Taxes fair and foul
Posted by metaphorical on 31 December 2007
In an interesting article about the so-called “fair tax,” the LA Times mentions in passing a key reason Mike Huckabee has jumped from the pack in the polls. (A recent AP poll put him first, though within the margin of error.)
Anyone who has watched the Republican debates knows that Huckabee is one of several candidates who would close the doors at the IRS. The tax proposal in question is one that would create a national sales tax of 23% and abolish the income tax.
The LAT article describes a group called Fairtax.org.
The group has spent about $2.5 million to mobilize supporters in early caucus and primary states, and plans to spend $1 million more in coming months.
As a nonprofit, it cannot endorse a candidate. But it lets people know where the candidates stand — and that Huckabee is a particularly strong backer of the tax.
According to the article, “The group’s biggest push was in Iowa leading up to the August straw poll.”
Fairtax.org rented 10 buses and paid the $35 individual fee for 400 tickets to the event.
Huckabee placed second, behind former Massachusetts Gov. Mitt Romney, and garnered the first major coverage he had received in the campaign.
Is it the only reason Huckabee has emerged as a leading candidate? Of course not. But as the Times points out, “For Huckabee, the proposal may prove a politically useful antidote to the intense criticism he has taken from his party’s anti-tax wing for overseeing several tax increases as Arkansas governor.”
Furthermore, Huckabee benefits from still being a big unknown. The AP notes that according to its polling, “Fifty percent of all voters and 40 percent of Republicans say they don’t know enough about Huckabee to say if they like him or not.”
To be sure, the Republican race is still wide open. Here are the AP numbers:
Mike Huckabee, 22 percent
Rudy Giuliani, 21 percent
John McCain, 14 percent
Mitt Romney, 13 percent
Fred Thompson, 11 percent
The November numbers were,
Giuliani 27 percent
Thompson 17 percent
McCain 15 percent
Romney 11 percent
Huckabee 9 percent.
A month from now things will look very different. Only 3 or 4 candidates will be viable after New Hampshire, Iowa, and South Carolina. It’ll be interesting to see if Huckabee is one of them. Right now, my money is on him being the Howard Dean of 2008 — a candidate who peaks too early and won’t survive the press attention and financial demands of front-runner status. On the other hand, it’s hard to see who of his opponents will emerge as the Republicans’ Kerry.
Meanwhile, the “fair tax” is a two-edged sword as a campaign issue.
The Times article points out that according to a number of experts, 23% isn’t nearly enough to bring in revenue equivalent to today’s income tax.
William G. Gale, a tax expert at the centrist Brookings Institution think tank, estimates that the levy could run as high as 50% — a tax so steep that it would be an invitation to mass tax evasion.
“It’s a crackpot plan,” said Bruce Bartlett, a conservative economist and former Treasury Department official who is a leading critic of the sales tax. “Anyone who supports it should not be taken seriously.”
To my own thinking, something needs to be done. A flat income tax would be grossly unprogressive — except compared to today’s twisted tax code, which allows the rich to pay very little in the way of taxes.
A single rate of, say, 20%, along with a modest national sales tax of, say, 10%, would be roughly revenue neutral and take from the rich at least what they’re paying now, and perhaps more so. (There would have to be some form of credit for the working poor and lower middle class. Even Huckabee’s proposal has something along those lines.)
With such a scheme, we could largely eliminate the IRS after all, and tax policy would no longer be used as a means to advance certain ideas about how people should best live, such as home ownership, or heterosexual-only marriages.
As misguided and unrealistic as the Fairtax.org/Huckabee proposals are, they tap into something that resonates with the American public. The tax code today is too complex, has too many loopholes, and lets rich people and corporations pay far too little. If something isn’t done about that, crazy ideas will have to be taken more seriously than they deserve.