This was, Thurow argued, preferable to then-Fed Chairman Paul Volcker’s approach to curbing inflation, which was to slam the brakes on the money supply and bring on a severe recession (which of course is what happened in the end). The leading advocate four decades ago was Lester Thurow, a celebrity economist at MIT who in 1981 proposed curbing double-digit inflation with a consumption tax. Interestingly, liberals fancied such consumption taxes before conservatives did. That makes a purely symbolic House vote all upside for the Democrats.īroad-based consumption taxes like what Carter has proposed are always a dumb idea. Even Grover Norquist, the hard-right president of Americans for Tax Reform and flat-tax advocate who famously said he wanted to shrink government “to the size where I can drag it into the bathroom and drown it in the bathtub,” told Joseph Zeballos-Roig of Semafor this week that the Fair Tax bill was “a political gift to Biden and the Democrats.” Elsewhere Norquist has called it “one of the stupider ideas that have been put forward.” If the “fair tax” passed in the House it would still have no chance of becoming law, of course, because the Senate and the White House would stop it. They would be replaced by a flat 30 percent national sales tax on everything you buy. Under the Fair Tax bill sponsored by Representative Buddy Carter, a Georgia Republican, all income, capital gains, estate, gift, corporate, and payroll taxes would be eliminated.
They are never a good idea, but the current iteration, which House Speaker Kevin McCarthy has promised to bring to the floor, is a worse idea than usual. Consumption taxes are having a moment, as they do every 20 years or so.
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