Why Has the FairTax Not Become Law?
By David L. KendallThe following article was written by the newest member of our Advisory Board. Professor Kendall earned his Ph.D. in economics from North Carolina State University, is Professor of Economics and Finance at the University of Virginia's College at Wise. He was Dean of the School of Business at St. Edward's University in Austin, TX and Chief Economist for Empire Funding Corporation, also of Austin. While a senior economist with RTI International, Research Triangle Park, NC, Dr. Kendall led numerous applied economics research projects conducted for FDA, EPA, and USDA. David and his wife Laura Ann make their home in the scenic mountains of southwestern Virginia, along with Puff, Bunny, Bella, and Penny (cat, dog, dog, and rabbit).
I first learned about the Fair Tax and the Fair Tax Act in 2004 when I began teaching public finance Economics for the University of Virginia’s College at Wise. In 2005, I authored an open letter to the President advocating the Fair Tax, a letter that was co-signed by 80 professional economists, including Nobel Prize recipient, Vernon Smith. The letter, which can be read here (https://web.archive.org/web/20061015083330/http://fairtax.org/PDF/Open_Letter.pdf) was mailed by Americans for Fair Taxation to President George W. Bush, every member of the House and the Senate, and every member of the President’s Advisory Panel on Tax Reform. Since then, I have continued to advocate for passing the Fair Tax Act, and every year I teach my public finance students about the bill.
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 to get an up or down vote, Members of Congress will have to be dragged 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 dragged 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 dragged 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.
CONCLUSION
David points out that we need to make the case for the FAIRtax very simple.
The truth is that there are two groups of people in the U.S. The first group are the ones who support having an aggressive IRS that maintains an incomprehensible tax code and requires all of us to keep extensive records and file complicated tax returns that tell the government every detail of our personal finances. They don’t say it out loud, but a primary reason that this group wants to keep the income tax in place is that they know that the IRS can be used to intimidate and coerce their opponents.
The second group of people are the ones who support freedom, want to eliminate the IRS and take back control of their lives.
Which group do you belong to?
The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
The FAIRtax will allow Americans to TAKE BACK CONTROL over their government and their lives.
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us. It will be clearly shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
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