December 9, 2007

AN ORGANIZING ISSUE:

The Huckabee Contradiction: The populist who has the most radical tax plan imaginable. (Wall Street Journal, December 9, 2007)

The fair tax has been knocking around GOP precincts for years and has been heavily promoted by Texas millionaire Leo Linbeck, among others. We've heard their pitch in our offices and admire their passion. Their concept is to junk the federal tax code--payroll, income, corporate, Social Security, everything--and substitute a 23% national retail sales tax on nearly all goods and services. But while proponents use that 23% figure as an easier political sell, the rate is closer to 30% when it's calculated like any other sales tax, with the levy on top of the price. State sales levies would go on top of that.

There's a lot to be said for taxing consumption over income, and the fair tax would be worth consideration if we were writing a tax code from scratch. Realistically, we're not. The plan would require repealing the Sixteenth Amendment that allowed a federal income tax, and the chances of that happening are approximately zero. The political risk, given the nature of government, is that we'd end up with both an income tax and a national sales tax.


Pass it dependent on the repeal and make Democrats defend the income tax and IRS.

Posted by Orrin Judd at December 9, 2007 5:28 PM
Comments

The plan would require repealing the Sixteenth Amendment that allowed a federal income tax

Ummm, no it wouldn't. The amendment allows Congress to pass an income tax, but doesn't require it.

Posted by: PapayaSF at December 10, 2007 12:27 AM

Papaya is correct.

The danger, of course, that you end up with both.

For my part, Huck's rise is likely his embrace of the Fair Tax, as their energy and zeal approach Ron Paul's zeolots.

The problem is that once the get enough traction, and the plan get scrutiny, the 23/30% lie will come back to haunt them.

Social Sec. needs to be taken out of the fair tax and morphed into separate accounts. The idea that the IRS is going to "disappear" is childish "zeolot speak."

The US will require the huge bureaucracy to manage Soc. Sec., define "end use" and the inevitable "Fair Tax exemption" laws, not to mention their "rebate" plan.

I used to hate the Fair tax and now see it as somewhat good and inevitable (it is where the money will be). The people promoting it just need to grow up.

Posted by: Bruno at December 10, 2007 8:09 AM

Americans are so undertaxed there's zero chance of both.

Posted by: oj at December 10, 2007 11:17 AM
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