"FairTax" Boosts Huckabee, Despite Critics

GOP Contender's Support For Questionable National Sales Tax Drawing Supporters

(Washingtonpost.com)  This story was written by Jonathan Weisman.

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To former Arkansas governor Mike Huckabee, supporting a national retail sales tax is more than a policy proposal. It has provided much-needed muscle for his campaign, filling rallies and events with fervent supporters hoping to replace the entire income and payroll tax system.

There's one problem: A national sales tax won't work, at least not according to tax experts and economists of all political stripes. Even President Bush's Advisory Panel on Federal Tax Reform dedicated a chapter of its 2005 final report to dismissing such proposals.

"After careful evaluation, the Panel decided to reject a complete replacement of the federal income tax system with a retail sales tax," the panel said. It concluded that such a move would shift the tax burden from the rich to the poor or create the largest entitlement program in history to mitigate that new burden.

Under the proposal, known to supporters as the FairTax, the Internal Revenue Service and the entire income and payroll tax system would be abolished. Americans would then pay a sales tax on virtually everything: a new home, yard work, food, health care. Only education would be broadly exempted.

FairTax advocates say a 23 percent tax rate would maintain the same amount of money flowing into the Treasury, though that number is debatable. An item priced at $1 would actually cost consumers 30 percent more, or $1.30. FairTax advocates say that amounts to a 23 percent rate, because 30 cents is 23 percent of the product's after-tax cost of $1.30.

To offset the burden on the poor, the FairTax system would send monthly checks to everyone in the nation, compensating for taxes paid up to the poverty level and ensuring that some minimum standard of living would go untaxed. The president's tax overhaul panel, in its final report, estimated that such a program would cost $600 billion to $780 billion a year, making "most American families dependent on monthly checks from the government for a substantial portion of their income."

But the biggest criticism is that the tax cannot be administered. Many economists say a black market would develop overnight, especially in the service sector.

"Under the FairTax, every time you purchase a service, you would probably get two prices -- one you can pay with a check or credit card that includes the FairTax, and one you can pay in cash and save 23 percent," conservative economist Bruce R. Bartlett wrote this week in the publication Tax Notes. "Because there would no longer be any audits of income, since the IRS would have been abolished . . . massive evasion is inevitable."

At the same time, federal spending would shoot up because the government would have to pay sales taxes on purchases. To compensate, the sales tax rate would have to rise to more than 40 percent for the government to take in as much as it does now, said William G. Gale, a tax economist at the Brookings Institution. State and local governments, facing a new burden on purchases, would have to increase taxes to maintain current levels, as well.

To Huckabee, there seems to be no downside to a national sales tax. By eliminating federal income and payroll taxes, businesses would save considerable sums and pass on the savings. The FairTax would lower the cost of retail goods, make U.S. companies more competitive internationally, send the economy into overdrive and even encourage thrift, since the national sales tax would apply only to new goods.

"Am I running for president to shut down the federal government? Not exactly," Huckabee says on his Web site. "But I am running to completely eliminate all federal income and payroll taxes. And I do mean all -- personal federal, corporate federal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment. . . . Instead we will have the FairTax, a simple tax based on wealth."

Once an advocate of a single, "flat" income tax rate, Huckabee was converted by FairTax advocates who peppered town hall meetings while he was governor. Now, FairTax supporters pack events to cheer him on. A May rally in Columbia, S.C., attracted about 10,000 FairTaxers, who cheered rapturously when Huckabee declared: "I realize that the FairTax organization does not endorse candidates, but let me be very clear: I endorse you."

Nonetheless, FairTax's detractors are legion. In Tax Notes, Bartlett spent 15 pages attacking the proposal and its advocates, whom he accuses of being ignorant or dishonest. Dale W. Jorgenson, a Harvard University economist and elder statesman on tax overhaul, called the FairTax "reform by focus group."

"These people have to be taken seriously," Jorgenson said of the organized campaign for the FairTax. "They're not terribly experienced in politics. But they have this grass-roots movement out there. They have cornered the market, and nobody in the political world is out there saying this is nuts."

Alvin Rabushka, the father of the flat tax and a senior fellow at Stanford University's Hoover Institution, said anyone who professes to be an independent businessman or contractor would label every purchase as a wholesale transaction or business necessity, because business-to-business purchases would not be subject to the tax.

"For me at least, a national retail sales tax is an attractive idea," Rabushka wrote on his blog this month. "Only fools pay retail."

Charmaine Yoest, a Huckabee spokeswoman, said that all tax systems have their flaws, and that Huckabee would address issues of compliance as president.

In all these criticisms, FairTax advocates see sour grapes. Ken Hoagland, a spokesman for Americans for Fair Taxation, said Bush's tax panel was headed by tax lobbyists, including former senators Connie Mack (R-Fla.) and John Breaux (D-La.), intent on maintaining the current system and their livelihoods.

As for Rabushka, a hero in many conservative tax circles, "This is a guy who's been trying to sell an idea on tax reform for years and gotten nowhere with it," said David G. Tuerck, an economist at Suffolk University in Boston and a FairTax advocate. "He's showing some signs of panic, now that we've got at least one serious presidential candidate backing us."

[gfuss2]

Guys, Gals, For those of you who are doing "just fine economically" now, check out what FOOLS we really all are! Right wingers, Neocons, and All Americans could be "REALLY DOING JUST FINE" if not for what our wonderfull self serving polliticos have been allowing to be perpetrated on "US" the American public for decades! We''re in total servitude & have been for decades! Go to this Link & Discover the Real Truth! Do you have the nerve to discover the kind of Gov''t we really have? Just learn & enjoy, then puke figuring the tax money that has been "STOLEN" from all of us. Then copy & paste this link in all of your e-mails to start a grassroots effort to end this *** & reclaim our country. Go here for the real truth about our Gov''t, Good ol Boys & Girls Club. http://www.youtube.com/watch?v=3ueEfRXZCVA
Go- Go-Go-, Ron Paul baby!! I''ll Definately Vote for you, (the only Honest face running!) All the rest are a bunch of "self serving" Liars & Crooks! They''re all = Dems & Reps, BEHOLDIN to Big Oil, Big Pharma, Humongus Insurance, lining their pockets, etc! Maybe we "thru - you" Ron Paul can save our country from all the rest of these Corrupt Power Hungry Politicos. Good Luck Ron Paul. Discover the Tyranny perpetuated on the American people for so many yrs! The "powers to be" NEED a Grass roots movement as the to even begin to put enough pressure on our "howdy doody" gov''t (puppets)to feel the desire of the people to be able to cut these strings of sevitude that has existed for so long.

[gfuss2]

Hey Guys, Gals, & (Stupid Patriots) of America, etc,
For those of you who are doing "just fine economically" now, check out what FOOLS we really all are! Right wingers, Liberals, and All Americans could be "REALLY DOING JUST FINE" if not for what our wonderfull self serving polliticos have been allowing to be perpetrated on "US" the American public for decades! We''re in total servitude & have been for decadws! Go ahead, I Dare you to go to this Link & Discover the Real Truth! Do you have the nerve to discover what kind of Gov''t we really have? Go then. Just learn & enjoy, then puke figuring the tax money that has been "STOLEN" from all of us. Then copy & paste this link in all of your e-mails to start a grassroots effort to end this *** & reclaim our country. Go here for the real truth about our Gov''t, Good ol Boys & Girls Club. (Dems & Reps) alike. http://www.youtube.com/watch?v=3ueEfRXZCVA
Go- Go-Go-, Ron Paul baby!!

[antoniof123]

Are there really this many stupid people in this country?

[jedi08]

The CLINTON Broadcast System (CBS) is out their again playing politics, and not doing any research.

Anyone who has actually looked at the fair tax knows their are many more positives then Negatives.

They talk in the article about how their would be a black market for things like yard work. Well guess what there already is now.

Jonathan Weisman is a Ignorant fool

[rowdytexan2]

Posted by rmsdm4 at 09:02 AM : Dec 29, 2007

This is just what we need, big business NOT having to pay any taxes. THEY DON''T PAY TAXES NOW! They live out of their businesses like royalty and claim NO profits to be taxed!

The only fair tax is a flat tax on EARNINGS! If you earn it, pay taxes on it, with no loopholes, write offs, or deducations!

[l8c6]

can anyone believe this country and it''s corporate media?

CBS online news censored the word "o*rif*ice"

[l8c6]

And just think, all the drug dealers, john kerry''''s(evil rich) would actually pay taxes. I think the real reason liberals are afraid of it is because they won''''t have a nanny state to coddle.

Posted by rmsdm4

It never ceases to amaze me, the twisted mind of the "liberal" hating whack jobs like you.

So divisive, so hateful, so offensive, so assuming. How dare you and the likes of you insult the citizens of the United States. Many of those you attack are dying in Iraq as you write your right wing trash. Many who are called "liberals" by the fascist fools in this nation have contributed immensely to this nation.

You do not own the flag, you have not single handedly made this a great nation. Your trash has brought it to the state it is in now. You undoubtedly voted for this thing in office.

True patriots need to take this country back from those who parade around bullying with words from their back *** with the United States flag draped about them. Many of these have committed high treason against this nation and its people.

---%u201CI don%u2019t give a *******,%u201D Bush retorted. %u201CI%u2019m the President and the Commander-in-Chief. Do it my way.%u201D
%u201CMr. President,%u201D one aide in the meeting said. %u201CThere is a valid case that the provisions in this law undermine the Constitution.%u201D
%u201CStop throwing the Constitution in my face,%u201D Bush screamed back. %u201CIt%u2019s just a ******* piece of paper!%u201D

[l8c6]

Perhaps the most disturbing thing Bush has done in this country is divide the people and open them up to radical knee jerk proposals. It took over 200 years for the United States to reach the place it is. Change has always been a part of the equation for good reason. To radically shatter the infrastructure overnight would take this country back to the early days for sure as the Ron Paul cult followers aspire to do. The early days of internal war, revolutionary war, civil war. Storm clouds are forming. A major difference now is that foreign nations are not so far away. How much can other world economies bring the United States to its knees in this rich man''s global economy?

[l8c6]

The threat to the common american, in any society in history that''s been a good 90% of the people, is private corporations. The kings and queens, the royal families of the old world and the dictators of 3rd world countries are private entities unaccountable for the most part to popular opinion. They always rule by the sword and a good dose of fear.

Roosevelt policies balanced with regulated capitalism produced the strongest nation and strongest middle class the world ever knew. Self serving arrogant narcissistic elitist anti-social non-visionary fools are in the process of destroying it.

A person born in the late 1930''s in the United States enjoyed the best era that any working class person will ever hope to live in this world. Not one republican can be thanked for this.

[macusweil]

Huckabee has no original ideas of his own. His pandering to religious rights will not carry him far in the current political climate. His tax increases as governor speak of his true colors regarding fiscal responsibility. His call for a move to a ''fair tax'' that will place the tax burden squarely on the poor and middle class.

What is really required is a clean up of BIG government and true fiscal reform.

To quote Congressman Ron Paul ~ "Real conservatives have always supported low taxes and low spending. Real conservatives have always supported low taxes and low spending.

But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation. Our mounting government debt endangers the financial future of our children and grandchildren. If we don%u2019t cut spending now, higher taxes and economic disaster will be in their future %u2014 and yours.

In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply %u2014 making each dollar in your pocket worth less. The Fed is a private bank run by unelected officials who are not required to be open or accountable to %u201Cwe the people.%u201D

Worse, our economy and our very independence as a nation is increasingly in the hands of foreign governments such as China and Saudi Arabia, because their central banks also finance our runaway spending."

I''m voting for Ron Paul in the Feb 5th New York state GOP primary.