Schiff/Wenzel interview available here. (If that link ever stops working, listen here)
Satisfied now, Dave? Wenzel is so damn confused it’s making my head hurt. That’s why I’ve gotta go with senility, because I can’t figure any better explanation as to how someone who references “the great economist Murray Rothbard” can sit there and argue that a sales tax will be harmful because it will move the demand curve and people won’t buy as much stuff, as a way of saying a sales tax is worse than an income tax.
Seriously listen to that interview…he just keeps going round and round. Schiff keeps asking him “Yes, of course I want taxes to be lower…but the point is the government is going to take money one way or the other…either from people’s income or their consumption…which would you choose?” and Wenzel just keeps saying “no, you’re missing it…that’s like saying you’re diabetic and you need to cut sugar out of your diet…the conversation shouldn’t be whether you should be having a cake or a soda or any of that stuff. It’s still going to cause the same problem. It’s just moving stuff around on a chess board. What needs to be done is the taxes to be lowered overall.”
He even gets into detailed explanations about how increased costs to the consumer entice him to buy less, leaving extra inventory for the producer, meaning he’ll have to lower his prices and blah blah blah. And Schiff is like: “Well how is that different from if the consumer has money taken out of his paycheck…he still has less money to spend, which still means less demand, which would mean the producer is still not going to sell as much and prices are still going to have to come down…so I still don’t see your point.”
Granted that’s more of a paraphrase, and Schiff really didn’t make the point that clearly, but that’s what he was saying…and Wenzel just doesn’t get it. And then just like any other confused old man he wants to change the subject and asks Peter for his opinion on the stock market.
Finally Schiff moves to get him to answer something so he just asks what Wenzel’s tax plan would be. Wenzel says he’d want to do something to get taxes a lot lower. And Schiff of course automatically agrees and says he’d definitely be down with a 0-0-0 plan…and then he has to break it down again and try not to leave the man any geezer escape hatches…Schiff literally sits there and lays it out: "yes I would love taxes to be zero, but the government is going to have expenditures, so it can’t be perpetually funded with debt. We all can stipulate that we want governement spending to collapse so that the taxes can be as low as possible, but we’re gonna have some taxes…the government’s not going to go away, so we have to fund it. So what would your preferred mechanism for funding the government be?
And what’s Wenzel’s answer? "Okay, here’s what I would do…I would still very much focus on the cost side and really, you know bring government’s down to zero as much as I can. " That’s all he’s got. Same non-answer. And where does he go from there? Well changing the subject of course. The very next sentence: “Now, this is all assuming that I could be elected president…” Schiff has to cut him off again, and restate everything “yes, we agree we want government to collect as little as possible…etc etc etc. Let’s say we get it down to $1 trillion a year instead of $4 trillion…how do you say the government should go about collecting that $1 trillion?”
Wenzel: “okay, I would cut it much lower…”
Schiff: “It doesn’t matter what it is! YOu’re not going to get it to zero…so how are you going to collect the revenue you need?”
Finally Wenzel concedes and describes a capitation tax…basically count everyone over 18 years old, and just divide. That’s his plan. That’s his solution. Everyone pay exactly the same dollar amount. Not based on percentage of their income, or their overall wealth, not percentage of stuff they buy…no…just the exact same dollar amount, based on whatever the government feels like collecting. Bill Gates and John Q, both pay the same, regardless of how much they produce, how much they consume, or anything else that they do. And this is the same guy who 5 minutes earlier was talking about how a sales tax is unfair to the poor?
Eventually Peter just moved on and went on a monologue and explained everything straight up. Wenzel closed the segment saying how he would post from Rothbard’s critique explaining why the consumption tax “really does not effect the consumer, but effects the producers and land owners”.
Aftermath
Wenzel followed through and posted the portion from Rothbard’s article…and then quickly followed up with another entry claiming Schiff was wrong on the capitation tax. He claims “Peter caught me off gaurd when he said that a capitation tax is not allowed by the Constitution. Peter’s wrong.” No, once again Bob Wenzel is wrong. The part in question can be heard here.
Schiff clearly states: “would you want the government to have to apportion it according to the Constitution, or would we amend the Constitution to allow the government to levy a capitation tax without apportionment?” Later all he says is the “Founding Fathers were familiar with a capitation tax system, and they didn’t like it, that’s why they made it hard for the government to levy that type of tax”.
It’s right there. Anyone can listen to it. Schiff said nothing about it being unconsitutional. Bob just had a bruised ego from looking foolish on the air and needed to find some way to call Schiff wrong. I just didn’t realize he’d go as far as to actually make something up. (Of course we could always go with the senile defense and claim he “just misremembered”).
Then of course, Wenzel follows up again with Rothbard On The Best Tax, since, you know, he didn’t have an answer of his own so he just went to Rothbard to find out what his opinion should be.
It also seems this has gotten some attention, as Wenzel notes in a later post (these are all today, by the way) that “Bob Murphy attacks Rothbard on Consumption tax” on his own blog, and to top it off, (I can’t be sure this isn’t an extreme coincidence) the main article on Mises.org today is Rothbard’s full consumption tax critique (yes, the same one Wenzel quoted from). I’m wondering if that was just pulled up from the archives and put on the front page because of today’s events.