I've read Laurence Vance's writing against the FairTax and all of the points he's made are excellent.
However, I don't believe he mentioned that the FairTax can distort the market just as much as the income tax in that it can be used by special interests just as easily as the income tax can be, if not more so. For example, a company could lobby for rebates if you buy its product while a comparable product from their competitor could be shut out. It could even establish barriers to entry. The rebates could become far worse than income tax deductions for certain things, in part because so few people pay Federal income tax anyway.
Also, I think it's naive to think that any Constitutional Amendment authorizing the FairTax will be narrow enough to prevent the FairTax from getting just as complicated as the income tax.
Anyone here besides me see little difference between the FairTax and the current tax code or is it that there is something seriously wrong with me?
I think a reason Dr. Paul is not supportive of it is because he's seen it's an alternative proposed by the establishment (like M Huckabee FFS) that could easily be manipulated by special interests.
In theory, it's less harmful to tax consumption than it is to tax income, but (as governments always fail in reality) I don't think the FairTax would be any different in reality... because the FairTax would just wind up becoming a tax that would be more bureaucratic than the income tax and it could eventually eat up peoples' savings anyway because of the potentially broad rebate subsystem.
I haven't read Vance's critique. Do you have a link?
That being said, I'm still inclined to believe a consumption tax would be less harmful than what we have now. I can't imagine the amount of production and investment and savings that would take place if there was zero- income, payroll, capital gain, and estate taxes.
Disclaimer: I am 100% opposed to all taxation in any form, whatsoever.
However, not all forms of taxation are as destructive as all others. If we're to be stuck with taxes no matter what, we should prefer less destructive forms to more destructive forms.
The income withholding tax is the most odious instrument of tyranny ever devised by the mind of man. Really, the brutal logic of the sprawling police state has its root in this one, evil idea.
The government doesn't actually care what we do with ourselves. Hell, they don't even care if we murder each other, as long as we don't organize a revolt against the Establishment. So why all the police-state surveillance measures? They are all extensions of the first, root act of surveillance which is conducted upon all of us: income reporting for tax purposes. From this follows the need to spy on the contents of our bank accounts. From this follows the need to spy on our financial transactions over time and across space. From this follows the need to spy on our potential cash holdings and physical surveillance. From this follows the need to wiretap, datamine, dragnet, correlate and collate every scrap of data about our daily activities to ensure that we're not "sneaking past" the income tax regimen.
I have proposed an alternative that I believe is the least harmful conceivable tax system. I can even imagine an industry for insurance against being victimized by taxation arising. Such an industry would make the government's life a living hell as they would require their clients to comply with best practices in financial privacy in order to qualify for insurance.
Clayton -
@ John James: Here it is:
http://mises.org/daily/1814
I know it's pretty old, but so is the idea of the FairTax.