Gary Johnson: ‘Abolish the IRS’ in light of scandals

In light of the scandals that have plagued the Internal Revenue Service (IRS) over the past year – not including the other scandals since its inception – former New Mexico Republican Governor and 2012 Libertarian presidential candidate Gary Johnson believes the United States should just simply abolish the IRS.

Speaking in an interview with Watchdog.org Monday, Johnson explained that the continuing scandals that have embattled the tax-collecting agency, including the latest news that IRS official Lois Lerner urged colleagues to be cautious about what they write in emails, are just another example as to why it needs to be eliminated entirely.

Johnson noted that the controversy surrounding the IRS hasn’t surprised him in the least because “this is what happens when you have bureaucrats in charge that can manipulate the system any way they so choose.” He added that if the latest fiasco at the IRS doesn’t concern or madden anyone then “you’re out to lunch.”

For the past few years, Johnson, who recently became the president and chief executive officer of Cannabis Sativa Inc., has called for ending the IRS and a slate of other taxes in favor of incorporating a consumption tax, otherwise known as the FairTax, a policy that was one of his primary campaign platforms in the last presidential race.

“Let’s abolish the IRS, let’s eliminate income tax, let’s eliminate corporate tax, let’s balance the federal budget and if we need a tax, it can be one federal consumption tax,” the former governor stated. “I think a great starting point for a debate and discussion over a national consumption tax is, let’s start with the Fair Tax, legislation that has been written up and I think signed up on by 80 congressmen and women.”

Despite the number of criticisms over ending the IRS, getting rid of the income tax and instituting a national sales tax, Johnson averred that there are plenty of advantages more than disadvantages, such as other nations following the U.S. in removing the income and corporate tax and tax filings.

A consumption tax has been a constant debate in the libertarian community. Although some say a general sales tax would be a better system than the status quo, many want the income tax replaced with nothing. The other concern is that the government could further increase an overall consumption tax to make up for losses of revenues and to feed the government beast.

Economist Murray N. Rothbard opined that a consumption tax isn’t just a tax on purchasing goods and services, but it is also a tax on savings since it is simply a savings-investment on future consumption.

Here is what Rothbard wrote in 1994 entitled “The Consumption Tax: A Critique”:

“Suppose now that instead of an income tax, the government follows the Irving Fisher scheme, and levies a 20 percent annual tax on Jones’s consumption. Fisher maintained that such a tax would fall only on consumption, and not on Jones’s savings. But this claim is incorrect, since Jones’s entire savings-investment is based solely on the possibility of his future consumption, which will be taxed equally. Since future consumption will be taxed, we assume, at the same rate as consumption at present, we cannot conclude that savings in the long run receives any tax exemption or special encouragement. There will therefore be no shift by Jones in favor of savings-and-investment due to a consumption tax. In sum, any payment of taxes to the government, whether they be consumption or income, necessarily reduces Jones’s net income. Since his time-preference schedule remains the same, Jones will therefore reduce his consumption and his savings proportionately. The consumption tax will be shifted by Jones until it becomes equivalent to a lower rate of tax on his own income. If Jones still spends 90 percent of his net income on consumption, and 10 percent on savings-investment, his net income will be reduced by $15,000, instead of $20,000, and his consumption will now total $76,000, and his savings-investment $9,000. In other words, Jones’s 20 percent consumption tax will become equivalent to a 15 percent tax on his income, and he will arrange his consumption-savings proportions accordingly.”