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 ...
So answer me this:
A family of four earns $40K/yr, gets a prebate to cover $26K HHS poverty level spending, and has mortgage interest not subject to FairTax of $14K per year. How much will they pay in taxes to support the Federal government that protects their lives and freedoms and that will provide them with SS/M benefits when they retire ?
My math says they’ll pay ZERO. So what incentive do they have to vote against even more government spending ?
Excellent!
Suppose Huckabee is elected and implements his tax plan. 23%. You spend all of it 15 years. You will have paid $230,000 in taxes.
Yes. $75,000<$230,000. Excellent!
But you also invested it from day one at 5% apr. You draw 5% (a conservative number) on only what you have left over the next 15 years.
If I spent it all in 15 years, earning 5% and drawing 5%, your numbers don't add up. Maybe you should run an Excel spreadsheet?
Your investment makes you 350,000 tax free dollars, to give to your kids, or do whatever you wanted to with.
I can leave $350,000 tax free to my kids today.
Which would you rather have?
Numbers that add up.
Yes, bad math becomes better when more people repeat it. You understand prices will rise under the FairTax?
There's no evidence of that. In fact... the economists suggest the opposite.
I think if you add a 30% tax to a purchase, the purchase price will be higher than before the 30% tax was added. You disagree?
To begin with Huckabee’s proposal is 23%. I heard him say that myself. And the 23% is taken care of in the math that I gave you. Now come on.... you’re smarter than that. If you’re not then you got more problems than paying taxes.
“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.”
Yes, that is one of the brighter points of the FairTax. But that is true even if the FairTax doesn’t replace Payroll Taxes. Nobody complains about IRS audits or personal intrusion when it comes to the SS/M taxes. And if the SS/M is funded by a portion of FairTax, then retirees would be paying into SS/M at the same time they are drawing from it. In fact, the FairTax requires SS benefits to be adjusted upwards so the retiree will have enough money to pay the FairTax. That’s just silly. If we leave Payroll as a tax on wages, and we eliminate the prebate which would just leave huge blocks of voters off the tax rolls, we could have a FairTax with just a 12% rate. That would be a formula for smaller government — nobody gets a free ride while still voting for government largesse.
The FairTax adds 30% to your purchase price.
When I said earning and drawing.... I was talking about the same thing. I wasn’t saying “draw” an additional 5%. Seriously.... you’ve never setup a model in your life. Have you?
Huckabee’s proposal is 23%. That’s what he has articulated.
If you earn 5% and draw 5%, your money will last more than 15 years.
Seriously.... you’ve never setup a model in your life. Have you?
LOL! Try again?
The FairTax adds 30%.
That’s what he has articulated.
He has a proposal different than the FairTax? Or maybe you can't do the math? LOL!
While people can and do move between income brackets from year to year, Congress has created a situation where half the taxpayers pay virtually all the taxes and benefits for everyone. How fair is that? But any politician who proposed that the "poor" (poor for America, anyway) pay THEIR fair share would be destroyed politically, no matter how morally and economically correct they happened to be.
And there is your real problem, my FRiend: our previously self-reliant, independence-minded culture has been corrupted over time by the same mentality of entitlement that is presently helping to destroy much of Europe. That, along with a few million baby-making Muslims who seem to think they need not work for the dhimmis they soon expect to rule. The difference is: we still have a chance.
With the FairTax there’s no tax filing and if you earn $120, you have $120 when you pay for that “$100 purchase” which actually will have dropped some in price due to the FairTax.
Of course with the income tax the IRS might also decide to fine and penalize you unless you can prove your innocence to some charge they decide to use on your tax situation. In that case your "$100 purchase" is even much more expensive than a "$128 purchase" - or perhaps you think things like that never happen under our present system.
And I took the worst case scenario. I assumed that you CHOOSE to spend all million dollars in 15 years. That would be your choice under Huckabee's plan. Under the current plan you've got no choice except to pay the taxes and pull it out of investments when they make you.
Math is hard.
With the FairTax there’s no tax filing and if you earn $120, you have $120 when you pay for that “$100 purchase” which actually will have dropped some in price due to the FairTax.
So, an item which costs $100 today will cost how much, after the FairTax becomes the law of the land?
If you’ve honestly done one of the FairTax calculators you’ll see that your effective tax rate will most likely be lower than at present. I haven't seen the response you illuminate (if it actually exists), but one thing in it is certainly true - prices will be lowered and in addition our country's economic well-being will benefit since now all illegal aliens, drug dealers, etc will be paying when they consume ... just like the rest of us. This expanded number of taxpayers will help lower the burden on the rest of us.
Thanks for clarifying. Your original claim made no sense. So, assuming the worst case scenario and ignoring standard exemptions and standard deductions, I'd pay say 28% on the $350,000 in interest. Or $98,000.
To recap, $75,000 + $98,000 = $173,000 in taxes paid under the current system versus $230,000 under the FairTax.
Maybe you need a better model?
Under the current plan you've got no choice except to pay the taxes and pull it out of investments when they make you.
Why is somebody making me pull money out of this account?
The “$100 purchase” is not at all a “$100 purchase” since you’ve had to earn, say $128 to make that $100 purchase” - so it’s really at least a “$128 purchase”.
Then, too, you’re overlooking that the price of that “$100 purchase” (which really was a “$128 purchase”) will decline somewhat under the FairTax which means that even including the 23% inclusive tax that the price will be less than the original “$100 purchase” which was actually $128) since you have your entire $128 to work with and your effective tax rate (check one of the FairTax calculators) will be much less that a present 28% income tax rate.
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.