Politics, Technology, and Language

If thought corrupts language, language can also corrupt thought — George Orwell

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.

12 Responses to “Taxes fair and foul”

  1. Bruce Barnes said

    The consumption tax will increase the tax on people about 28.5 %. Instead of individuals paying 60 % of taxes, they will pay 100% of the budget. In FY 2006, corporation income tax was 13.8 % of the federal budget and corporate employment taxes were 14.7 %. Under the “Fairtax plan,” businesses do not pay taxes. Corporations enjoy all of the privileges of persons except the vote. They benefit from infrastructure, employee public education, law enforcement and limited liability. If corporations do not pay taxes, their privileges should be revoked

  2. Bruce Barnes said

    Taxable property is what most of the people have. Intangible property which is not taxable is what the wealthiest people have the most of.
    “fairtax” definitions:
    1. Taxable property – any property (including a leasehold of any term or rents for such property), but excluding intangible property and used property.
    2. Intangible property – an asset that is not physical and not real property. It includes copyrights, trademarks, patents, goodwill, financial instruments, securities, commercial paper, debts, notes, and bonds.
    3. Taxable property or services purchased from a seller for a business purpose in an active trade or business, or for export from the United States for use or consumption outside the United States are not taxed.
    4. Purchases by consumers are taxed.
    5. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed.
    6. Used property – defined as property on which the federal sales tax has been collected already, and property that was held for other than a business purpose on December 31, 2008 (the day before the sales tax became effective). The term “used” relates to whether or not the sales tax has been paid previously, and not just to whether or not the item has been sold previously.

    It appears that almost everything will be taxed for the first few years.

  3. Bruce Barnes said

    The consumption tax is not fair.

    When a company has a dispute with a customer, they may find themselves in a court that only the customer has funded and to add insult to injury, the customer has to pay his lawyer 23 % more than the company does.

  4. Bruce Barnes said

    Insurance will cost 23% more.

    All types of insurance: Life, health, property and casualty, liability, marine, fire, accident, disability, and long-term care will be taxed.

    Do you think healthcare cost a lot now? Just wait.

  5. Bruce Barnes said

    Everyone will start their own business.

    If a business pays Fair Tax on items for business use, the owner can get that FairTax back. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed.

  6. Bruce Barnes said

    The FairTax Act will phase out appropriations for the Internal Revenue Service and then spend billions recreating bureaus to administer the Fair Tax.

    The IRS is uniquely qualified to administer the Fair Tax with people, computers, and facilities in every state and major city.

    The fair Tax Act will pay retailers to collect taxes and keep records for six years and pay states to collect from retailers. An administering state enters into a cooperative agreement with the U.S. Treasury Department governing the administration of the FairTax by such state.

    The Social Security Administration sends out the monthly rebates.

    The Secretary of the Treasury is given the authority to promulgate regulations, to provide guidelines, to assist states in administering the FairTax, to provide for uniformity in the administration of the tax, and to provide guidance to the general public. The Secretary of the Treasury is required to establish an Office of Revenue Allocation to arbitrate any disputes between states regarding the destination of sales for purposes of allocating sales tax revenue among the states.

    The Secretary of the Treasury and each state sales tax administering authority may employ persons as necessary for the administration of the FairTax and may delegate to employees the authority to conduct hearings, prescribe rules and regulations, and perform other such duties.

    Following due process of law, the tax administering authority can seize property, garnish wages, and file liens to collect FairTax amounts due. Each sales tax administering authority must establish, maintain, and adequately staff an effective, independent Problem Resolution Office to protect citizens from abusive administration. The sales tax administering authority must establish and maintain an appeals process that provides a full and fair hearing of any dispute regarding tax liability.

    The Treasury Department may use FairTax data in preparing economic or financial forecasts, projections, analyses, or estimates.

    The fair Tax Act establishes an Excise Tax Bureau within the Treasury Department to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco and Firearms. It also establishes a Sales Tax Bureau to administer the national sales tax in those states where the federal government directly administers the tax and to discharge other federal duties and powers relating to the FairTax.

    Does a rose by any other name still smell as sweet?

  7. Tom Krop said

    As a staunch backer of the FairTax, may I ask, just what vested interest in the present tax code does Mr. Barnes have ? Judging by his posts, this is surely the case. The same goes for William Gale and Bruce Bartlett.

  8. Swanny said

    Wow, that’s high-larious. Do people just seek out the term “fair tax” and go off?

  9. digglahhh said

    It is strange that a first time poster just goes off on a string of six successive posts about this one specific subject.

    Regardless of my stance on the issue, or of whether I’m in agreement with the comments, I too was like, this dude is going for his…

    It would look totally normal if it was all done in one post though. Yet, his chosen strategy might have been a better bet that people would actually read all that he has to say.

  10. Todd Wilkinson said

    Churches also benefit from infrastructure and law enforcement, as well as many other government services. There is no good excuse as to why churches should not have the benefit of tax exemption.

  11. drtoddwilkinson said

    My appologies, the last sentence of my short post should read “There is no good excuse as to why churches should have the benefit of tax exemption.”

  12. digglahhh said

    In general, the idea of using, or benefiting from the system of taxation is applied so myopically by a large share of the American public. It’s flat-out moronic.

    First of all, you don’t get to chose how your particular tax dollars are spent. It’s not like you get to check boxes for different initiatives your money may be used for, so get over it. Some benefit from some things more than others – you are partially paying for something that you don’t use, but others do. Others are also paying for things they may not use, but you do. It’s not that difficult of a concept…

    If you do not have a dog, you may not want to pay for the construction of a dog park. Well, think of it as an investment in not stepping in dog shit!

    Secondly, there are things we all benefit from. We all benefit from schools. Just because you choose to send your child to private school, that doesn’t mean you don’t benefit from the public school system. You are benefiting from the education of any public school educated person whose services you benefit from in any given day.

    Since education is tied to success, your whole neighborhood benefits from an educated population. Neighborhoods with better schools are safer, so you’re benefiting by not being mugged on a regular basis…

    I’ve actually heard the, “I send my kid to private school” argument from a some woman who runs her own business. “Umm, lady, you are hiring employees, right? And benefiting from their education, right?”

    It’s the same shit over and over. I ain’t using the highway system if I don’t have a car (because you never purchase products that were delivered by truck). It ain’t racism if it ain’t dressed in white sheets and pointed hoods. I ain’t fucking with the environment if I ain’t out there burning down rain forests.

    When you view the world, try looking more than a few feet in front of your own nose, people…

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