Friday, February 27, 2015

OMG Is Rand About to Call for a National Sales Tax?

Rand Paul at CPAC:

 In the coming weeks, I will propose the largest tax cut in American history,a tax cut that will leave more money in the paychecks of every worker in America. My tax plan will keep the IRS out of your life and out the way of every job creator in America.
It sure sounds to me like he is hinting at a national sales tax.

Here is an excerpt from Murray Rothbard's brilliant essay on the dangers of a sales tax replacing the income tax:
 In recent years, the old idea of a consumption tax in contrast to an income tax has been put forward by many economists, particularly by allegedly pro-free-market conservatives. Before turning to a critique of the consumption tax as a substitute for the income tax, it should be noted that current proposals for a consumption tax would deprive taxpayers of the psychic joy of eradicating the IRS. For while the discussion is often couched in either-or terms, the various proposals really amount to adding a new consumption tax on top of the current massive armamentarium of taxing power. In short, seeing that income tax levels may have reached their political limits for the time being, our tax consultants and theoreticians are suggesting a shining new tax weapon for the government to wield. Or, in the immortal words of that exemplary economic czar and servant of absolutism, Jean-Baptiste Colbert, the task of the taxing authorities is to "so pluck the goose as to obtain the largest amount of feathers with the least amount of hissing." We the taxpayers, of course, are the geese...

Let us now consider the merits or demerits of a consumption as against an income tax, setting aside the question of bureaucratic power. It should first be noted that the consumption tax and the income tax each carry distinct philosophical implications. The income tax rests necessarily on the ability-to-pay principle, namely the principle that if a goose has more feathers it is more ripe for the plucking. The ability-to-pay principle is precisely the creed of the highwayman, of taking where the taking is good, of extracting as much as the victims can bear. The ability-to-pay principle is the philosophical embodiment of the memorable answer of Willie Sutton when he was asked, perhaps by a psychological social worker, why he robbed banks. "Because," answered Willie, "that's where the money is."

The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax...

We conclude with the observation that there has been far too much concentration on the form, the type of taxation, and not enough on its total amount. The result has been endless tinkering with kinds of taxes, coupled with neglect of a far more critical question: how much of the social product should be siphoned away from the producers? Or, how much income should be retained by the producers and how much income and resources coercively diverted for the benefit of nonproducers?

It is particularly odd that economists who proudly refer to themselves as advocates of the free market have in recent years led the way in this mistaken path...


  1. Rand gave a 20 minute speech and you took out a 10 second clip that may or may not be hinting what you suggest...that Rand will propose a national sales tax. Let me ask you this, Bob. If the real world choice (not some theoretical class-room exercise) was: a. Abolish the IRS completely and, instead, adopt a national sales tax, what would you do? And if Rand proposes precisely that, would you still oppose the change? Do you think that Rothbard would have? If you do, you would be wrong.

    As to the rest of the speech, given the context of other Republican war-mongers and defenders of torture who took the podium, I thought that the tone was just about right. "Government can't deliver the mail; how can they make war work ?" He made constant references to defending the entire Bill of Rights and how the separately listed "rights" are really connected and part of the greater general liberty. I dare say No One, Democrat or Republican, will make those connections.

    Does he really mean any of this? Who knows. But do we want to wait 1000 years (as Walter Block suggested) for a libertarian ideas to completely dominate the culture and reduce government down to the nightwatchman function? I don't know about you, but I don't have 1000 years (or even 20). Rand is the best of a very bad lot and in politics that's the choice.

    1. " Rand is the best of a very bad lot and in politics that's the choice."

      So, you just illustrated that there's no political solution. Good for you. As Clyde Wilson said, voting may not be evil, but it's at best an act of cluelessness, like chewing gum.

  2. Harry Browne did the same thing in '96 when he was running for the LP nomination. Of course, he changed his tune shortly thereafter when other candidates pointed out the foolishness of that idea.