After my recent post on “bashing the IRS,” I got several emails and comments asking whether a national sales tax might be a better idea than the flat tax. I’m a big fan of proposals such as the Fair Tax. I’ve debated in favor of the national sales tax, done media interviews in favor of the national sales tax, written in favor of the national sales tax, and even defended the national sales tax in congressional testimony. As far as I’m concerned, we should junk the IRS for some type of single-rate, consumption-base (meaning no double taxation), loophole-free system. The flat tax is the most well-know approach for achieving these goals, but the national sales tax also would work. Indeed, the two plans are different sides of the same coin. A sales tax takes a piece of your income (but only one time and at one low rate) when it is spent, and a flat tax grabs a slice of your income (but only one time and at one low rate) when it is earned.
So why, then, do I devote most of my energies to a sales flat tax? The answer is that I don’t trust politicians. I fear that they will pull a bait-and-switch, and implement something like a Fair Tax but never complete the deal by getting rid of the income tax. The European experience certainly serves as a warning. Nations across Europe began implementing their version of a national sales tax (the value-added tax) in the late 1960s. Voters often were told that other taxes would be eliminated or reduced. But all the evidence shows that VATs simply led to a much higher tax burden and a much bigger burden of government.
I don’t want that to happen in America, as I explained 13 years ago for Reason and two years ago for the Media Research Center. But this video is probably the best summary of my argument.
By the way, some fans of the Fair Tax say the solution to this problem is an amendment to the Constitution. I fully agree, but then I point out that there are not even enough votes to approve a watered-down balanced budget amendment, so that seems an unlikely path to success. That being said, if we ever reach this point, and are able to repeal the 16th Amendment and replace it with something that unambiguously would stop the politicians from ever burdening America with an income tax, I will gladly offer my support and push a national sales tax
International Liberty 
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[…] But that doesn’t really matter because the solution is the same regardless of whether one blames politicians or the IRS. Throw the tax code in the garbage and replace it with a simple and fair flat tax (or, if there are ever sufficient votes to undo the 16th Amendment, replace the internal revenue code with a national consumption tax).* […]
[…] But that doesn’t really matter because the solution is the same regardless of whether one blames politicians or the IRS. Throw the tax code in the garbage and replace it with a simple and fair flat tax (or, if there are ever sufficient votes to undo the 16th Amendment, replace the internal revenue code with a national consumption tax).* […]
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[…] eight times in nearly 4,300 columns over the past seven-plus years. And most of those mentions were incidental or […]
[…] sales tax instead. That’s fine with me, for reasons I explain here, but you better make sure to first amend the Constitution so that scheming politicians don’t pull a bait-and-switch and saddle us with both an income tax and a sales […]
[…] sales tax instead. That’s fine with me, for reasons I explain here, but you better make sure to first amend the Constitution so that scheming politicians don’t pull a bait-and-switch and saddle us with both an income tax and a sales […]
[…] revenue code is abolished and replaced with some form of national sales tax. That’s because the flat tax and sales tax are basically different sides of the same coin. Under a flat tax, income is taxed one time at one low rate when it is earned. Under a sales tax, […]
[…] tax instead. That’s fine with me, for reasons I explain here, but you better make sure to first amend the Constitution so that scheming politicians don’t pull a bait-and-switch and saddle us with both an income tax and a sales […]
[…] revenue code is abolished and replaced with some form of national sales tax. That’s because the flat tax and sales tax are basically different sides of the same coin. Under a flat tax, income is taxed one time at one low rate when it is earned. Under a sales tax, […]
[…] because it’s a horrible tax from a theoretical perspective (like the flat tax and national sales tax, it’s a single-rate system with no double taxation of income that is saved and invested), but […]
[…] I’ll also take a national sales tax, like the Fair Tax, as a replacement. But since I don’t trust politicians, that option […]
[…] revenue code is abolished and replaced with some form of national sales tax. That’s because the flat tax and sales tax are basically different sides of the same coin. Under a flat tax, income is taxed one time at one low rate when it is earned. Under a sales tax, […]
[…] revenue code is abolished and replaced with some form of national sales tax. That’s because the flat tax and sales tax are basically different sides of the same coin. Under a flat tax, income is taxed one time at one low rate when it is earned. Under a sales tax, […]
[…] code is abolished and replaced with some form of national sales tax. That’s because the flat tax and sales tax are basically different sides of the same coin. Under a flat tax, income is taxed one time at one low rate when it is earned. Under a sales tax, […]
[…] both the flat tax and national sales tax are based on territorial taxation, and most other countries actually are ahead of the United States […]
I understand the fear of having a VAT and an income tax.
The Flat Tax would certainly be better than the current system, but it’s just as likely, if not more so, that the flat tax would quickly be changed to resemble our current system again.
I think instead, using the energy to promote the Fair Tax and abolish the income tax with an ammendment would be a better use of time. The FairTax will never come into being without massive grassroots support, and the only way that will happen is for the populace to be educated on the costs of the current system and the benfits of the FairTax. Spending that energy promoting a Flat Tax system that would soon be modified dilutes the message.
[…] simplicity is why the flat tax adopts the latter approach (this choice does not exist with a national sales tax since the government collects money when income is spent rather than when it is […]
[…] simplicity is why the flat tax adopts the latter approach (this choice does not exist with a national sales tax since the government collects money when income is spent rather than when it is […]
What about the underground economy? How much tax revenue is lost by people who seemingly do not earn a living, like drug dealers? The Fair Tax would solve that problem. It might help with the illegal alien problem. Wouldn’t you have to be a citizen or resident alien to receive the prebate.
I prefer Ron Paul’s approach … we need to get rid of the income tax and replace it with NOTHING.
If we revert to a federal budget of 1980 we do not need the income tax.
A consumption tax will continue feeding big government control from Washington.
An error, I think:
So why, then, do I devote most of my energies to a sales tax?
Is that supposed to be “flat tax” instead of “sales tax?”
Most of the proponents of the fair tax seem to underestimate the danger of getting stuck with both a VAT and and income tax. All discussion of tax reform should start with the abolishment of the existing tax system before any new tax is introduced. Otherwise, instead of improving the system, the reformers run the very real risk of making it much worse. We just cannot risk introducing a new tax on top of the existing taxes, under no circumstances should it even be considered. Any reform that ignores this is worse than worthless, it is dangerous.