September 12, 2005
Starving the beast
(Cross-posted at The FairTax Blog)
One of the strangest criticisms I’ve heard of the FairTax has been from the ideological Libertarians. Being one of that rare breed myself, I understand the criticism, but cannot see the point.
FairTax proponents consider one of the greatest assets to the plan the incredible increase in economic growth in this nation. That increase in growth will provide benefits and advancement in our society at an absolutely incredible pace. As the economy increases, of course, tax revenues will also increase greatly to our government, shoring up the budget deficit and unfunded programs like Social Security and Medicare. To those of us who hate budget deficits, this is an incredibly strong point. To the ideological Libertarians who hate government? Fully funding government programs will only keep them going, and the ideological Libertarians want those programs to go away.
I should point out that I, as an ideological (small-l) libertarian, would absolutely love to see those programs go away. Neal Boortz is an ideological Libertarian, and would love to see those programs go away. But at the same time, that’s a different debate.
When the ideological Libertarians are claiming that these increased federal tax revenues are a bad thing, they can’t see the forest for the trees. Each time they decry the increase in revenues, they are essentially saying “You shouldn’t dare grow the economy by a dollar, because $0.23 will go to the government!” They are saying that economic growth, if it has the downside of increasing federal tax revenues, shouldn’t occur.
In our current political environment, those programs are not going away. While I’d love to see major reform to Social Security and Medicare, and would love to see the government shrink, it doesn’t look likely in the near future. And trying to “starve the beast” doesn’t work when the beast prints its own money. If the Fairtax will grow our economy at a much stronger pace and thus also increases federal revenues, that’s a tradeoff I’m willing to make. Just as I don’t refrain from working to avoid paying income tax, or refrain from investing to avoid capital gains tax, I won’t refuse economic growth just because the government might get higher tax revenues. Tax reform is the battle of the day, and the FairTax is the best plan I’ve come across. I’ll save my attempts to strangle government for tomorrow.
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Any tax that does not include passive investments, passive income, etc will be judged to favor the wealthy unfairly. How will stock market purchases, real estate, etc. be included in the fair tax? or is it. I understand that if all money transfers/purchases were included the % would be in the 10-15% range. Comments?
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Why wait with the strangling?