Tuesday, December 18, 2007

Assessing Huckabee's Fair Tax

As the Iowa caucuses move closer and Mike Huckabee rises in the polls, discussion intensifies over his Fair Tax proposal. Here is some of it.

In today's New York Sun, Amity Schlaes calls it a Scare Tax. She shows how the 23% rate is actually 30% on each purchase, whether a DVD or a house. With that sort of surcharge, she foresees a black market developing. Though the idea includes canning the IRS, we can expect some other form of tax police to enforce the Fair Tax. Go to, "Scare Tax, Not Fair Tax," December 17, 2007.

Rich Lowry is also critical. In "Huck's Draft Tax Plan: A Silly Political Ploy" (NRO December 4, 2007), like Amity Schlaes he does not think that the sixteenth amendment will be repealed. The tax plan is premised on that. Otherwise, instead of a national sales tax replacing the income tax, it would be simply added on top of it. Lowry cites the congressional Joint Committee on Taxation estimating the tax being as high as 57%. He responded to Ken Hoagland of FairTax.org with this.

FYI, the sixteenth amendment to the constitution (ratified 1913) reads like this: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Bruce Bartlett, in "Dianetics, The Tax Plan" (The New Republic, December 13, 2007) focuses on the connection between the Fair Tax backers and the Church of Scientology, a religion invented by science fiction writer, L. Ron Hubbard. He also has an assessment in the Wall Street Journal, "Fair Tax, Flawed Tax" (August 26, 2007), with only a passing reference to Scientology.

The editors at the National Review also give it the thumbs down. "Republicans cannot win a national election without the tax issue. If they ran on the national sales tax, Republicans would be taking one of their natural strengths and making it into a liability." ("Fair Tax, Foul Politics," NRO August 16, 2007)

David Tuerck of the Beacon Hill Instititute and of the Suffolk University economics department backs the Fair Tax , but I found his brief defense in the New York Sun ("On Taxes, Huckabee Leads") to be without much substance. (You get one chance, buddy.)


Shane Vander Hart said...

I'm curious if you went to fairtax.org or looked at writings by economists that have endorsed the fair tax?

When you consider the prebate, and not paying federal income tax, we come out way ahead. I like the plan, but I would be ok with a flat tax as well.

Shane Vander Hart

David C. Innes said...

Welcome to the show! It's pleasure to hear from an Iowa Vander Hart. I know one in Independence, and a former one in Grafton MA. The prebate concept immediately struck me with horror. Think of tens of millions of people looking forward to another big government handout, even thought it is their own money. People will receive the "prebate" as free money and then regard the tax with resentment, completely separating the two in their minds. And do you not think that the government will use this prebate to manipulate us and for social engineering purposes? Furthermore, who qualifies for this prebate. People who earn below a certain income level. But "income" is complex. You will need something like a tax return and the IRS to make that determination. The fundamental consideration is not whether you or I pay less money or more. The chief question pertains to liberty. Does this plan expand the government and deepen our dependence on it, or does it free people in the use of their faculties and means and strengthen them in their capacity for self-government? Does it equip us for responsible maturity or reduce us further to infantile dependency? That is the question Iowans should be asking, as any lover of liberty would. It is also a profoundly Christian question. Perhaps more on that in a post. Given these principial considerations, I'm really not concerned what this and that economist might say.

Shane Vander Hart said...

I see your point with the prebate, but one can also look at the current tax system and how that affects our liberty as well. This way the government does not have to know how much I make.

I would think the latter - that it would strengthen them in their capacity for self government and equip us for responsible maturity. Though I'm sure it will have a negative effect on some. Good questions though.