There's been some talk about the Fair Tax during the recent elections. For those who don't know, the Fair Tax is a national sales tax on items not neccessary to day-to-day life. The Fair Tax is meant to replace out current Federal income tax system. Radio talk show host Neal Boortz is probably the Fair Tax's biggest supporter but the idea had gained some limited traction in the House of Representatives. Williams is in thoery a fan of the idea but has serious concerns about any possible real life implementation. I happen to share many of his concerns.
The linked article is his most recent on the subject. It's largely a rehash of an earlier piece from Capitalism Magazine. I also include the Capitalism Magazine link because it contains some background info the Town Hall piece only glosses over:
Before we look at whether a national sales tax is a good idea, how about a little Economics 101 just to convince you that government spending, not government taxation, is the true measure of governmental impact on our lives?
Keeping the numbers small, suppose the annual value of what Americans produce, our gross domestic product, is $100. If government spends $40 of it, of necessity the government must force us to spend $40 less. There are several ways this can be done. Government could tax us $40. Government could borrow, thereby driving up interest rates and reducing private spending. Government could simply print money, which would cause inflation and reduce our purchasing power. Finally, government could employ some combination of the three.
He did a piece as a guest host on Limbaugh one time that greatly expounded on this concept. He went on to argue that our current inconme taxation system is really just a thinly veiled income redistribution scheme. I wish I could find a transcript of that.
Back to the main point, Williams argues that the Fair Tax could be as good as any revenue-neutral tax system but has some serious conditions that would need to be met before he would endorse it. But most importantly, Willaims points out the irrelevancy of the tax system and provides a real permanent solution to the government's financial situation:
My solution is an amendment limiting federal spending to a fixed percentage, say, 10 percent of the gross domestic product.
Taxation is important but spending is more important.