Fair Tax Gives Gary Johnson Some Hiccups On The Trail
Houston – When Libertarian presidential nominee Gary Johnson brought up the Fair Tax at his party's nominating convention in Las Vegas, he was occasionally booed and even heckled by some of the delegates in the hall. It was the only thing his chief rival for the nomination, Lee Wrights, could really attack him on from a policy standpoint.
Since that late May convention Johnson has had several opportunities to reform and perfect his pitch to voters, and in particular libertarians, for instituting a national sales tax. So far, the results appear to be mostly positive for Johnson.
Throughout his trip through Texas the former New Mexico governor has had to explain and sometimes defend his support for the controversial tax reform proposal.
The Fair Tax calls for abolishing all federal taxes and replacing them with a 23 percent nationwide sales tax that applies only to new goods and services. For example a used car or secondhand clothes would be exempt, while groceries would not. In addition to a simplified tax, everyone would receive something called a monthly prebate check. More on that here.
It's not an easy thing for people to break down into a quick thirty second blurb. Even the politically plugged-in audience that dominated Johnson events in the Lone Star State appeared uneasy or easily confused by the proposal. During this trip, the Fair Tax explainer usually gobbled up one to two minutes of Johnson's 17-to-20 minute stump speech.
The portion of his stump speech about the Fair Tax usually goes something like this:
"I am the only candidate advocating abolishing the income tax, corporate tax, and the IRS and replacing all of this with one federal consumption tax. In this case I am embracing the Fair Tax, which, if you look at it, turns out to be cost neutral over a very short amount of time. It's really the answer when it comes to our exports. Bleeding out 23 percent embedded non-transparent taxes that we have in goods and services that we export. So it's the answer that comes to China. It's really the answer that comes to jobs.
In a zero corporate tax rate environment, if the private sector doesn't create tens of millions, well, I don't know what it takes to create tens of millions of jobs."
Johnson's talk about the Fair Tax hasn't been limited to his stump speech, though.
During his second to last campaign stop here, Johnson held a meeting with local Libertarian Party candidates to talk shop. The Fair Tax eventually came up. Roy Hall, a candidate for Congress in Texas' Eighth Congressional District, peppered Johnson with questions on the intricacies and nuances of it. The questions weren't hostile, though, they were mostly inquisitive on how it works, how to better sell the idea to people, and what would keep Congress from instituting a national sales tax and a national income tax.
"Wouldn't it be better just to scrap that and just go for a straight-up Constitutional amendment?" asked Hall.
"That's what this does. The way the Fair Tax deals with the Sixteenth Amendment is if you adopt the Fair Tax the states have six years to repeal the Sixteenth Amendment constitutionally. If they don't do that then the whole thing reverts," explained Johnson.
Several of the candidates present started talking as soon as Johnson paused.
"No, that would be the big fear is that this just becomes an add-on tax. That's the big fear," he said.
Harold Doty, a candidate for Brazoria County Commissioner, added that the percentage was pretty steep.
"Keep in mind now we're back to this being cost neutral, that's something you gotta toss back in there," Johnson.
Jim Stark, a candidate for Congress in Louisiana who made the trek to Houston to see Johnson, noted that the plan makes sense for active duty military because it's "an instant pay raise for them."
"It's an instant pay raise for everybody because there's no more withholding from your paycheck, there's no more FICA," added Johnson.
A few days earlier Johnson found a less receptive audience in Fort Worth at a small luncheon for donors at a local steakhouse.
"Just because the Fair Tax is tricky doesn't mean you should shy away from it. All of the criticisms of the Fair Tax are justified. It is regressive but the way the Fair Tax deals with it is by issuing a prebate check. Nonetheless, I think it's a great starting point for a national debate on tax reform," Johnson said later in an interview.