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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