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RIGHT-LIBERTARIANS, THE FAIR TAX, AND BIG GOVERNMENT
by
Joseph A. Brittian
A Thesis Submitted to the Faculty of
The Wilkes Honors College
in Partial Fulfillment of the Requirements for the Degree of
Bachelor of Arts in Liberal Arts and Sciences
with a Concentration in Political Science
Wilkes Honors College of
Florida Atlantic University
Jupiter, Florida
April 2012
ii
RIGHT-LIBERTARIANS, THE FAIR TAX, AND BIG GOVERNMENT
by
Joseph A. Brittian
This thesis was prepared under the direction of the candidate’s thesis advisors, Dr. Keith
Jakee and Dr. Timothy Steigenga, and has been approved by the members of his
supervisory committee. It was submitted to the faculty of The Honors College and was
accepted in partial fulfillment of the requirements for the degree of Bachelor of Arts in
Liberal Arts and Sciences.
SUPERVISORY COMMITTEE:
__________________________
Dr. Keith Jakee
__________________________
Dr. Timothy Steigenga
__________________________
Dean, Wilkes Honors College
__________
Date
iii
ACKNOWLEDGEMENTS
I acknowledge my advisor Dr. Keith Jakee for his untiring efforts to ensure that my jaded
worldview does not distort the good intentions of my research, analysis, and conclusions.
I also express my gratitude to my advisor Dr. Timothy Steigenga for his efforts to ensure
that I sufficiently broadened the scope of my analysis.
iv
ABSTRACT
Author: Joseph A. Brittian
Title: Right-libertarians, the Fair Tax, and Big Government
Institution: Wilkes Honors College of Florida Atlantic
University
Thesis Advisors: Dr. Keith Jakee and Dr. Timothy Steigenga
Degree: Bachelor of Arts in Liberal Arts and Sciences
Concentration: Political Science
Year: 2012
I begin by identifying right-libertarians as individuals who believe, foremost, that
legislators should reduce the size of the national government. A number of right-
libertarians support a Congressional tax reform proposal, the Fair Tax. This support is
surprising because the bill is revenue neutral: it therefore does not directly address
concerns over increasing Congressional spending or growth of government. Are right-
libertarians sacrificing their principles for expediency or is there some other explanation?
I argue right-libertarians mainly support the bill because they (1) believe Congress would
abolish the IRS as soon as it went into effect, increasing citizens’ privacy in the process;
and (2) view it as a gradual reform that would lead to further legislation intended to reduce
the size of government.
v
TABLE OF CONTENTS
INTRODUCTION...............................................................................................................1
THE FAIR TAX AND ALTERNATIVE TAXES..............................................................3
2.1 OVERVIEW OF THE FAIR TAX..............................................................................3
2.2 POTENTIAL NEGATIVE CHARACTERISTICS OF THE FAIR TAX...................5
2.3 BRIEF HISTORY OF AMERICAN TAX REFORM.................................................6
2.4 POPULAR ALTERNATIVE TAXES IN TAX REFORM DEBATE........................8
DEFINING RIGHT-LIBERTARIANISM........................................................................12
RIGHT-LIBERTARIANS ADVOCATNG THE BILL....................................................15
4.1 CRITERIA FOR ANALYSIS...................................................................................15
4.2 DIRECT RIGHT-LIBERTARIAN SUPPORT.........................................................16
4.3 ACADEMICS’ AND POLICY ANALYSTS’ SUPPORT OF NRSTS....................17
4.4 ACADEMICS’ AND POLICY ANALYSTS’ SUPPORT OF THE FAIR TAX......18
ASSESSING SUPPORT....................................................................................................21
5.1 COMPARING REASONS TO PRINCIPLES...........................................................21
5.2 POLITICAL OBJECTIVES.......................................................................................24
CONCLUSION..................................................................................................................27
REFERENCES...................................................................................................................29
vi
LIST OF GRAPHICS
FIGURE 1: FEDERAL TAX REVENUE BY TYPE.........................................................8
FIGURE 2: AN OVERVIEW OF ALTERNATIVE TAXES...........................................11
CHAPTER 1
INTRODUCTION
The current US debt is almost $15 trillion (BPD, 2011: 1). The debt continues to
grow, leading to concerns over future US credit solvency. In August of 2011, Standard &
Poor’s, one of the three major US credit ranking agencies, downgraded the US long-term
sovereign credit rating in partial response to this growing uncertainty (2011: 1). S&P
estimates that the debt burden, the ratio of debt to GDP, will rise from 74% in 2011 to
90% in 2015 (2011: 1). A large amount of current Congressional spending is intended to
stimulate a US economy still facing high unemployment and emerging from the
aftermath of a devastating housing bubble. To many, increasing deficit spending is
dangerous and growth is not occurring quickly enough. As an impediment to economic
growth, the growing length and complexity of the current tax code has caught the
attention of many citizens and politicians. Reforming, or even replacing, the current tax
code is a proposed solution.
One of these proposals is the Fair Tax, an alternative US national tax system that
would replace payroll taxes, corporate and personal income taxes, gift and estate taxes,
and capital gains taxes with a single national retail sales tax (Linder, 1999: 101). It
gained national attention when candidate Herman Cain endorsed it in the 2011
Presidential primary debates (Coy, 2011: 1). Proponents argue implementation of the
Fair Tax will stimulate economic growth (Boortz, 2005: 2).
2
Among these supporters are “right-libertarians,” who are defined in detail below.
Generally, they support capitalism and reducing the current size of the national
government. Since the Fair Tax is specifically designed to generate the same amount of
tax revenue provided by the current national tax system (Linder, 1999: 104), it does not
appear that passing the legislation will incentivize Congress to reduce the size of
government by implementing it. Therefore, the reasons for right-libertarian support are
uncertain. As evidenced above, the size of the national government is growing. As
deficit spending continues to grow, the national government is increasingly exerting its
influence over the economy. Because right-libertarians, above all else, desire the national
government to decline in size and power, when they avidly support a tax reform proposal
that does not affect current tax revenues and encourage Congress to reduce spending, it
begs the question as to how they can ideologically support such a proposal. Seemingly,
these right-libertarians are contradicting their beliefs by championing the Fair Tax.
Investigating this potential contradiction, I explore a group of right-libertarians’
reasons for supporting this proposal. After analyzing areas of the proposal that right-
libertarians might ideologically oppose, and examining right-libertarian literature
espousing reasons for their support, I investigate the merits of these reasons in the context
of American tax reform. To accomplish these goals, I use a five-part analysis: I explain
specifics of the Fair Tax legislation and alternative tax proposals in Chapter 2; provide a
definition of right-libertarianism in Chapter 3; review right-libertarian literature about the
Fair Tax in Chapter 4; attempt to discern reasons why right-libertarians support the Fair
Tax in Chapter 5; and relate the results of my analysis in Chapter 6.
3
CHAPTER 2
THE FAIR TAX AND ALTERNATIVE TAXES
2.1 OVERVIEW OF THE FAIR TAX
Georgia Representative John Linder introduced the Fair Tax in the US House of
Representatives in 1999. He has resubmitted the bill to the US House every subsequent
year (Boortz, 2005: 2). If Congress passes the Fair Tax proposal, the national
government will tax retail sales at the point of consumption, meaning it will only tax
retail products sold within the boundaries of the United States and not exports (Linder,
1999: 102). The bill proposes a 30% “tax-exclusive” tax rate for the first year, and
allows Congress to adjust this rate every following year (Linder, 1999: 201).
Most literature discussing the Fair Tax proposal indicates that Congress will set a
23% “tax-inclusive” rate for the first year under the Fair Tax (Boortz, 2005: 35).
Economists in the United States typically quote income taxes as tax-inclusive and sales
taxes as tax-exclusive (Bachman et al., 2006: 10). If an economist quotes a tax rate as
tax-exclusive, the quoted rate includes taxes owed in the tax base, which is either a
household’s pre-tax income under an income tax system or the pre-tax amount to be paid
under a sales tax system (Bachman et al., 2006: 22). When an economist quotes a rate as
tax-inclusive, the quoted rate does not include taxes owed in the tax base (Bachman et al.,
2006: 22).
4
To clarify these concepts, imagine Congress passes a national retail sales tax
(NRST) with a 30% tax-exclusive rate, and no other national or sub-national taxes exist.
If an individual buys a $100 retail product, the tax amount is 30% of the pre-tax price of
$100, which is $30. The total amount paid ($130) is the sum of the pre-tax price ($100)
and tax amount ($30). Alternatively, if Congress quotes the tax rate of the NRST as 23%
tax-inclusive, the tax amount is 23% of the total $130 paid, which is also $30. Both
calculations yield the same tax amount value of $30, but require taking a percentage of
two distinctly different values.
Possibly, many advocates of the Fair Tax proposal quote the tax rate as 23% tax
inclusive, believing it can be more easily compared to tax-inclusive quotes of income tax
rates. Regardless, a large amount of literature supporting the Fair Tax only mentions the
23% tax-inclusive rate (Boortz, 2005: 35). By not defining tax-inclusive and tax-
exclusive, this literature is often misleading.
Another debate surrounding the Fair Tax is its progressivity. A progressive tax
increases in tax rate as the amount subject to taxation (the taxable base) increases
(Sommerfield et al., 1992: 32). Conversely, a regressive tax decreases in rate as the
taxable base increases. Under a progressive sales tax system, those who spend the most
bear the greatest portion of the overall tax burden, and those who spend the least bear the
lowest portion. Since most Americans support a progressive national tax system
(Kotlikoff and Rapson, 2005: 10), it is often politically expedient to design any
alternative to the current national tax system as progressive.
5
To ensure that the Fair Tax has some progressivity, the bill includes a family
consumption allowance. This allowance is usually referred to as a “prebate” in
discussions surrounding the proposal’s viability (Kotlikoff and Rapson, 2005: 8). The
government will give a prebate, a monthly tax rebate, to each household that includes
more than one person. The prebate will be determined by multiplying 1/12 of the annual
poverty rate by that year’s tax rate (Linder, 1999: 301).
2.2 POTENTIAL NEGATIVE CHARACTERISTICS OF THE FAIR
TAX
Right-libertarians, defined in greater detail below, generally desire the national
government to reduce its size and power. Also, they oppose the extent to which the
government can invade individuals’ privacy. Recognizing these principles, there are
several notable drawbacks inherent in the bill for right-libertarians.
The most evident potential shortcoming of the Fair Tax is that the authors of the
bill designed it to be “revenue neutral” (Linder, 1999: 401). A revenue neutral tax
proposal generates the same amount of revenue for the national government as the taxes
it replaces or modifies. Since the proposal is revenue neutral, it will not reduce national
tax revenues and encourage politicians to decrease spending. This concept seems
potentially devastating to right-libertarians’ goal to reduce the size of the national
government.
6
Another potential problem for right-libertarians is that the bill does not repeal the
16th
Amendment to the US Constitution. This amendment allows Congress to levy an
income tax without apportioning it among the states. Without repealing this amendment,
Congress retains full authority to implement the income tax again. This means that the
US could have both a NRST under the Fair Tax legislation and an income tax. Under
this scenario, the national government’s power may even increase.
A further potential setback is that the bill clearly stipulates the tax rate can be
raised or lowered by Congress every year (Linder, 1999: 301). Since Congress is free to
raise the tax rate, the size and power of the government can easily continue to increase.
Thus, the Fair Tax does not appear to be designed to restrain growth of the national
government.
2.3 BRIEF HISTORY OF AMERICAN TAX REFORM
To assess the potential effects of implementing a NRST under the Fair Tax, I now
compare it to the available alternatives, including the present tax system. The current US
tax system collects much of its revenue through payroll taxes, personal income taxes,
corporate income taxes, estate and gift taxes, and taxes on capital gains (See Figure 1
Below). In the 1980s, political debate intensified over the use of deductions in personal
and corporate income taxes (McCaffery, 2002: 45). Many politicians claimed that a large
amount of these deductions were unnecessary, and demanded that Congress eliminate
several of them in the mid-1980s (McCaffery, 2002: 58).
7
In response to this growing demand, Congress passed the Tax Reform Act of
1986 (the “1986 Act”) to remove many personal and corporate income tax deductions to
broaden the tax base and reduce marginal tax rates (McCaffery, 2002: 47). Many
economists recognize the 1986 Act as the most significant attempt to reform the tax code
in the late-20th
century (McCaffery, 2002: 47; Sullivan, 1996: 6). The originators of this
bill, Senators Packwood and Bradley, examined many alternative tax systems before
settling on the specifics of their bill (McCaffery, 2002: 47). In their research, they
concluded that a consumption tax would be “unfair” because it did not tax savings
(McCaffery, 2002: 47). The Senators believed that since higher-income earners save
more in their lifetimes, these earners would disproportionately benefit if the government
shifted from principally taxing income to taxing consumption, resulting in an inequitable
outcome that disadvantages lower-income earners.
While some economists agree with the Senators’ assessment (Sullivan, 1996: 2),
others believe that the current tax system, which does tax savings, inhibits US
competitiveness. They would prefer that current taxes be replaced with a consumption
tax, claiming it would increase capital formation (Sullivan, 1996: 2; McCaffery, 2002:
27). These economists argue that since a consumption tax, unlike an income tax, does
not tax savings, it would encourage citizens to save income to avoid paying taxes on that
income (McCaffery, 2002: 27).
8
Above: Figure 1, Federal Tax Revenue by Type; CBO, 2009: 15
2.4 POPULAR ALTERNATIVE TAXES IN TAX REFORM DEBATE
National tax reform once again became a subject of strong Congressional debate
in the 1990s. Congress began to consider many alternative tax proposals, but none were
adopted (Sullivan, 1996: 3). Since the 1990s debate, the most commonly considered
alternatives to current national taxes include a value-added tax, NRST, and flat tax
(Sullivan, 1996: iv). The effectiveness of these alternatives and current taxes hinge upon
questions of compliance and administration costs (Graetz, 1997: 86-107). I will briefly
examine each of the aforementioned alternatives (See Figure 2 below for an overview).
Individual Income 52%
Payroll 36%
Consumption 3%
Wealth 1%
Corporate Income
8%
Federal Tax Revenue By Type
9
The type of tax proposed in the Fair Tax legislation is a NRST. This tax is
imposed upon individual retail sales that occur within a nation’s boundaries.
Administering a NRST can be difficult because consumers do not keep detailed records
and retailers might evade the tax by purchasing items for personal use and claiming them
as intermediate purchases (Sullivan, 1996: 9-32).
A second problem, “cascading,” occurs when the government taxes intermediate
business purchases (Trager, 2005: 204). In other words, the government may tax a
good’s sale multiple times when it only intends to tax the final retail sale. Notably, since
businesses and retailers are responsible for identifying intermediate business purchases to
the government, businesses and retailers carry the majority of the blame for cascading.
As a final concern for implementing a NRST, state legislators will probably
object to the tax as unfair competition in sharing a major revenue source (Sullivan, 1996:
15). Currently, most states rely on consumption taxes as a primary source of tax revenue.
If the national government implemented a NRST, consumers will have to pay state and
federal sales taxes. The combined rate of these taxes might become highly unattractive to
consumers, pressuring state legislators to reduce state sales taxes and impose other taxes
to offset losses in tax revenue. Since consumption taxes usually have a greater impact
upon tourists, these taxes are usually more popular to voters than other forms of taxes.
For this reason, state legislators will be reluctant to replace sales taxes with other types of
taxes.
Despite these shortcomings, the advantage of the NRST is that it is fairly
uncomplicated and familiar to most Americans. As a result, voters perceive the tax as
10
simple and do not often recognize its drawbacks (Sullivan, 1996: 16). This perception
increases the likelihood of a NRST receiving public support.
In contrast to a NRST, which the government imposes upon consumers at the
point of purchase, a value-added tax (VAT) is imposed upon businesses at every point of
production (Sullivan, 1996: 17). Businesses can receive rebates for taxes already paid by
previous businesses for a given good (Sullivan, 1996: 18). Compared to a NRST,
compliance costs are higher, since sellers and buyers both have to keep detailed records
(Sullivan, 1996: 19). The US is one of the only industrialized nations that does not have
a VAT (Sullivan, 1996: 16).
As a third option, a flat tax was frequently discussed in the mid- to late-90s
(Sullivan, 1996: iv). This tax has a constant tax rate, and can be imposed on individuals,
corporations, or both (Sullivan, 1996: 38). If the government permits exemptions for
income below a predetermined cutoff level, then flat taxes can be progressive (Sullivan,
1996: 40). The difficulty of government enforcement mostly depends upon the
complexity of the flat tax, specifically in terms of how many deductions and exemptions
the government allows. The tax becomes more complex as the number of allowable
deductions and exemptions increases, and growing complexity makes enforcement more
costly (Sullivan, 1996: 42).
11
Figure 2: An Overview of Alternative Taxes
Type of Tax Description of
Tax
Compliance &
Administration
Costs
Advantages Disadvantages
NRST
Imposed upon
individual retail
sales that occur
within a nation’s
boundaries.
Retailers can
evade tax by
claiming personal
purchases as
intermediate
purchases, and
consumers do not
keep detailed
records.
Relatively
uncomplicated,
and appears
simple to
Americans due to
their familiarity
with retail taxes.
“Cascading,” or
multiple
taxations, can
occur; state
objections to
sharing a
revenue source;
difficult to
ensure strong
progressivity.
VAT Imposed upon
businesses at
every point of
production;
business can
receive rebates
for taxes already
paid by previous
businesses for a
given good.
High compliance
costs since buyers
and sellers have
to keep detailed
records.
The tax is not as
visible to
consumers,
making it less
objectionable to
them.
Goods can be
taxed multiple
times when
businesses do
not apply for
rebates.
Flat It has a constant
tax rate, and can
be imposed on
individuals,
corporations, or
both.
Complexity
increases as the
number of
available tax
expenditures
increases.
A constant rate
simplifies
associated tax
code.
Lack of
progressivity
without available
tax expenditures.
12
CHAPTER 3
DEFINING RIGHT-LIBERTARIANISM
Having briefly reviewed tax reform in the US, I now discuss the philosophy of
right-libertarians. Since political theorists use varied definitions for right-libertarians, I
select a broad definition that is consistent with mainstream political theory. Furthermore,
I briefly review other types of libertarians to better distinguish right-libertarians.
The label “libertarian” is difficult to define. As a political designation, it is
distinct to the United States (Freeman, 2001: 110). And, although several academics
choose to use this designation, the beliefs of self-labeled libertarians are frequently
disparate. Political theorists have divided libertarianism into four separate schools of
thought: anarchism, Geolibertarianism, left-libertarianism, and right-libertarianism
(Gauss et al., 2004: 205). Before defining right-libertarianism, I will review the three
other forms of libertarianism.
Of the four libertarian schools, the most radical is anarchism. Mainstream
anarchists support a stateless society (Gauss et al., 2004: 80). Left-libertarians also
support a stateless society, but more specifically oppose authoritarian institutions that
collectively control a large portion of society’s means of production (Ostergaard, 1991:
21). This control supposedly subjugates the majority of the population to the will of
these institutions (Gauss et al., 2004: 128).
13
Completely rejecting a stateless society, Geolibertarians desire to reconcile the
beliefs of Georgism with those of right-libertarians (Foldvary, 2002: 9). Georgists argue
that rent should be paid to the community for a claim of private ownership to any portion
of land (Foldvary, 2002: 10). According to this theory, individuals making these claims
of ownership should pay for the right to exclude others from the land, and for the
government’s protection of this claim, by paying taxes to the government (Foldvary
2002: 10). While Geolibertarians share a desire to maintain property rights with right-
libertarians, they differ from right-libertarians by claiming property taxes as necessary.
Geolibertarians make this claim because they, unlike right-libertarians, are Georgists.
Although right-libertarians do not oppose taxes, they do not believe individuals should
necessarily have to pay property taxes to maintain property ownership.
Since right-libertarians do not support Georgism or a stateless society, they are
distinctly different from other types of libertarians. Also called “traditional libertarians”
(Becker, 1992: 1562), right-libertarians support capitalism and believe that all individuals
have a right to the fruits of their labor (Foldvary, 2002: 8). They believe that government
should be limited in power and size (Foldvary, 2002: 9). Currently, they think the
government is too great in size, possessing excessive power to invade citizens’ privacy
(Becker, 1992: 1563; Konkin, 1983: 35). Although right-libertarians do not contest
taxation as a principle, they oppose the extent to which the government can invade
citizens’ lives and privacy by enforcing the current tax code (Becker, 1992: 1562;
Konkin, 1983: 35). While right-libertarians may differ by the degree to which they
14
believe the national government should be reduced in size and power, they are alike in
believing that the national government’s size and power should be diminished.
15
CHAPTER 4
RIGHT-LIBERTARIANS ADVOCATING THE BILL
4.1 CRITERIA FOR ANALYSIS
Right-libertarians comprise only a small portion of the US population, and
academics who identify or sympathize with right-libertarian causes are few in number.
Consequently, finding a large amount of right-libertarians who support the Fair Tax and
have performed credible academic or economic analysis to justify their support is
difficult. And, since legislators proposed the Fair Tax only twelve years ago, searching
for academic right-libertarians’ analyses of the Fair Tax is even more challenging.
However, while many academics do not publicly identify their political ideology, most of
them express views that sympathize with only a small number of ideologies.
Recognizing this tendency, I explore the views of academic supporters of the Fair
Tax who highly sympathize with right-libertarian beliefs. These views provide credible
positions from which right-libertarians can justify their support of the legislation. Below,
I identify right-libertarian support of the Fair Tax in three ways: (1) I determine who are
the right-libertarians directly supporting this legislation; (2) I broaden my study to assess
right-libertarian academics and policy analysts who supported a NRST before Rep.
Linder introduced his bill; and (3) I examine the reasons why right-libertarian academics
and policy analysts support the Fair Tax.
16
4.2 DIRECT RIGHT-LIBERTARIAN SUPPORT
As discussed above, direct right-libertarian support of the Fair Tax is difficult to
identify. However, there are a few visible examples of supporters: former Governor of
New Mexico and 2012 Presidential Candidate for the Libertarian Party, Gary Johnson;
founder of thesouthernlibertarian.com, Chuck Burns; former Libertarian candidate for the
United States Senate in 2010 for Florida, Alexander Snitker; and radio personality, Neal
Boortz. Their reasons for supporting the bill include increased individual privacy from
an expected decrease in enforcement powers of the IRS, greater visibility in the intended
effects of taxes, and a gradualist approach to minimizing the power of the national
government. While only one of these advocates argues all of these reasons, the
proponents assert fundamentally similar positions.
A view shared by all of the aforementioned supporters is that passing the Fair Tax
legislation would immediately lead policymakers to abolish the IRS, which would
significantly diminish the power of the national government and increase individual
citizens’ privacy (Boortz, 2005: 15; Snitker, 2010: 1; Johsnon, 2012: 1; Burns, 2011: 1).
Despite this shared viewpoint, the supporters have more nuanced individual arguments,
illustrating their slightly varied goals. While Boortz shares the view discussed above, he
views legislators adopting the Fair Tax as a gradual step towards greater reforms. In the
immediate future, Boortz thinks that legislators will reduce business costs and spur
economic growth by passing the Fair Tax (Boortz, 2005: 42). In contrast, the other
aforementioned supporters do not argue that the Fair Tax is intended as a gradualist
17
reform. Rather, they contend that it is the best currently available tax reform solution.
Snitker is the only one to qualify this position, believing others pieces of legislation to be
of strong importance. While he would be willing for Congress to pass the bill by itself,
he hopes that successful passage of the Fair Tax would occur alongside a repeal of the
16th
Amendment and passage of a Balanced Budget Amendment, intended to prevent
Congress from further deficit spending (Snitker, 2010: 1).
4.3 ACADEMICS’ AND ECONOMIC ANALYSTS’ SUPPORT OF
NRSTS
Even prior to the Fair Tax proposal, Stephen Moore, a policy analyst who served
as a senior fellow at the CATO institute and was directly involved in the developmental
stages of the Fair Tax, and economist Laurence Kotlikoff supported replacing much of
the current tax system with a NRST. In a 1995 paper arguing that an NRST should
replace most of the current tax system, Moore argued that successful tax reform depends
upon four factors: visibility, positive economic impact, simplicity, and privacy (Moore,
1995: 1). He believed that replacing income and payroll taxes with a NRST would best
balance these goals by expanding the taxable base, promoting economic growth, reducing
tax expenditures, and leading to the elimination of the IRS. While he did not discuss the
impact that replacing much of the current tax system with a NRST would have upon the
IRS, Kotlikoff also believed that a NRST-based tax system would increase economic
growth and simplify the tax code by eliminating tax expenditures (Kotlikoff, 1993: 1).
18
Another proponent, Robert H. Frank, an economist at Cornell, proposed a NRST,
which differs from the Fair Tax in that it does not offer a prebate. Anticipating a possible
libertarian backlash to his proposal, Frank defends his support of the NRST, as a right-
libertarian, by denouncing all libertarians that ignore or greatly disparage the right of the
state to tax as a position of a radical libertarian (Frank, 2006: 450). However, he does not
recognize the previously-discussed drawbacks to a NRST-based tax system, insofar as it
meshes with the right-libertarian philosophy (See Section 2.2), and does not discuss any
of these concerns in his proposal. Specifically, Frank does not directly address how
adopting his NRST would reduce the power of the national government, or what taxes, if
any, should be eliminated if Congress adopted his suggested tax.
4.4 ACADEMICS’ AND ECONOMIC ANALYSTS’ SUPPORT OF
THE FAIR TAX
As discussed above, Moore helped design the Fair Tax legislation. His support
for the Fair Tax, as a right-libertarian, is based upon his belief that legislators would
abolish the IRS quickly after passing the legislation. Moore argues that by reducing
current compliance costs, the Fair Tax would eliminate the need for the IRS (Moore,
2009: 5). According to Moore, by eliminating the IRS, Congress would significantly
diminish the power of the national government and increase individual citizens’ privacy.
As a second argument, Moore believes that the Fair Tax would create a more equitable
and less manipulative tax system, since it reduces tax expenditures (the prebate is the
19
only tax expenditure in the current legislation). Although Moore’s central argument for
support stems from an assumption that Congress will eliminate the IRS after passing the
bill, Moore clearly supports the Fair Tax.
A potential advocate for the Fair Tax, Walter Williams, a professor at George
Mason University, supports the Fair Tax in its intent, but is highly skeptical about the bill
because it requires Congress to set the tax rate every year, rather than keeping it at a set
rate (Williams, 2008: 108). In order for The Fair Tax to effectively reduce governmental
control over American lives, Williams believes that Congress must implement three
provisions: (1) a repeal of the 16th
Amendment that created the Income Tax; (2)
legislation that fixes the tax at a set rate (Williams is content with keeping the 30% tax-
exclusive rate, which, in the current bill, is the rate applied during the first year the bill
goes into effect); and (3) a Constitutional amendment ensuring that a tax increase can
only occur with a three-fourths vote of Congress (Williams, 2008: 109). Essentially,
Williams fully supports the Fair Tax in its purpose and believes that it would accomplish
traditional, right-libertarian, goals, as long as Congress is restricted from altering the tax
rate by the aforementioned measures. The reasons for Williams’ support appear clear:
although he is a right-libertarian, he is also a self-declared skeptic regarding national
governmental reforms that would fully serve the right-libertarian agenda (Williams,
2008: 109), and he wants Congress to implement what he believes to be the most viable
solution to national tax reform. In terms of seeking gradual reforms to achieve right-
libertarian goals, his view is very similar to that of Boortz, but he differs significantly
20
from Boortz in his view that legislative safeguards are essential to make the legislation
effective in its intent.
21
CHAPTER 5
ASSESSING SUPPORT
5.1 COMPARING REASONS TO PRINCIPLES
In Section 2.2, I outlined potential reasons why right-libertarians might oppose
the Fair Tax. Since the Fair Tax is revenue neutral and allows Congress to change the tax
rate every year, it does not incentivize Congress to reduce deficit spending by lowering
tax revenues. Furthermore, since the bill does not repeal the 16th
Amendment, Congress
can impose an income tax alongside the NRST introduced by the legislation. Given these
concerns, a group of right-libertarians’ support for the bill became a question of political
theory: was this group compromising its principles by supporting the Fair Tax? In
attempting to explain this potential contradiction, I sought to uncover why right-
libertarians supported the bill. While some advocates reviewed in this analysis addressed
these issues, the majority of supporters did not. However, all of the reviewed proponents
provided several reasons why they supported the Fair Tax. The remaining question is
whether the given reasons for support coalesce with the right-libertarian ideology, as
defined in Chapter 3.
The myriad of arguments presented by right-libertarians directly supporting the
Fair Tax are: (1) Congress, no longer recognizing a need for the IRS, will abolish the
agency, reducing the power of the national government by increasing individual citizens’
22
privacy; (2) the legislation is a gradual reform that will lead to further legislation aimed at
achieving right-libertarian goals; (3) the bill will promote economic growth; and (4)
reducing tax expenditures will make the tax system more equitable. As discussed in
Chapter 4, Snitker desires Congress, along with passing the Fair Tax, to adopt a Balanced
Budget Amendment (preventing deficit spending) and repeal the 16th
Amendment.
Taking a stronger position, Edwards only supports the Fair Tax if Congress repeals the
16th
Amendment, legislation fixes the NRST rate at a set rate, and Congress
constitutionally requires a three-fourths vote to raise taxes. Underlying many of these
claims are assumptions that Congress will implement additional legislative measures
when it passes the Fair Tax.
Most of the reviewed right-libertarians assume Congress would abolish the IRS
after passing the bill. They argue citizens would gain greater privacy and the government
would have less enforcement power after Congress eliminates the IRS. Certainly,
reducing government power and increasing individual privacy are both goals of right-
libertarians. Regardless, it is essential to note that the Fair Tax legislation does not
abolish the IRS. These arguments could only be valid if Congress chose to not retain the
IRS after passing the Fair Tax, and are highly suspect because there is no assurance that
policymakers would actually eliminate the IRS if they passed the legislation.
Equally questionable are the beliefs that legislators would pass a Balanced Budget
Amendment, repeal the 16th
Amendment, or pass legislation preventing Congress from
making a change to the NRST rate or other tax rates. The Fair Tax does not accomplish
any of these goals. While Congress may be compelled to pass any of the aforementioned
23
legislation alongside the Fair Tax, it remains uncertain if it would. Nevertheless, since all
of these measures would restrict or reduce the growth of the national government, these
proposals are consistent with the right-libertarian ideology.
As final points of interest, proponents have argued that passing the Fair Tax
would increase economic growth and reduce tax expenditures. If Congress actually did
reduce tax expenditures by passing the Fair Tax in its current form, the new tax system
would reduce the government’s ability to manipulate the economy through the tax code.
This goal is consistent with the right-libertarian philosophy, specifically appealing to
right-libertarians’ strong advocacy of capitalism and free markets. Additionally, as
capitalists, right-libertarians also desire to promote economic growth.
As a matter of political theory, this group of right-libertarians initially seemed to
be sacrificing its principles by supporting the Fair Tax. Yet, rather than compromising its
ideology, this group predicated its arguments for support upon right-libertarian beliefs.
Although right-libertarians’ advocacy often stemmed from many assumptions about how
Congress would act after passing the bill, the reviewed right-libertarians in this analysis
provided arguments reflecting the right-libertarian ideology. Contrary to initial
appearances, right-libertarians do not appear to be compromising their ideological beliefs
or acting hypocritically by supporting the Fair Tax.
24
5.2 POLITICAL OBJECTIVES
When evaluating right-libertarians’ motivations for supporting the Fair Tax, it is
important to recognize that supporters could have political motivations that extend
beyond their desires for Congress to implement policies consistent with the right-
libertarian ideology. In other words, right-libertarian advocates might support policies
they believe will help transition the members of either the Democratic or Republican
parties into accepting a revised philosophy that is more aligned with right-libertarian
beliefs. As the two large parties comprising the United States’ predominantly two-party
system, the aforementioned parties absorb the majority of the electorate and wield
incredible power to accomplish goals consistent with their underlying principles. If right-
libertarians could alter the principles of one or both of these parties to more closely
resemble their own philosophy, they may be more likely to realize policy reform that
accomplishes right-libertarian goals. So, are the right-libertarians reviewed in this
analysis likely to possess these political aims?
If the reviewed right-libertarians supported the Fair Tax as a gradualist reform, it
would be reasonable to assume that they intended to at least align themselves with
politicians representing the mainstream faction of their respective parties. Yet, only
Boortz and Williams supported the Fair Tax as a gradualist reform. Additionally, not a
single right-libertarian who was examined in this analysis explicitly stated that he or she
desires to use gradualist reforms (including the Fair Tax) to transform the philosophy of a
major party by inciting a revolutionary alteration of that party’s mainstream platform.
25
Since none of the right-libertarians in this study clearly indicated their political
identifications, any of these right-libertarians could identify with a major party. If any of
them do, they might reasonably be motivated to seek methods to alter the mainstream
platform of a party to embody right-libertarian ideals. But, only former Republican
Governor Johnson of New Mexico overtly affiliated with one of the two major parties.
With the exception of the three right-libertarians discussed above, most of the right-
libertarians who were examined in this study have not sufficiently indicated what, if any,
political objectives they intend to pursue by supporting the Fair Tax outside of
forwarding the right-libertarian agenda.
Given the existing evidence, only Boortz, Johnson, and Williams could arguably
be openly politically motivated to transform major party platforms into a closer reflection
of the right-libertarian ideology. As a former Republican Governor, Johnson’s
significant past experience within the party and lack of an explicit public departure from
it could indicate that he still identifies with Republicans. In other words, as a right-
libertarian, who also identifies as a Republican, Johnson may desire to influence the
mainstream Republican platform to closely reflect right-libertarian ideals. Still, it is not
clear whether Johnson has departed from the Republican Party, so this reasoning is purely
speculative and based on incomplete information. Meanwhile, Boortz and Williams
might be seeking gradualist reforms to affect major party platforms, resulting in party
positions that better represent right-libertarian principles. But, again, this possibility is
speculative, and more explicit evidence is needed to draw any convincing conclusions.
26
Ultimately, right-libertarian advocates of the Fair Tax could be pursuing three
broad political objectives by supporting the bill: increasing the number of right-
libertarians within Congress, changing major party platforms to more closely conform to
the right-libertarian ideology, or creating a government that is better representative of the
right-libertarian philosophy. Right-libertarians may conceivably be aiming to achieve
any or all of these goals, but the specific political motivations of the right-libertarians
who were examined in this study remain inexplicit. Nevertheless, it is evident that right-
libertarian supporters of the Fair Tax have an incentive to become politically motivated to
change one of the major party’s platforms to achieve right-libertarian goals. It is simply
unclear whether right-libertarian supporters actually have this political motivation.
27
CHAPTER 6
CONCLUSION
The goal of this analysis was to discover why a group of right-libertarians
supported the Fair Tax when it did not appear to incentivize Congress to reduce spending.
I questioned whether right-libertarians should ideologically support the Fair Tax, given
that it did not address the pressing issue of growing Congressional spending. After
analyzing several right-libertarians’ arguments for supporting the legislation, I recognized
that, while the underlying assumptions that supported their reasons were often suspect,
these advocates were not compromising their right-libertarian principles.
Among their arguments, many of these proponents reasoned that the Fair Tax
would promote economic growth and increase individual privacy by encouraging
Congress to abolish the IRS. Others qualified their support by arguing that the Fair Tax
would act as a gradual reform that would lead to stronger right-libertarian policies in the
future or insisting that Congress should pass other legislation in conjunction with the Fair
Tax to effectively reduce the size of government. Some argued that the Fair Tax, by
reducing the number of tax expenditures in the tax code, would reduce the power of the
national government to manipulate the tax system. While arguments were diverse,
advocates’ positions were ultimately consistent with the right-libertarian ideology.
Despite this consistency, it remains questionable whether right-libertarian
supporters have political aims to either expand their prominence within Congress or
influence major party platforms to reflect right-libertarian principles. Support for the Fair
28
Tax as a gradualist reform indicates that some right-libertarians desire to expand the
influence of the ideology within Congress. And, since a right-libertarian might also
identify with a major political party, this involvement might signify an interest in
reforming the platform of that party to better represent his or her ideological leanings.
Further inquiry is needed to ascertain whether these speculations are valid.
29
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