Huckabee's tax plan appeals, but is it fair?

[Gunny]

By Tom Redburn
The New York Times
updated 10:21 p.m. CT, Sat., Jan. 5, 2008

Long before Mike Huckabee, the former Republican governor of Arkansas, began campaigning for president, advocates for replacing the entire federal tax system with a national sales tax were campaigning to convert him to their cause.

They succeeded. “Am I running for president to shut down the federal government? Not exactly,” Mr. Huckabee says on his Web site. “But I am running to eliminate all federal income and payroll taxes. And I do mean all — personal federal, corporate federal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment.”

“Instead,” adds Mr. Huckabee, who demonstrated his appeal to voters with his victory on Thursday in the Iowa caucuses, “we will have the FairTax, a simple tax based on wealth.”

Under the plan, Americans would pay only one federal tax, which would be applied to just about everything they buy: not just the goods people buy at stores on which most states assess a sales tax, but nearly all services, including health care and insurance, the purchase of a new home or rental of an apartment, even things like a teenager mowing a lawn or baby-sitting for a neighbor.

But the FairTax, as its many fervent backers call it, is not as simple as its supporters describe. And, to most tax experts who have looked at the proposal, it is anything but fair. For one, its burden would fall disproportionately on middle-income people.

more ... http://www.msnbc.msn.com/id/22520696/

So when all the smoke and mirrors are removed, it's just another tax plan that screws the middle class. What a deal. We ALREADY have that.

 

[midcan5]

He was asked wouldn't that just create an enormous Black Market? I think the question confused him, but I kinda like him for his charm and straight talk even though I mostly disagree.

 

[Paulie]

So when all the smoke and mirrors are removed, it's just another tax plan that screws the middle class. What a deal. We ALREADY have that.

The only REAL fair tax is NO tax. All we need to do is cut the IRS, and scale back spending to levels 10 years ago. Even THEN, the spending was still too high, but our economy could still have been sustained even without the extra 1 trillion in income tax revenue.

That, plus stop the inflation problem which is just adding another tax, and this country will be on it's way back to economic prosperity.

We can either do that, or wage never ending wars world wide so we FEEL like we are more safe, until we're finally bankrupt.

Here's a good question, though...Let's say the federal income tax was abolished...would you still give a percentage of your income willingly, to help fund the wars that make you feel more secure?

 

[Annie]

So when all the smoke and mirrors are removed, it's just another tax plan that screws the middle class. What a deal. We ALREADY have that.

agreed.

http://corner.nationalreview.com/post/?q=YjEzZWI5ZGEwY2FiZGIxMzFiYTRkNGY5ZDVkNmU0NTk=

The Fair Tax: A Question [Ramesh Ponnuru]

I was talking about it with a colleague the other day, and it reminded me that I meant to post this letter, which I got after suggesting that the Fair Tax would hurt the middle class.

What you don't see is that the income tax raises the price of everything. Every item you buy is overpriced because the seller has to be able to pay the income tax on his payment. So it's unfair to say that when the Fair Tax is introduced, prices won't go up 23 or 30 percent. They won't go up at all. The middle class will be better off.​

I've encountered this argument before. The notion is that getting rid of income taxes will cause prices to drop to offset the impact of the new sales tax. My question in response: If this theory of how the economy works is valid, then shouldn't wages drop 23 percent, too?

01/05 11:37 PM

 

[watermark]

The only REAL fair tax is NO tax. All we need to do is cut the IRS, and scale back spending to levels 10 years ago. Even THEN, the spending was still too high, but our economy could still have been sustained even without the extra 1 trillion in income tax revenue.

That, plus stop the inflation problem which is just adding another tax, and this country will be on it's way back to economic prosperity.

We can either do that, or wage never ending wars world wide so we FEEL like we are more safe, until we're finally bankrupt.

Here's a good question, though...Let's say the federal income tax was abolished...would you still give a percentage of your income willingly, to help fund the wars that make you feel more secure?

OK.

Tell me. What are you going to cut to take a trillion dollars off the budget.

 

[indago]

I posted this on another WebSite a couple of years ago:
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It says, at the Fair Tax Website: "The current Federal income tax system is broken."

It's not broken. Most folks don't really know what the federal "income tax" is. It has been declared, by the Supreme Court of the United States, that the federal income tax is an excise tax. Mr. Justice William R. Day, delivering the opinion of the United States Supreme Court, explained what an excise tax is: "Excises are "taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges." Cooley, Const. Lim. 7th ed. 680 ...the requirement to pay such taxes involves the exercise of privileges,..." — Stella P. Flint v Stone Tracy Company 220 US 107, 151, 152 (1911)

Chief Justice Edward D. White, delivering the opinion of the Supreme Court of the United States, and quoting from a previous case, stated: "In the matter of taxation, the Constitution recognizes the two great classes of direct and indirect taxes, and lays down two rules by which their imposition must be governed, namely: The rule of apportionment as to direct taxes, and the rule of uniformity as to duties, imposts and excises." — Pollock v Farmers' Loan & Trust Company 157 US 429, 557 (1895) Brushaber v Union Pacific Railroad Co. 240 US 1, 13 (1916)

The Congress was never granted the power to lay a direct tax upon the inhabitants of the States. If the inhabitants of the States realized the Constitutional system of taxation, and forced the government to follow it, government would have to go to the States to get the money for their projects under the direct tax system. And this is the way it should be, since it was the States that created the federal government in the first place. Also, the States granted government the power to tax imported goods. Since the free trade agreements, this revenue has been reduced considerably, and the burden is placed upon the inhabitants of the States.

So, you see, it's not the federal "income tax" that is broken, it is the people who are broken.
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[indago]

"When you think about returning this country to the Constitution, we have drifted from the Constitution in the past 100 years. The Congress ignores it, the courts ignore it, the executive branch ignores it. But there's a large number of dedicated Americans who believe that America was a great country when we obeyed the Constitution, that liberty was more important than largess and special-interest government.

This is a major undertaking, to take on the military industrial complex, the medical industrial complex and all the special interests by individuals sending in money. So I think we've done a tremendous job, but we also know what we're doing.

We're not tinkering with the system. We aren't talking about mismanaging the war in Iraq. We're talking about the change in foreign policy that was established by Woodrow Wilson, our pretense that we're able to make the world safe for democracy and forever spend ourselves into oblivion.

I mean, this is a major undertaking, but the revolution toward this goal has actually begun. And how far we go in the campaign, we don't know. But I'll tell you what, the American people, and there's this large segment sending in the money to our campaign that are determined that this revolutionary spirit will continue." — Congressman Ron Paul — CNN — LATE EDITION — 6 January 2008

 

[BaronVonBigmeat]

I think this would lead to an economy dominated by corporate behemoths, and tiny black-market businesses (think: people on craigslist selling out of their homes). The black market part is obvious, but the trend towards corporate giganticism is less so.

Let's say you are a manufacturer of widgets. You get your springs from china, your forgings from russia, your gaskets from Indonesia. Currently, you may not be able to compete with the corporate behemoths on price, but you are a nimble company able to outmanuver them on quality, flexibile custom designs for niche applications, customer service, and so forth.

Under this plan though, you would pay 25% sales tax on each of these transactions. The corporate behemoth you compete against manufactures everything in-house: springs, forgings, and gaskets. The tax they pay is zero.

So basically, there would be a tidal wave of consolidations as companies try to dodge the sales tax. Then the tax would go up to compensate, leading to still more consolidations, and a handfull of fat lazy uncompetitive conglomerates dominating the economy. I really really don't like an income tax, particularly as it exists currently, but it doesn't distort the economy the way this would.

OK.

Tell me. What are you going to cut to take a trillion dollars off the budget.

Well, as he said, go back to where we were just 10 years ago, which was already bloated. You could concentrate on some areas more than others of course. Personally, I would axe the depts. of commerce, energy, education, housing, homeland security, and of course the war and the overseas american empire.

 

[Shogun]

b-b-b-but the fair tax people LOVE Huck now!

 

[M14 Shooter]

OK.
Tell me. What are you going to cut to take a trillion dollars off the budget.

Entitlement spending.

 

[Steerpike]

Let's say you are a manufacturer of widgets. You get your springs from china, your forgings from russia, your gaskets from Indonesia. Currently, you may not be able to compete with the corporate behemoths on price, but you are a nimble company able to outmanuver them on quality, flexibile custom designs for niche applications, customer service, and so forth.

Under this plan though, you would pay 25% sales tax on each of these transactions. The corporate behemoth you compete against manufactures everything in-house: springs, forgings, and gaskets. The tax they pay is zero.

That's simply not the case. Business to business purchases for the production of goods and services are not subject to the tax.

My mind isn't made up on the Fair Tax idea, but the sheer number of misperceptions about it perpetuated in the media and online are staggering.

 

[Paulie]

Entitlement spending.

Yeah, that would help, but it wouldn't reduce 1 trillion dollars in spending.

You can't be for pre-emptive wars, and international military escapades and still say that we ought to cut some spending and taxes. There's too much money being spent on our foreign policy as it is. Aren't you tired of China financing our defense?

There's no reason the federal government should be involved in the school system, so cut the Dept. of Education. We dont need the Dept. of Homeland security just because we got hoodwinked once. We never needed it, and still don't. It's a HUGE beaurocracy that really doesn't accomplish anything more than each organization within it could accomplish on it's OWN, if said org's would actually TRY.

Dept. of Energy would be nice too. I just don't understand how this country came to think that we need the Fed's to wipe our asses for us from cradle to grave. If we weren't so fucking dumbed down the last 100 years, we'd be more able as a society to govern ourselves at the local and state levels. Instead, we're more concerned with our own entertainment, than fixing our society. We'd rather just let the "government" take care of us while we consume. They know what's best for us afterall, right?

 

[M14 Shooter]

Yeah, that would help, but it wouldn't reduce 1 trillion dollars in spending.

Entitlement spending tales up ~60% of yearly federal spendng, and none of it depends on the amount of revenue available. FY2006, it totalled $1.553T

 

[Paulie]

Entitlement spending tales up ~60% of yearly federal spendng, and none of it depends on the amount of revenue available. FY2006, it totalled $1.553T

Well, you can't cut those until you get rid of the Dept. of Education.

That was always a talking point for Republicans but it was never acted on. Do you support such a thing, or do you just like to say "cut entitlements"?

 

[M14 Shooter]

Well, you can't cut those until you get rid of the Dept. of Education.

Sure you can. There absolutely no reason why you have to cut the DoEd first.

And yes, I agree that the DoEd should be cut.

 

[Bern80]

That's simply not the case. Business to business purchases for the production of goods and services are not subject to the tax.

My mind isn't made up on the Fair Tax idea, but the sheer number of misperceptions about it perpetuated in the media and online are staggering.

BVBM brought up some good points I hadn't thought about. I thought the whole idea behind the fair tax was that it was suppossed to be a simple blanket system. Now before it's even implemented we're makeing exceptions to the rule? That's why we're the frickin tax mess we're in now.

 

[Steerpike]

I don't think that's a good argument Bern. It isn't an exception to the rule. It's how the system was designed to begin with.

 

[Bern80]

I don't think that's a good argument Bern. It isn't an exception to the rule. It's how the system was designed to begin with.

Can you imagine the wave of loopholes though? Only individuals are required to pay income tax? I'm all for small government, but a pretty big chunk of tax revenue comes from businesses. Are businesses suppossed to be exempt from all taxes?

 

[Steerpike]

It isn't only individuals. It just doesn't apply to goods bought for the production of goods (which are later then sold and subject to the tax). Its no different than wholesale items not being subject to sales tax.

 

[Bern80]

It isn't only individuals. It just doesn't apply to goods bought for the production of goods (which are later then sold and subject to the tax). Its no different than wholesale items not being subject to sales tax.

I need to do some more reading into the particulars I guess. Maybe a better way to ask it is under said system, what would businesses pay taxes on? I think you could make an easy argument that everything a business purchases goes toward the end product/service in one form or other.