Posted on 12/24/2007 7:55:05 AM PST by 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.
(Excerpt) Read more at latimes.com ...
20-25% of the asset value of retail inventory is not just going to “evaporate” over night without the result being the same as what happened in 1929.
Not if done correctly
Lose the IRS, the income tax and automate it and it might increase our savings rate.
There would certainly be a transition period. As new inventory comes in, the embedded taxes will be gone, lowering the retail prices.
Indeed I do - take your head out of the MSM ‘economic disaster” propaganda box.
No it doesn’t - read the bill.
And in no time we’ll have a 50% fair tax.
Tell me how that will work on a tank of gas.
BTW, the FairTax bill leaves the federal excise tax on a gallon of gas in place, and taxes the tax.
The Income Tax gives the political class too much power. Too many ways to punish their political foes and reward their political clients.
What I think tax reformers should be pushing is a flat tax. Either that or a vastly simplified tax code.
Progress in this society is always evolutionary, not revolutionary. Tax reformers should be taking small bites out of the existing system rather then trying to swallow it whole.
No, it doesn't. It leaves certain federal excise taxes in place and even allows those taxes to be taxed.
So right now, a top 50% earner pays 13.84% (per your example) of their income AND they pay about 22% of every product they buy. Under the FairTax, no income tax and a 23% inclusive sales tax.Let's safeley assume the top 50% earner is a producer. Where does his/her 13.84% of their income play into the 22% of the product? If it's included in the 22% are you saying s/he wouldn't get 100% of their paycheck? Or on the other hand are you saying the total tax collected from the product is 35.84%?
Either way it would be helpful if you could demonstrate how your scenario collects the same amount of tax it replaces
Sock puppet or alter ego.
Yes, individual income taxes are part of the embedded taxes in the current cost of every product. Most likely, salaries will drop to current “take-home” pay levels.
So take home pay remains about the same. The cost of goods and services remains about the same. So your buying power doesn’t change much, if at all.
I’m no economist, so I’ll have to take the word of the numerous economists who studied and developed the FairTax that it is revenue neutral.
You're right to an extent - prices would drop, wages would also drop, as the result of the next "great depression" caused by any consumption tax. Then the enemies of freedom, and especially our economic enemies, will put the final nails in our coffins...
I’m no economist, so I’ll have to take the word of the numerous economists who studied and developed the FairTax that it is revenue neutral.Where would I find those words you've seen that says it's both revenue neutral and purchasing power doesn't change?
You can follow logic and do simple math can't you? If I have to earn $113.84 (gross) to purchase a $100 product that is laden with 22% tax the government would have collected $35.84.
After the fairtax (according to you) my gross would be $100 and the price for the same product would be $78 plus 30% Fairtax of $23.40 = $101.40
My gross would only be $100 and the tax collected only $23.40...or 34+% less.
Maybe you could explain how that is revenue neutral.
The hairy arm of the sock puppets is still having his hissy-fit-fest over on that old thread
“So if I’m in the top one percent I’d be really happy to reduce my tax from 36% to 23%. If I’m in the 50% bracket as I’m in now at 13.84%, I’m getting screwed. People in the bottom 50% currently paying 2.98% are even more screwed. “
Here is what I do not understand: why is it fair for one person to pay more in taxes than another? That is my problem with the flat tax. Everybody should pay the same taxes. It should not matter how much money you make. You should pay for the services you need as a citizen but no more. The progressive system and the flat tax are Marxist.
You are describing the current income tax. How does keeping it do all of the magic you want?
It panders to the populist agenda of taxing the rich rather than looking at the real issues of what our Federal Government actually spends and the Constitutionality of its spending and rather attempts to shift the burden and administration of the current taxation structure from employers and workers to retailers and consumers.
But those evil nasty rich people would have a CHOICE under the FT. They can chose when and where to pay their taxes. Which is worse, taking their hard earned money as soon as they earn it or taking it when they chose to spend it?
You are talking about the constitutionality of government spending. What about the constitutionality of government taxation. IMHO the income tax rules violate at least 4 of the rights enumerated in the Bill of Rights.
Shifting the burden of taxation to retailers and consumers is bad, why? Why is it bad to shift it away from employers and workers? You're shifting the punishment of taxes from wealth creators to wealth spenders. What is wrong with that?
The truth is that high income people currently pay a lot in taxes. Yes, they spend more in total because they can afford to buy the products and services they purchase and what they choose to spend on so called luxury items keep a lot of business in business and a lot of not so rich people employed.
If you're worried about employment you should reconsider your opposition to the FairTax. A total of no less than 75 economists sent an open letter to the President and Congress asking that they consider a national retail sales tax. Of all of the economic arguments for or against the FairTax I haven't seen one economist other than the soi disant economist Bruce Bartlett claim that the FT would lower economic growth. I have seen many who say it would increase it.
And just who is considered wealthy. According to the FAIR Tax plan? ?
The plan doesn't say who is wealthy it does call for rebates of taxes on expenditures up to the poverty level. There are plenty of people (T. Heinz Kerry for example) who are very wealthy but don't necessarily have a lot of taxable income. They would be contributing to the general revenue again.
Some will say, but you will get a bigger net paycheck without all those federal withholding taxes. That is true but people at the so called poverty level and students and retirees can currently claim exemptions from most payroll tax withholding up front.
So? How would that change under a NRST?
So who is paying for those fees? Is that really factored into the supposedly revenue neutral 23%?
Yes.
While this sounds simple, “simply an additional line on the current sales tax reporting form” I know it’s not all that simple.
Yes it is.
I will have a much bigger incentive to go to E-Bay and buy “used” products tax free than buying new ones.
What are you going to do when they run out of used legal services? How about used eyeglasses? Even used cars. Pretty soon we'd run out of used cars. I've seen some new models quickly lose 30% of their value the minute you drive them off the lot. People still buy them.
I can see this plan as being disastrous to the economy at its inception.
Then you know something that many trained economists do not.
Most of us will see it as a huge tax increase and out of fear, most of us will greatly reduce our spending to the very bare necessities
Most of us are smart enough to understand that we would still be paying about the same in taxes to the Dept. of Treasury and that our financial position hasn't changed much at all.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.