FairTax

Following Mike Huckabee's surprise second-place finish in the Iowa Straw Poll, I noted the influence that a group called FairTax.org had in the contest. Huckabee is the only presidential aspirant so far to have endorsed the FairTax agenda of abolishing the federal income tax, and the IRS along with it, and replacing it with a 23 percent national retail sales tax. I argued that despite the results in Ames, Iowa, identifying himself with such a radical agenda makes Huckabee a one-issue sideshow, rather than a serious candidate.

A fundamental, all-at-once overhaul of this nation's tax structure is a non-starter in the current political environment. The tax code, while always of interest to one degree or another, is simply not where the passions of Americans lie right now. At this moment in history, the American imagination is consumed with one issue: national security.

Maybe in a world where people are not literally afraid of being blown up today, tomorrow, or the next day, there would be enough room in the national consciousness for a debate about the tax structure. But if Steve Forbes couldn't make Americans feel invested in the idea of a flat tax in 1996, during the peace and prosperity of the Clinton years, Mike Huckabee cannot sell it in 2008. Frankly, he would do just as well to base his campaign on a return to the gold standard.

Even if the FairTax movement constitutes a significant portion of the GOP primary electorate, which I do not grant by any means, the general election environment is not fertile ground for any such discussion.

My August 13 post was instigated by a comment to an earlier blog entry which boasted of FairTax.org's role in helping Huckabee to secure his second-place showing. The commenter described FairTax as a "grassroots movement."

But as the Wall Street Journal reports today, FairTax is about as "grassroots" as the "movement" to abolish the federal estate tax - which is to say, not in the slightest. Like the anti-estate-tax effort, FairTax is a project birthed and nurtured by a small group of superwealthy Americans whose goal, not surprisingly, is to do away with this country's progressive tax structure and replace it with a regressive tax which leaves more of their income in their own hands.

For more than a decade, a group started among friends at Houston's River Oaks Country Club and led by construction magnate Leo Linbeck Jr. has pushed to scrap the federal income tax for a national sales tax.

[...]

To ensure the income tax never returns, the group proposes repealing the 16th Amendment that created it a century ago.

In its place would be a 23% national sales tax on goods and services though other analysts say the rate would have to be higher. Where the income tax is intended to be progressive, taking more from those with greater wealth, a consumption tax would be regressive, hitting lower-income people proportionally harder because they spend all or most income on necessities while richer people can save and invest much of theirs.

[...]

Besides Mr. Linbeck, other big donors to the group include billionaire investors T. Boone Pickens and Robert C. McNair, major Republican contributors.

If an agenda so contrary to the interests of working American families, conceived and driven by billionaires, can be described as a "grassroots movement," then that expression has no meaning. This project is no more "grassroots" than the global warming denial groups that are founded and funded by ExxonMobil.

Many of the press reports about Huckabee's second-place finish in Ames focused on the David-and-Goliath nature of his showing, versus Mitt Rommey having essentially purchased his win. Romney spent, by some estimates, $5 million on community organizing, transportation, hospitality, and tickets to the event for people who would vote for him. By contrast, the intitial press reports focused on the relative pittance, about $150 thousand, that Huckabee spent.

But as the Journal reports, just because Huckabee didn't spend a lot of his own cash, it doesn't mean money was not a factor in his second-place showing.

The underdog's finish in the Iowa straw poll behind winner Mr. Romney has raised his profile among party activists and donors -- especially since he seemed to pull it off without paying for buses, barbecue and tickets for his voters to the extent Messrs. Romney and Brownback did. But FairTax.org paid for 10 buses and 550 of the $35 tickets to vote in the straw poll -- and let supporters know that Mr. Huckabee was their ally.

Huckabee's second-place in the Iowa straw poll appears to be no different than Romney's first-place showing, except that Romney got ahead on the depth of his own pockets. Huckabee, without a personal fortune on which to draw, worked the interest group angle. He let a small, passionate group of activists know that he was on their side, and they turned out in force to support him, backed by the relatively limitless resources of a group of billionaires with an agenda.

The FairTax agenda, while potent in the microcosm of the Iowa Straw Poll, is too extreme to gain wide acceptance in either the broader GOP primary contest or the general election. If FairTax had as much of an influence on Huckabee's showing in Ames as it appears, it is unlikely that he or they will find much opportunity to capitalize on the results.