Privatization and the Fair Tax

The candidacies of Mike Huckabee and Ron Paul have raised the profile of the proposed Fair Tax, which would make up 23% of the purchase price on all new goods across the board, including those purchased by the government. Seen another way, it is a 30% tax on the base goods or services. As such, it would require a 30% cut in any taxed spending – or would require a higher rate to make up for the higher appropriation levels required to make the same purchases. If appropriations were not increased, then government contracting would decrease by 30%, forcing agencies to do more work in house. In other words, if the Fair Tax passes you can kiss all future and current privatization of government services goodbye.

You could call the Fair Tax the bureaucrat reemployment act.

UPDATE: I was wrong on this, as Federal Employee salaries are taxed in taxes paid to the state government. The federal government is, in effect, taxed twice since its employees are taxed by paying the Fair Tax, although their individual salaries would be higher, although there would be 23% less of them.