Paul L. Caron

Saturday, May 2, 2009

Adler & Hewitt: The FairTax Fantasy

Fair Tax Hank Adler (Chapman University, George Argyros School of Business & Economics) & Hugh Hewitt (Chapman University, School of Law) have published The FairTax Fantasy:  An Honest Look at a Very, Very Bad Idea (Townhall Press, 2009).  Here is the publisher's description:

Launched by talk radio host Neal Boortz and Georgia Congressman John Linder and embraced by Presidential candidate and former Arkansas Governor Mike Huckabee, the FairTax movement, though relatively small, has grown into a significant and very media-savvy force pushing for radical changes in the way the federal government will collect taxes.

The details of that plan, and why its advocacy is a disaster for the GOP and why its implementation would be a disaster for the United States are discussed in this book. Put simply, the imposition of a massive new sales tax -- at least 30% but probably much higher -- on every product consumed in the United States and accompanied by the simultaneous repeal of the federal income tax code is a risky and deeply dangerous attempt to sell simplicity to a tax weary public. Hank Adler and Hugh Hewitt both favor real tax reform, but don't advocate either economic or political suicide. The FairTax is both.

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I'm convinced that the primary attraction of the Fair Tax is that it would be so easy to avoid and evade, e.g. through bartering. Speaking of evasion, proponents evade the obvious fact that there is no painless way to raise revenues of 20% to 30% of GDP. Furthermore economists tell us that several small taxes create less harm (deadweight loss) than one large tax.

Everyone would like to pay less tax, and Fantasy is indeed the correct word for that idea, in any form it takes.

Posted by: AMTbuff | May 2, 2009 6:36:45 AM