Huckabee: Sales Tax Saves Social Security

Republican presidential hopeful and former Arkansas Gov. Mike Huckabee takes part in the Des Moines Register Republican Presidential Debate in Johnston, Iowa, Wednesday, Dec. 12, 2007. (AP Photo/Charlie Neibergall)
Republican presidential hopeful Mike Huckabee said eliminating federal income taxes in favor of a national sales tax would help save Social Security - an odd pitch in a state where residents pay no state income or sales taxes.

"Instead of basing our national budget off of payroll taxes for Social Security ... it means the base of funding is much broader," said Huckabee, whose shoestring campaign has surged nationally and in Iowa, which holds caucuses five days before New Hampshire's Jan. 8 primary.

"That's important because we have a declining number of people who actually live by their wages," the former Arkansas governor told workers at the Elektrisola plant in Boscawen, where workers make wires for electric guitars like those Huckabee plays, among other things.

The tax plan Huckabee has proposed, called the "FAIR tax," would eliminate federal income and investment taxes and replace them with a 23 percent federal sales tax. The poor would pay no net sales tax up to the poverty level, and every household would receive a rebate equal to sales taxes paid on essential goods and services.

It's a tough sell in New Hampshire, where residents do not pay state income taxes or general sales taxes. Scott Sweezey, a programmer at the plant who lives in Bristol, said he doesn't know how to make a consumption tax treat people fairly.

"Low-income or retired would pay the same tax as somebody who has a million dollars," Sweezey said. "I guess if you don't buy anything, you don't pay any sales tax, but if you do buy something, you pay sales tax."

A grim future looms for Social Security, because as post-World War II baby boomers begin retiring, the system won't collect enough taxes to pay for retirement benefits. The government likely will have to raise taxes or reduce benefits.

Neither solution is attractive, so presidential candidates in both parties avoid talking about them. An exception is Republican former Tennessee Sen. Fred Thompson, who proposes lower-than-promised benefits for future retirees as well as new private investment accounts.

Huckabee says replacing income taxes with a sales tax would also have the benefit of discouraging illegal immigration because they would be forced to pay taxes they're not paying now.

Not everyone in New Hampshire dislikes the idea of a federal sales tax.

Ken Schuhle, a Navy veteran from Dover, said it would eliminate loopholes that rich people exploit. "That way, everybody pays our share," said Schuhle, who listened to Huckabee speak during lunch at the New Hampshire Veterans Home in Tilton.

Huckabee also named Republican political strategist Ed Rollins as his national campaign chairman. Rollins was national campaign director for Ronald Reagan in the 1984 presidential election in which Reagan won 49 states.

"Ed is an unparalleled strategist and is well-known as the man who directed the most successful presidential campaign in the history of the United States," Huckabee said in a statement. "Ed's experience and track record of building winning coalitions within our party; bringing together social, economic and foreign-policy conservatives, and reaching across party lines, makes him a good fit for our campaign."