When Mike Huckabee came in a surprise second in the Ames, Iowa Straw Poll back in August, a flat-tax advocacy group called FairTax was instrumental in his showing. The group purchased tickets and provided bus transportation for Huckabee delegates.
At that time, I wrote that, while the FairTax organization's help might be very welcome to Huckabee's underfunded campaign during the primary, it would prove a liability during the general election should he actually win the nomination.
The FairTax movement aims to abandon the current U.S. tax structure in favor of a 23 percent national sales tax. Many experts have attacked this idea as fundamentally unfair and unworkable. The regressive nature a 23 percent tax on everything that you buy would hit poor and middle class Americans disproportionately hard. And, they say, replacing the revenue lost from the current tax structure would require a much higher rate than 23 percent.
Conservative economist Bruce Bartlett has even denounced FairTax as a "crackpot scheme."
Over the last couple of weeks, as Huckabee has surged from a second- or even third-tier candidate to a bona fide contender, I thought that he would begin to downplay or at least cease to emphasize his FairTax connections. I was wrong.
First, he mentioned it unprompted during last Wednesday's CNN/YouTube GOP debate. And now, Atlantic blogger Marc Ambinder notes that a FairTax organizer has actually joined the staff of Huckabee's campaign.
Last week, I wrote that Americans For the Fair Tax COO David Polyansky left the group.If Huckabee really is wedded to the FairTax campaign, as it appears he is, I believe this limits his electability in a significant way.
Turns out that he's now the chief operating officer of one Mike Huckabee For President, Inc.
"He was instrumental in bringing in the FairTaxers in Iowa and has a plan for getting them out to the caucus next month," a Huckabee spokesman says.
If Steve Forbes couldn't sell a flat tax scheme to the American people during the peace and prosperity of the Clinton years, Huckabee will not be able to sell it now. This is especially true due to the genesis and nature of FairTax, which does not hold up well at all under scrutiny. The plan is not practical as is proponents insist, and is not, as they suggest, a "grassroots movement."
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.In other words, as with the "grassroots movement" to abolish the estate tax, this is just a group of billionaires trying to keep more of their money in their families' hands.
[...]
Besides Mr. Linbeck, other big donors to the group include billionaire investors T. Boone Pickens and Robert C. McNair, major Republican contributors. As a tax-exempt nonprofit group, FairTax.org is nonpartisan. But Democrats haven't rallied to the cause. Mr. Hoagland says its representatives have met with candidates of both parties or their policy experts. They have also been on more than 500 talk-radio shows during the past year and have hosted promotional facilities at presidential debates.
The idea of scrapping our entire tax structure in favor of an untested national sales tax scheme, which benefits the wealthy to a disproportionate degree, is just too extreme to capture the imagination of a majority of voters in 2008.
2 comments:
You are correct, and have you noticed how the Fairtax organization is now running for the hills. Seems like their tax exempt status was endangered by the blatant support for a particular presidential candidate. And that's a no-no!!
Economic dislocations are the problem with an income tax system that is highly manipulable - subject to influence by lobbyists and continual revision by politicians, taxes business resources and payroll whose costs cannot be extracted from export prices and results in higher domestic price tags for consumers.
Clearly, the answer is in front of us - the FairTax; that's right, the same plan ardently advocated by Gov. Huckabee and demagogued by people like Bruce Bartlett.
The research makes a compelling case for every American wage-earner to get involved in voicing their support for the FairTax Act of 2007 (HR 25 / S 1025) that's been reintroduced into every session of Congress since 1999, and with growing numbers of co-sponsors.
Mr. Huckabee's advocacy of the FairTax is the single most important policy position in this election. Here's why:
The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars – $358 billion more than the taxes it replaces. [BHKPT]
The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan. [THBP]
Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [THBNP]
The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [ALM]
Consumption benefits [ALM]:
• Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.
• Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.
• The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.
• By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent.
Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [KR]
Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [JK]
Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. [THBPN]
Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [THPDB]
On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base. [TBJ]
The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent. [WM]
ALERT: Kotlikoff refutes Bruce Bartlett's shabby critiques of the FairTax.
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