Even though many economists agree that a national retail sales tax has great merit, most of them say they do not advocate for the Fair Tax Act, because they think political reality dictates that it can never become law. Some ask me why I waste my time. I tell them I do so because it’s the right thing to do, even if they are right.
In 1999, John Linder, Republican Congressman from Georgia, first introduced the Fair Tax Act (H.R. 25). From 1999 through 2022, some member of Congress has introduced substantially the same bill, year after year for 23 years.
Not only has the Fair Tax Act not become law, the bill has never so much as made it out of The U.S. House Committee on Ways and Means to be voted up or down by Congress. “The 435” have simply refused to give the Fair Tax Act a vote for 23 years. We now have the true but entirely useless answer to the question posed by the title of this essay. The real question remains. The real question has two parts: (1) why has Congress refused even to vote on the Fair Tax Act, and (2) why have “we the people” not insisted that Congress at least vote on the bill.
Congress has not voted on the Fair Tax Act because the leadership of both political parties do not want to relinquish the enormous power Congress has and exercises through the U.S. Tax Code. “We the people” have not insisted that Congress at least vote on the bill because we advocates of the Fair Tax Act have been ineffective in persuading enough people to care about the enormously harmful travesty that simply is the U.S. Tax Code. These are the simple, straightforward answers. But let’s dig deeper.
Party leaders of Congress --- leaders of both parties --- know well the enormous power they wield through the complicated, convoluted, massive, eye-glazing provisions of the U.S. federal tax code. They know that no one on planet earth is capable of understanding all the provisions of the Code, which runs to tens of thousands of pages, and which expands every year.
They know that the Code gives powerful Members of Congress what amounts to practically unlimited ability to help their friends and hinder their foes, using what economists call “tax preferences” (a.k.a., tax loopholes). They also know that “we the people” have always been placated by vows every three to five years to “fix” and “simplify” the U.S. federal tax code. And they know that most Americans feel helpless to do anything about it.
Every two years, a small handful of newbie Members of Congress arrive in Washington DC, fully committed to their principles and to their good intent to change America and make a difference. But within just a few months, most of the newbies come to understand that if they don’t play ball with party leaders --- and play by the well-established rules of “the swamp” --- their chances of reelection are dim at best. So, play ball most do. One of the chief tenants of the rules of ball playing is not to shake the federal income tax tree. Get on board or get gone.
And so it goes with Congress. If the Fair Tax Act is ever the get an up or down vote, Members of Congress will have to be drug by the electorate, kicking and screaming to do so. For just as Congress will never vote for term limits for themselves, unless forced by voters to do so, they will also never vote to relinquish the unimaginable power bestowed on them by the U.S. Tax Code.
“We the people” can and have sometimes drug Members of Congress kicking and screaming to change the law of the land, but not through ordinary law making. The process of ordinary, routine law making does not permit we the people to have a full-throated voice. And yet, on rare occasions, for truly important issues, “we the people” have accomplished the dragging via amendments to the Constitution. Such occasions are rare, though, because without leadership, “we the people” can accomplish very little.
Some may object that we have the ballot box. We do, but the ballot box is quite ineffective for changing the law of the land. The ballot box merely allows us to replace a handful of scoundrels every two years with what typically turns out to be a different handful of scoundrels. History attests to this fact. Every two years the ballot box mostly returns 97 percent of incumbents to Congress. The handful of newbies is small, indeed.
Without leadership, Congress will not be drug kicking and screaming to abolish the U.S. Tax Code and to replace it with the Fair Tax Act. Such leadership has not and will not likely be leadership of the Americans for Fair Taxation or any other tax advocacy organization. Such leadership will almost certainly have to come in the form of a candidate for President of the United States, or at the very least, Speaker of the House.
Moreover, such leadership will not persuade “we the people” to back the Fair Tax by using the litany of technical arguments already present and easily found on the website, Fairtax.org. AFFT has done a marvelous job explaining provisions of the Fair Tax Act. AFFT has also done a marvelous job explaining how adoption of the Fair Tax would be beneficial for a very large majority of American taxpayers. What we advocates of the Fair Tax have not done well is force Congress to vote on the Fair Tax Act.
In 23 years we have not convinced a candidate for President, or convinced a Speaker of the House, to take up the gauntlet and lead “we the people” to dragging Congress kicking and screaming to vote on the Fair Tax Act. I believe that if Congress were forced to vote on the Fair Tax Act, the bill would pass, which I believe is why party leaders of both parties have ensured for 23 years that no such vote was held.
How could an effective leader accomplish the very difficult goal of getting the Fair Tax Act passed? Not with charts and graphs; not with tables of data; not with economic analysis of the prospects of faster economic growth; not with explanations of how the “pre-bate” works to stave off the inherent regressiveness of a sales tax. No; such information has long been available, but to no avail.
An effective leader would use different tactics. That leader would hammer home how enormously unfair the U.S. Tax Code really is for a large majority of Americans. That leader would repeat over and over how tax preferences favor small special interest groups. That leader would tell real-world stories of how the massive underground economy evades taxation altogether. That leader would show how it is that the U.S. Tax Code favors the rich and powerful at the expense of average taxpayers who have no power to avoid the burden of the income tax. That leader would explain how annual and monthly changes to the implementation of the Code, via the power of the bureaucratic IRS, do indeed retard economic growth by keeping commerce in a continuing state of change and flux regarding tax law. Businesses hate uncertainty. Changes to the U.S. Tax Code guarantee uncertainty.
Never mind raising more money for more economic research. No amount of economic research will persuade we the people to insist that the Fair Tax Act be given a vote. As a professional economist who teaches public finance economics and public choice economics, I assure you that economic research is not capable of showing that the economy will grow faster, if only the Fair Tax Act were to become law. Nor is economic research capable of showing that retail prices will drop across the board by some percentage with adoption of the Fair Tax Act. But let me not glaze over eyes with “econspeak.”
AFFT can and should do all it can to raise money to back effective political leaders, political leaders capable of leading “we the people” to insist that at the very least, the Fair Tax Act be given a vote by Congress. AFFT can and should do all it can to raise money to pay for wide-spread media ads calling for Congress to give the Fair Tax Act an up or down vote.
If we advocates of the Fair Tax truly want the bill passed, we must adopt different tactics. What we have done for 23 years has not worked.
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