So, Mike Huckabee wants to get rid of the IRS and repeal the 16th Amendment, which allows the federal government to collect income taxes. He is a proponent of what’s called FairTax, a variety of tax ideas typically billed as a “consumption tax.” I have to admit there is a simple, almost tempting elegance to it: we get rid of all federal level taxation, and replace it with a federal sales tax of about 23%. On top of this, families (depending on household composition) up to the poverty level essentially get all their money back over the course of the year; instead of a once-a-year refund-check, they get a monthly prebate. Supposedly this makes the tax progressive and not regressive, in that the assumption is that people who make more money aren’t necessarily spending as much of it (they save it or, I guess, invest it), and therefore aren’t getting taxed for it as much. They still get that prebate (again, varying with household composition), though since they are assumably consuming more than this minimum, they are not getting all their taxes back. Another way of putting it is, the tax does not “punish” people for just getting by at or below the poverty level, so they get their income supplemented with the prebate checks to offset the sales taxes; those above this threshold, if they are spending much more than it, are really the ones carrying the tax burden, though it only gets higher as one makes more money. Another way still of putting this is with something of an example I’ll borrow from wikipedia:
For example, a family of four (a couple with two children) earning about $25,000 and spending this on taxable goods and services, would consume 100% of their income. A higher income family of four making about $100,000, spending $75,000, and saving $25,000, would consume only 75% of their income on taxable goods and services. When presented with an estimated effective tax rate, the low-income family above would pay a tax rate of 0% on the 100% of consumption and the higher income family would pay a tax rate of 15% on the 75% of consumption (with the other 25% taxed at a later point in time). A person spending at the poverty level would have an effective tax rate of 0%, whereas someone spending at four times the poverty level would have an effective tax rate of 17.2%.
At the top of the list made by Americans for Fair Taxation in support of the FairTax is that it “enables workers to keep their entire paycheck.” This is achieved, at least in part though probably mostly, because the FairTax movement involves repealing the 16th Amendment—eliminating Income Taxes and the IRS in general. It is a supply-side economic move masked as a demand-side, as the most widely made purchase is left out of this picture while at the same time remaining the central element: human labor.
It bears a more than striking resemblance to a Lacanian objet (petit) a, or when we put it to work (Jodi Dean reminded me of this), a Zizekian obscene supplement. The FairTax says it wants workers to get their fair compensation for their work, and that the real boon in this is their increased spending power, though it is the implicit transaction between employer and worker, paradoxically with regards to human labour, that is left out of this plan’s scope. In other words, human labour qua spending power is liberated while at the same time never brought into question.
It just makes no sense to tout this elimination of income taxes as an achievement, when it would just as easily could be achieved by taxing employers for buying their workers’ labour. In a way, this is how income taxes work now, though they really target the tax-paying worker and not the employer like they should. Effectively, taxing employers and not employees for working would be taxing employer profits (perhaps into practical non-existence) and turning them around for social ends. In other words, FairTax tries to have the populist appeal of Socialism without the economic model to realize it.
It’s at once surprising and not that neoliberals have not jumped on this more, though I think it ultimately is because how closely it takes them to Socialism. It is a very short though profound logical leap to say, “If we are going to tax the consumption of all these goods and services on the part of consumers, why not producers too, who consume human time and energy for money?” It is as if that thought were an object-cause of Capitalist desire: they must approach it all the time in order to manage all the while stoking the fires of Capitalist growth, but ever realizing it would amount to the completion of the Capitalist telos: the blowing out of that flame and the end of Capitalism itself.