Fair Tax

Fair Tax Gives Gary Johnson Some Hiccups On The Trail


Photo by Garrett Quinn

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.  

NEXT: Paul Ryan Does Nothing to the Polls

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  1. everyone would receive something called a monthly prebate checkfrom the government

    How Libertaria Nothing says “limited government” like every household getting a guubmint check every month.

    1. Libertarian

    2. “Libertarian”

    3. I know. Where does the money for the prebate check come from?

      1. From the budget surplus, duh.

      2. Obama’s “stash” – duh


  2. But then all the people at the IRS would be out of jobs. Way to cut down on unemployment Gayjay.

    1. Nah, they’ll all be shifted over to the Bureau of Fair-Tax Compliance. The federal government will have to oversee and monitor every single commercial transaction to make the fair tax work.

      1. I don’t think so. People are obviously going to stop buying and selling anything at all because they won’t want to pay the Fair Tax. So they’ll only need one guy to monitor the one store that stays in business somehow (most likely a monocle store).

        Can’t we just pay them for doing nothing?

        1. Just give them a larger prebate check. The government can decide how much based on income…oh wait

          1. Haha, nice.

      2. You know, this is something I don’t think most people even realize. They hear no more FICA and no more IRS and that’s it. Somebody has to make sure these taxes get collected.


    1. Yeah I am a little confused. The Fair Tax isn’t perfect, but a hell of a lot better than what we currently have.

      Is everyone’s solution to go to a flat tax instead?

      1. Who cares, it’s like arguing if you’d rather have sex with a dragon or a basilisk.*

        *I originally said unicorn or pegasus, but then I figured you could just get a horn or some wings and a bunch of staples.

        1. Rosie or Roseanne?

      2. I’ve got 9-9-9 problems and you bitching ain’t one.

        1. HIT ME

        2. I think we can all agree that was a terrible plan.

        3. You know who else said “Nein nein nein”?

      3. Single land value tax with a citizen’s rebate.

      4. I would rather have a flat tax than the FairTax(tm). Either is better than the current income tax.

        He is getting flack from purists who don’t want ANY tax. I don’t any tax either, but that’s not an option on the table. If you are not an anarchist, then you need some form of taxation to fund government. The debate comes down to taxing wages, or taxing consumption, or taxing production, or taxing imports, etc. Gary Johnson is arguing that a national consumption tax is better than a national income tax. In the sense that kick in the butt is better than a kick in the head, I agree with him.

  4. It’s not an easy thing for people to break down into a quick thirty second blurb.

    How long would it take to explain the current tax code to someone? Thirty, Forty-five….Years?

  5. The fair tax might be giving Johnson hick-ups but the fact no one knows who he is is giving him belches.

  6. I think they marketed the FairTax terribly. They should have called it a receipt tax on evil business, as opposed to high sales tax on poor granny.

  7. I like the concept of the fair tax, but the prebate checks, worry me.

    I would prefer a more simple and fair tax…no prebate, and a lower, set percent.

    As far as needing fair tax enforcement officials, that is supposed to be handled by the same people that handle the state sales taxes. The states provide the money and documentation to the feds, the feds don’t collect directly.

    1. It’s extremely regressive without the rebate. Since we’d be raising taxes on more than half the country and those at the bottom will be spending more money on taxes instead of the things they need to survive, they will have even more political demand for a welfare state.

    2. The primary purpose of the Prebate is to keep the tax from being “Regressive”.

      However, the secondary purpose is to eliminate the taxing gamesmanship that plagues Sales Taxes and VATs. No exemptions in the law gets rid of 99% of the tax lobbying that goes on in congress, which would still remain if they went with exemptions for “basic goods” like many states do.

      It also takes the government out of micromanaging and monitoring a person’s purchases, which they would do if you had to provide documentation of all your purchases in order to receive a rebate.

      Also, with the exception of a small minority of true spendthrifts the Prebate would not be “other people’s money” beyond your first check, it would simply be refunding your own tax money up to a certain level of purchases from the previous month.

  8. 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.


  9. So instead of being taxed on the money I earn (which I can avoid paying to a certain degree thanks to some creative accounting), I would have to pay taxes on the things I purchase (which is unavoidable). On top of that there would still be state and local sales taxes and in many locations state income tax which is likely to increase and spread to more states if it becomes harder to get their hands on some of those federal dollars.

    Knowing the greed of government on all levels and the sheer impossibility of repealing taxes once they’re in place, I’m not convinced that Americans will ever be on board with this idea and I don’t see this a winning strategy for GJ. Hell, until we can elect a government that knows how to spend our tax dollars responsibly, I don’t believe that “tax reform” is possible. Personally I think Johnson is putting the cart before the horse if he’s pushing this kind of plan.

    1. Hell, until we can elect a government that knows how to spend our tax dollars responsibly

      Never going to happen.

      There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.
      -Milton Friedman

  10. The current debate over taxes follows completely what Groucho Marx once said: government is about looking for trouble, finding it, then misapplying the wrong solution. It may take 45 years to explain the income tax, but it only takes a year or two to understand it if you get together with like minded folks and study. I belong to such a study group, http://www.taxresponseteam.org. Call me a tax nerd, I don’t care. But if the state is going to take 30% of what I earn, I want to know on what principle it claims that right. The fact is, it has no right. They say there will never be tax reform until spending is cut, I agree. But in the meantime those of us who don’t believe in paying our “fair share” need to be able to assert our right to opt out.

  11. The prebate is the best part about FairTax. It encourages cutting government spending so there is more money to dole out. Plus regressive taxes suck hard and end up creating a bigger state.

  12. Check out The Neutral Tax (www.neutraltax.com). It is a universal federal tax reform plan that allows any of the other tax reform plans to be implemented at the state level. Check it out.

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