Huckabee campaigning for 23% sales tax

The Los Angeles Times ^ | December 24, 2007 | Janet Hook

[Alex Murphy]

WASHINGTON — Mike Huckabee, one of the most conservative Republicans in the 2008 presidential race, has embraced one of the most radical ideas on the campaign trail: a plan to abolish all federal income and payroll taxes and replace them with a single 23% national sales tax.

The idea -- dubbed the "fair tax" by proponents -- has been a political asset for Huckabee; its well-organized backers have helped catapult him from the back of the presidential pack to its top tier.

Sales tax proponents have tapped into seething voter hostility toward the Internal Revenue Service to become a below-the-radar political force, popping up at campaign events and candidate forums in Iowa and elsewhere.

The efforts on Huckabee's behalf by sales tax advocates helped spur his surprise second-place showing in an August Iowa straw poll -- the breakthrough that marked the beginning of his rise in the state and nationwide.

He is the only major presidential candidate to make the idea central to his campaign. "The first thing I'd love to do as president: Put a 'going out of business' sign on the Internal Revenue Service," he said at one debate.

Some wonder, however, whether his embrace of the plan eventually could turn into a liability.

The sales tax proposal has been around for years but languished on the fringes of practical politics and policy. Tax professionals generally regard the idea as impractical, regressive and even "crackpot," as one critic puts it.

It has gone nowhere in Congress. The 2005 Presidential Advisory Panel on Federal Tax Reform soundly rejected the idea. And many politicians shy away from it because it is easy for opponents to portray it as a huge tax increase -- as Democrats did in a 2006 Senate race in South Carolina.

[Principled]

If we all pay an average of 40% now, then how can we raise the same amount of cash with a sales tax of 23%?

It's simply because the consumption base is larger than the taxable income base.

It's as simple as having 5 people pay a tab or having 8 pay. When 8 pay, each bill is lower.

[Mr Rogers]

So who are the extra people who get taxed under the fair tax? Given that the rich already pay more than their fair share, who are you adding to the tax rolls?

[Issaquahking]

It's what you pay now. A year ago SS was dead at $87,500 but they keep bumping it up to hose your paycheck. You pay 6.2% on the first 7,000 on each employee for the UI. That's not in the book, it's the taxes you have to hold out as a small contractor. Plus the fed, plus the state, per th IRS.

I don't need a book to tell me I, and anyone who works for me is getting hosed at about 40%. The book just reconfirmed how much we are getting hosed, and examines a possible solution.

[gotribe]

Mike Huckabee, one of the most conservative Republicans in the 2008 presidential race,

You lost me there...

[Bigun]

The FairTax proposal is for FEDERAL tax reform and thus makes no attempt to dictate what individual states can or should do. Having said that, there are certain practical matters - such as those I have already mentioned - that states which currently have an income tax would have to deal with when the Fairtax becomes the law of the land.

[no-s]

Right now all they have to do is keep track of each employee....under a "Fair" tax they would want to know how many groceries you buy and how many times you eat out, when you bought a car and took the dog to the vet!

That's kind of bogus. It's not in the proposal, and in any case it's not the responsibility of the individual to pay the tax. They'll be after businesses who seek to avoid paying. Since the tax is only on retail transactions, this drastically reduces the number of businesses who have to collect the taxes. A retail operation which has any serious revenue at all is pretty easy to spot in a sales tax audit. These businesses are self-identifying, since they have to get a business license, perhaps a corporate charter, to legally do business with you.

The upshot is a drastic increase in efficiency of tax collection, combined with an tremendous decrease in the amount of power the federal government has over you, personally. The states which collect income tax will have to come around because they will have a net outflow of business and manufacturing to states which do not.

[Yaelle]

I'm thinking that no one will ever know whether the following transactions were properly taxed:

1) Online auctions and ads
2) Downtown alley shops run by illegals
3) Hookers and escorts
4) Any business that wants to have two tiers of customers, one on the books and one "off the books"

And that a national sales tax would inspire an underground economy like that seen in Russia. Any object that is fairly small (and there are some pretty important electronic components that are getting smaller and smaller) can be sold cheaper from the back of a van.

Thus we would end up with a huge federal policing institution that might make us dream of the Old IRS.

[Kevmo]

Huckabee has surged because he won a couple of debates and he’s got evangelical support. If a quick rise can happen to the liberal pro-life evangelical Huckster, it can happen to the conservative pro-life evangelical Hunter..

.

.

According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

Why the smart money is on Duncan Hunter
http://www.freerepublic.com/focus/f-news/1926032/posts

[Principled]

Hmmm... well you need to know what a "base" is for taxation. You can google it or sumpthin' so you don't have to question the source.

Anyway, the only people who pay all their taxes now are those who have taxable [legal] "income". But there are zillions of people who don't have legal "income" but do spend. That is, there are far, far more people who spend than people who have taxable income.

In your terms, I'm adding to the tax rolls anyone who does not pay income and payroll taxes now. BTW those of us who ARE paying income/payroll now will get a reduction :)

[gitmo]

ADVANTAGES:

This plan does not penalize saving.
It does not penalize productivity.
It removes the burden of filing and keeping information.
It removes the need for deductions and loopholes.

DISADVANTAGES:
If the 16th amendment is still in play, it will just be a pile-on tax.
It will encourage an underground economy or purchasing out of the country.
Transactions like eBay, yard sales, flea markets will start to be Federally regulated.

[Issaquahking]

Everyone pays on this one. Illegals too! Like I keep suggesting through the thread - read the book! Also try post #156.

[Yaelle]

Why would Fair Tax fans be so sure there would not be an underground economy? I understand that it would flush out dollars that are illegally gotten, IF they are spent in legal acquisitions.

But human nature being what it is, wouldn’t there still be people who want to cheat the system? Don’t we all know places where you can avoid paying tax right this second? I know that I can go downtown and buy a pinata or article of clothing from one of the MILLIONS of little Mexican shops and pay no sales tax. I also know that I can buy on Ebay from someone in my own state and not pay (and neither will seller) sales tax, even though one is SUPPOSED to. Why believe that everyone will become law-abiding if the Fair Tax is passed?

[Gondring]

What a rotten headline... as much as I hate Huckabee’s politics in general, the misleading headline is just a smear.

[gunservative]

This would never get past Congress, but I can understand why such a story is being printed at this time.

[sfvgto]

ok, replace one tax system with another, we will still get ripped off. Besides, you will still have to file with the state, and here in California, the state BOE makes the Irs look like girl scouts.

[Principled]

I like that calculator... looks a little familiar!

[Gondring]

I cannot believe that people here on FR would take an analysis by the LA slimes at face value.

Yes, it's quite funny how MSM claims are treated as gospel if they fit FReepers' preconceived ideas.

[Bigun]

Dang! Imagine that!

LOL!

[expat_panama]

The price of EVERY product or service produced in the USA today contains within it ALL of the taxes as well as ALL the costs of complying with the tax code of every set to hands that touch the process...

No it doesn't.

For one thing, increased costs are born part by the seller and part by the buyer.   Who pays what is set by supply/demand market forces (google "supply demand economics" to learn more).

Another thing is that I don't pay even the market portion of those taxes when I spend my money outside the US.

In addition, nobody here believes that a federal sales tax would be levied only after income tax collection is stopped.  We all know that knowing our government that we'd end up paying both..  OK, at least for a short time --say 50 years?

[OKSooner]

Yes, fair. You're taxed on what you spend, and everyone gets a tax pre-bate to offset the sales tax on necessities. Thus the poor are exempted from it.

You're NOT taxed on what you earn, and all the hidden taxes (FICA, Medicare, Medicaid) are eliminated.

YOU TAKE HOME YOUR ENTIRE PAYCHECK, except for state taxes.

The estate tax is eliminated also, which would be of interest to you or whomever you know who owns a business.

This is probably the only logical explanation for The Huckster's sudden surge in popularity. Of course, in his case it's a fake.

You can get the facts on it here:

http://www.fairtax.org/site/PageServer