Wednesday, November 14, 2007

Mike Huckabees support for Fair Tax boosts his campaign

One of the reasons for the upsurge in support for Mike Huckabee is his advocacy of the Fair Tax Plan. The Fair Tax Plan has spawned a huge and mushrooming grassroots movement. Increasingly supporters are swinging in behind the Huckabee campaign.

What Is The FairTax Plan?

The FairTax is a bill before the U.S. Congress—called H.R. 25 in the House and S. 25 in the Senate—that replaces the federal income tax with a national retail sales tax of 23% on new goods and services for personal use, eliminating the following taxes:

  • Personal Income Tax (Federal Tax)
  • Social Security (FICA) Tax
  • Medicare Tax
  • Estate Tax
  • Gift Tax
  • Capital Gains Tax
  • The Alternative Minimum Tax
  • Self-Employment Tax
  • Corporate Tax..............................

Taken from:

FairTax Made Simple

In summary:
The existing tax code would be eliminated. In order to make up for that revenue, a national sales tax would be payable on all goods sold in the United States. A "prebate" would return all of the money you paid in for taxes up to the poverty line. The taxation code would be simplified the paperwork would be reduced to just a few pages and an army of taxation consultants would disappear. The IRS (Internal Revenue Service) would be abolished. Retailers would send in the tax money they collect, and then you would be sent a prebate at the end of the year.


Anonymous said...

Mike Huckabee is an adroit public speaker. He communicates his message in life-like, cogent terms, with compelling examples like the story he told (at the Ames Straw Poll) of what his then-11-yo daughter entered into the "Comments" section of a Visitors Book after visiting the Yad Vashem holocaust museum: “Why didn't somebody do something?” Very effective.

Huckabee is all about calling his listeners to "do something," to awaken them to their own empowerment, and summon them to action in order that "Main Street," and not "Wall Street," will prevail in guarding the values and beliefs upon which the Republic was founded.

Huckabee puts his listeners at ease, and reassures them, articulating clear concepts in a natural, easy style (no doubt something well-cultivated as a pastor). He’s not as “mechanically-scripted” as Romney, nor angry or demanding, like a Ron Paul, and his large brown eyes, peering through a humble demeanor, draw a striking contrast to a unconvincing, tired-looking Thompson. One can easily imagine sitting comfortably with Mike over a cup of coffee at the Main Street Cafe.

Most importantly, perhaps, Huckabee convinces many that he is ONE with the FairTax grassroots movement. While many - like Romney, and others, who are invested in the current income tax system - seek to demagog the well-researched FairTax plan, its acceptance in the professional / academic community continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos” drew a sharper contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity

A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee's ardent advocacy:

For individuals:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy "at retail" - not "used"
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of "pre-FairTaxed" retail prices by 20%-30%
• Adding back 29.9% FairTax maintains current price levels
• FairTax would constitute 23% portion of new prices
• Every household receives a monthly check, or "pre-bate"
• "Prebate" is "advance tax payback" for monthly consumption to poverty level
• FairTax's "prebate" ensures progressivity, poverty protection
Finally, citizens are knowledgeable of what their tax IS
• Elimination of "parasitic" Income Tax industry
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates

For businesses:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Marketplace distortions eliminated for fair competition
• US exports increase their share of foreign markets

For the country:
• 7% - 13% economic growth projected in the first year of the FairTax
Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow

Passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy: Main Street will have to demand that their legislators deliver the bill.

(Permission is granted to reproduce, in whole or part. - Ian)

John Barry said...

Thanks Ian for such a comprehensive and informative post re Mike Huckabee. Hopefully Mike gets sufficient financial support. He has the charisma and policies to make a superb President.

Mark said...

Actually, Fairtax does have some great points -- if it worked. How wonderful it would be to not have and IRS!

But what if Fairtax didn't work? What if, for example, half of the money it says it can collect, is impossile to collect?

Would then the fairtax have to be 46%?

Do you know that fairtax taxes the federal government, to pay for the federal government?

Neal Boortz wrote "The federal government itself will become a major taxpayer" (Page 148 in his Fair Tax Book,)

Tax the federal government to pay for the federal government. ??

Isn't that a bit like me, pretending I can pay myself 10,000 to cut my own grass? I can write the check, I can even deposit the check. And I can do this every day. But at the end of the month, I don't have 300,000 dollars.

Fair tax advoates want to claim the government "will become a major taxpayer" -- but it can't possibly be so.

Fairtax needs to show -- at least on paper -- that they can collect 2.3 trillion in taxes. And a good chuck of that 2.3 trillion has to be the tax on the federal government itself.

It can not happen that way.

So Fair tax would have to be higher than 23% to remain revenue neutral, just for this one fallacy.

Are there any other fallacies?

Fairtax can only work IF it gets people to pay 460 billion in taxes -- on their health care costs. People who get heart bypass surgery, cancer surgery -- people who are in nursing home. Famlies fighting leukemia and other expensive illnesses will get incredily hard by the "fairtax".

One family, who has a child with leukemia -- could get a 40,000 SALES tax.

One nursing home patient, who gets by on her social securty -- would get a sales tax of 25,000 a year -- plus more tax for any other medical costs.

One cancer patient, with surgery, chemo, and radiation, could have 50,000 in "sales taxes".

So you will have the absurdity of a person who is actually taxed MORE sales tax than they have income.

Therefore, one way or another -- these patients will get exemptions, either defacto exemptions -- by not paying it. Or dejure exemptions - by getting an official exemption.

EIther way, the Fairtax can't possibly collect 460 billion-dollars from these folks.

Most likely, the outcry from even attempting to tax an 80 year old stroke victim in a nursing home, would result in Congress exempting all health care cost from the "fair" tax.

Fair tax has to get 150 billion in taxes -- from people as a tax on their rent.

Fair tax has to get 150 billion by taxing people who buy new cars --- and pretend that new car sales won't drop because of the high taxes.

Fair tax has to pretend it can collet 200 billion by taxing people who buy new houses -- and pretend the huge tax on new homes wont diminish sales.

Group after group will scream bloody murder -- and get exemptions.

So with all these inevitable exemptions -- Fairtax rate would have to be 60-80%.