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 ...
Are you claiming that because I may get a prebate of $30, that the doctor bill which is $100 now and will rise to $130 after the FairTax is really only $100?
So why not just say that the bill will rise to $130? What are you afraid of?
Or do you fall for the lie that prices will remain the same, you'll pay $0 taxes and get a prebate?
One of the think I like about the FairTax is that is DOES have everyone contributing to the tax revenue. The fact that some of those have their tax rate reduced or (in some few cases) eliminated does not disturb me as much as it seems to affront you since even those reduced rate folks - you can be sure - will see that they are “paying tax” when they buy consumption items as specified in the bill and they’ll wish to have even that rate lowered (rather than look at it a chance to get more by raising the rate as you proffer.
The fact that even those living on the margin will certainly view themselves (rightfully) as “paying taxes”
rather than living “high on the hog” via government dole is a point that I think will be effective is helping hold down the tax rate more than you believe (obviously) for the reasons you cite. It will be the first time perhaps in a lifetime that some of these taxpayers will have any real opportunity to boost themselves up a rung or two on the economic ladder by their own thriftiness.
For these and other reasons I don’t see it as “gaming the system: at all since there is nothing the taxpayer can do to “game” anything - that’s the way the law was intended to operate. Unlike the income tax system where there are myriad opportunities to “game the system” should you take it at your peril to do so (since it’s not intended to allow that and there are serious penalties to prevent such), the FairTax is not gamed at all by the taxpayer following the FairTax law. He should be able to benefit much more from this tax law than the present one while breaking no laws at all (nor spending sizable sums of money or time to do so).
Like you, I very much think that all should pay something - even those here illegally (or generating illegally) - and that alone will add millions of people to the tax rolls. I think having foreign visitors paying the FairTax is also a good idea since they, after all, take advantage of a number of taxpayer-funded events and activities ... and they are not eligible for the prebate wither.
Unlike you, though, I don’t believe that equating SS/MC payments to what is paid in tax is a reasonable thing. After all we both agree that those two entitlements are broken and I - at least - would like to see both eliminated. Things don’t always go in the same direction forever and, I believe, so it is with SS/MC - those will eventually be reduced (if not eliminated) so throwing them into a tax payment as some sort of tax equivalence is not a good idea since when going the other direction the opposite effect takes hold. I think it’s better to separate the view of the tax from its squandering (via entitlements) which is, after all, a political action that can be relatively easily reversed - or as least “easily” as compared to reversing a complete tax system we’ve had for darned near a century.
I suppose it's all relative and we'll doubtless disagree on that first paragraph as I've discussed. I'm merely pointing out my beliefs rather than trying to change yours so there's nothing wrong with differing views.
I still believe the FairTax offers the best hope for correcting some of the tax/spending ills we've gotten ourselves into with the present system where many (even on these threads) know they are not part of the tax system - or at least proportionally less than they might be. I think much of the spitting and fuming on these threads is one indicator of that.
You buy into an automatic price rise while income remains stable and that has certainly never been shown to be so in any economic study. The fact that purchasing power and economic activity increases under the FairTax is more significant I think. Certainly you will be paying taxes under the FairTax at your effective FairTax rate (rather than the higher marginal 23% ti rate you project). If you'd figure out your effective rate you'd be in a better position to see that.
Why would the price of a doctor visit fall?
You buy into an automatic price rise while income remains stable and that has certainly never been shown to be so in any economic study.
Says who? I don't buy into the perpetual motion (really bad math) of many FairTax supporters.
Certainly you will be paying taxes under the FairTax at your effective FairTax rate (rather than the higher marginal 23% ti rate you project). If you'd figure out your effective rate you'd be in a better position to see that.
Let's pretend my effective rate is 10%. Let's pretend my doctor currently charges $100 for a checkup. The FairTax becomes law, I'm so excited that I go to get a checkup. Clean bill of health. I stop at the billing desk, they hand me the bill. According to the new law, they have to break out the tax on the bill. How much is it?
The bill calls out the marginal tax rate (just as do the present income tax tables). It requires the receipt to specify the tax paid at point of purchase using the inclusive marginal rate of 23%.
If you paid the doctor $100, then $23.00 would show as the marginal rate which is what you would pay at that point in time - HOWEVER you would be receiving a refund so that (using your 10% effective tax rate) you'd end up paying a net of 10 percent tax inclusive after the prebate. The untaxed doctor bill would be $77.00 ($100.00 minus $#23.00) making the effective amount you pay while considering the prebate to be about $85.56 - the $77.00 plus the tax amount to include your 10% effective rate.
Excellent! So, a bill that is $100 before the FairTax would rise to what level after the FairTax is added?
The net amount of the bill including FairTax as in your example would be a decline from $100 to $85.56 net. It’s unfortunate you can’t understand that - but it’s true.
No, let's leave any prebate out of it. What is the increase, you know, the line item on the bill that says, "This is your Federal Fairtax"?
Let's start over, my doctor charges $100 for a visit. He hands me the bill. The first line says, Doctor Visit, $100.
The second line says Federal FairTax $---.
What is the amount on the receipt for the tax. Keep in mind, the doctor doesn't know my effective rate.
It shouldn't be that hard for you to tell me.
I would suggest that nearly 1/2 of the population could care less about the IRS - they pay only 4% of the total from federal income taxes. Payroll tax on the other hand goes for Social Security and Medicare, which hits everyone who works legally - I think that’s about 10-15% of your wages up to a certain threshold (can’t remember- $77,000/yr?). The Fair Tax would also eliminate the imbedded corporate taxes that are passed on to the consumers, which is about 20% added on. Before the Nation could embrace a national sales tax that would hit everyone, the Constitution would need to be amended to make sure that the Income Tax goes away before the Sales tax kicks in.
I can tell you that I have run my personal situation through the FairTax Calculator under every plausible condition and have come out better off under the FairTax every single time. I believe myself to be a fairly typical retired person so I STRONGLY suspect that most others will fair similarly but there is no need for conjecture as everyone can easily see for themselves by simply using the calculator, at the above link, for themselves.
My doctor currently charges $100 for a checkup. After the FairTax, the doctor bill will have one line that says, Checkup:$100.
The next line will say FairTax:$---
What will the amount in that line show?
Thanks.
Under the Fairtax $23.00 of every $100.00 spend on a new good or service would go to the Fed. Gov as tax but it is VERY important for one to remember that under the FairTax one would not have to earn in the range of $120.00 - $150.00 in order to have the funds on hand to allow him to make that $100.00 purchase. Under the FairTax you would have to earn exactly $100.00 in order to have the funds on hand to make that $100.00 purchase.
No. The price before tax is $100. What is the end price?
Under the FairTax if the doctor's price list says "Checkups $100.00" the receipt would show $77.00 for services rendered $23.00 tax to Fed. Gov.
If the price list says "Checkups $129.87" the receipt would show $100.00 for Services rendered and $29.87 tax to fed. gov.
If the price list says "Checkups $150.00" the receipt would show $115.50 for Services rendered and $34.50 tax to fed. gov.
Whatever the Dr. lists as his price for a checkup under the FairTax, $23.00 of each $100.00 will be tax and the remainder for services rendered.
Thanks. For some reason baybabe was afraid to give me that answer.
I can’t resist this...Huck proposes a ‘fair’ 23% national sales tax...
We all remember the Boston Tea Party from history...that was just a tiny demonstration against a sales tax on tea...with a 23% national sales tax the natives may decide to burn down a lot more than tea....what a Huckleberry.
Huck - forget it or forget Presidency.
I can tell you that I have run my personal situation under every plausible condition and have come out better off under the FairTax every single time. I believe myself to be a fairly typical retired person so I STRONGLY suspect that most others will fair similarly but there is no need for conjecture as everyone can easily see for themselves by simply using the calculator, at the above link, for themselves.
No, let's leave any prebate out of it.
I'm sure you'd like to do that to prove your warped point, but the prebate is just as much of the FairTax as is the 23% tax inclusive rate. Each individual has the option of NOT receiving the prebate but folks like that will not be typical at all. The prebate is considered just as is your income tax refund.
As I told you, the seller needn't know your effective rate - but if you have any sense you will so you can see how what the consumption is actually costing you - in the case you dreamed up, a reduction from $100 to $85.56.
Naturally that doesn't fit your FairTax attack, but it happens to be true.
Now that he sees he’s wrong he’s trying to shift his way out of the position.
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