FairTax: The ridiculous debate over a terrible idea

We're all dumber for having heard of the FairTax.

Until recently, you may have never heard of the so-called FairTax proposal, a piece of federal legislation that would completely eliminate the federal income tax and replace it with a federal sales tax. The few supporters of this bizarre proposal promise that, were it to be enacted, the payoff for fiscal conservatives would be the severe curtailment of the Internal Revenue Service, since there would be less enforcement needed for a sales tax than for an income tax.

This is, to be clear, an incredibly stupid idea based on a completely faulty premise that would never have any chance of becoming federal law, no matter who was in the majority in the House or the Senate, or which party controlled the White House. It’s a terrible concept that’s only supported by a few loony members of the House Republican caucus and some misguided conservative activists. Even a Republican president wouldn’t be willing to consider signing it into law - at least, no Republican president who stood any chance of winning any general election ever. It certainly has no chance of passage in the current national political climate, with Democrats controlling the White House and the Senate. Since it isn’t even supported by most House Republicans, it doesn’t even stand much chance of ever passing the House. Heck, even if Republicans somehow managed to win every single seat in the chamber next cycle and in every election forever, it would never become law, and that’s for a very good reason: As mentioned before, it’s a dumb idea. If you don’t believe me, just ask Grover Norquist, who’s made a whole career of fighting for lower taxes.

First and foremost, sales taxes require enforcement. Since it’s up to businesses to collect them, some agency of government will need to make sure that they’re doing it properly. In states that have sales taxes, like my home state of Maine, the state’s version of the IRS (Here it’s creatively called Maine Revenue Services) is in charge of that enforcement. So, even if the IRS were dramatically scaled back as proposed in the bill, it wouldn’t actually ever be totally eliminated: Whether you have a sales tax, an income tax, or both, governments don’t just rely on the honor system to collect it. No matter what taxes exist, there will need to be some agency enforcing the collection of them, or else your entire tax system becomes completely voluntary for everyone. There’s always going to be something like the IRS, no matter how much funding it gets or what you call it.

It’s also a terrible concept because one should never expand another tax in order to pay for the reduction of another. That’s not real fiscal responsibility, it’s an accounting gimmick that’s just trying to fool the voters. Any proposal to create any new kind of tax at any level isn’t fiscally conservative, no matter how the revenue generated by it is spent. Rather than trying to come up with creative schemes to cut taxes, or simply cutting them without paying for them at all, here’s a novel idea for fiscal conservatives who want to cut taxes: Cut spending first.

You see, if you cut spending, then you don’t need as much revenue, and you can cut taxes. It’s a revolutionary concept, I know, but one that has been tried and true at all levels of government for, well, centuries. There’s no need to reinvent the wheel here: You spend less money, then you need less revenue. It’s not complicated. Politicians only want to make it complicated because hardly any of them ever really want to cut spending, even those who self-identify as fiscal conservatives.

Moreover, it opens up the chance for Democrats to re-introduce the income tax, if it were ever repealed, while simultaneously keeping the newly-created national sales tax. It also would allow them to tax goods and services at different rates in order to incentivize or de-incentivize certain behavior. Democrats don’t have to implement universal background checks or a gun ban to curtail the Second Amendment once a national sales tax is passed; all they have to do is set the sales tax on guns at 90%. They could do the same thing with red meat, gas-powered cars, junk food - anything they wanted to get people to buy less often. The only reason they can’t do that now is because there is no national sales tax, and we’re better off keeping it that way. The last thing we want to do is hand Democrats another way to limit individual freedom.

So, the FairTax is not only a nonsensical idea, it’s one that - fortunately - has no chance whatsoever of ever becoming law. Why, then, has it gotten so much attention in the news as of late? Well, it’s because one of the few members of Congress who enthusiastically supports it, Rep. Andrew Clyde of Georgia, was also one of those who rebelled against Kevin McCarthy’s candidacy for Speaker of the House before changing his vote. In return, Kevin McCarthy promised him that this ridiculous idea of his would get a committee hearing and go through the normal legislative process. Apparently that was enough to get Clyde’s vote for Speaker.

Now, that’s ridiculous, but it’s perfectly fine - it’s part of the normal horse-trading process in Washington. Giving the FairTax idea the chance for a hearing might sound good, but it won’t really move it any closer towards becoming law.

Everyone in Washington understands this: Chuck Schumer, Joe Biden, and all of the Democrats. Yet, simply by allowing for a vote on it, it gives them the political opportunity to paint the FairTax idea as the ‘Republican plan to raise taxes’, even if the vast majority of Republicans in both the House and the Senate would never support it. This is what happens when any Republicans propose any new tax or tax increase in some kind of tax-shift scheme: Democrats get to paint all Republicans as wanting to raise taxes, making them no better than Democrats.

So, the Fair Tax is not a real, credible public policy proposal that might ever be enacted into law; it’s a fringe idea that hands the Democrats a free punching bag for a few news cycles. Least you have any doubt, watch how closely the press pays attention when it actually comes to a vote and inevitably goes down in flames spectacularly: it will get exactly zero coverage. It shows exactly why Republicans need to remain committed to real fiscal conservatism, rather than trying to come up with clever and creative work-arounds. Everyone understands that if we just cut spending, we can cut taxes. When you start proposing complicated schemes instead, it just muddies the waters without accomplishing anything. The Fair Tax is not only a dumb idea, it’s a dumb idea that hurts Republicans politically merely by existing. It’s entirely indicative of the level of strategic thinking that the Quixotic Caucus displayed in their rebellion against McCarthy, and exactly the sort of brilliance we can expect from them for years to come.

You may follow Jim on Twitter or Facebook. He is also a weekly political columnist for the Portland Press Herald, Maine’s largest daily newspaper.