartlett is right about the FairTax and Scientology, or whether that is a completely unfounded smear. The FairTax people say he’s very very wrong. But they would, wouldn’t they?

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