Mike Huckabee: further advancing the stereotype that people from the South can’t count

I like Mike Huckabee. He’s a nice guy. Not president worthy whatsoever though. Example number 1: The “Fair Tax”. Everyone should read Dan Bartlett’s famous Wall Street Journal article which explains why the (Un)Fair Tax is complete bullshit:

This is only the beginning of the deceptions in the FairTax. Under the Linder-Chambliss bill, the federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher.

 

This legerdemain is done solely to make revenues under the FairTax seem larger than they really are, so that its supporters can claim that it is revenue-neutral. But for the government to afford to purchase the same goods and services, it would have to raise spending by the amount of the tax it pays to itself. The FairTax rate, however, is not high enough to finance the higher spending it imposes. Therefore the proposal only works if federal purchases are cut by 30%, close to $300 billion–the increased cost imposed by the FairTax.

Similarly, state and local governments would have to pay the FairTax on most of their purchases. This means that it is partly financed by higher state and local taxes. It’s also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales.

State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. No state comes close to taxing services so broadly.

A 2000 estimate by Congress’s Joint Committee on Taxation found the tax-inclusive rate would have to be 36% and the tax-exclusive rate would be 57%. In 2005, the U.S. Treasury Department calculated that a tax-exclusive rate of 34% would be needed just to replace the income tax, leaving the payroll tax in place. But if evasion were high then the rate might have to rise to 49%. If the FairTax were only able to cover the limited sales tax base of a typical state, then a rate of 64% would be required (89% with high evasion).

I think the article pretty much speaks for itself. I seriously suggest you read the whole thing. When the Wall Street Journal editorial page is calling a regressive tax which would, allegedly, get rid of the IRS bullshit you know the idea is bunk.

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2 thoughts on “Mike Huckabee: further advancing the stereotype that people from the South can’t count

  1. Over 20 million dollars of research was put into developing the Fairtax by academia at such institutions as MITand Harvard. BRUCE Bartlett’s (yes BRUCE is his name not DAN, there goes your credibility) column was put to rest months ago for its inaccuracies and yet here you are trying to resurrect it.

    Instead of quoting some mythical person’s ranting, study HR25 with and open mind, if you’re capable, and leave the obscenities behind, they lessen your “argument.”

  2. I seriously think that you don’t know what you’re talking about, as presaged by your erroneous notation of the author’s name – it’s Bruce, (former Reagan admin. economic adviser), not Dan (the one who made fun of Huckabee’s name one moment, then talked about Huckabee’s possible rise, the next – another “club Republican” who’s too immersed in the status quo to understand the urgent need to transition to the FairTax consumption tax. Here’s what I wrote to BB at The New Republic online:

    “Can you say, ‘hit piece,’ Mr. Bartlett?” According to Bruce Bartlett’s WSJ article:

    BB (hereinafter meaning Bruce Bartlett, with apologies to a true great, BB King): “It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service”

    Me: This seems like a scientific approach to the review of FairTax; Scientologists are kooks, the FairTax must be a kooky idea.

    BB: “In reality, the FairTax rate is not 23%. Messrs. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. (This is known as the tax-inclusive rate.)”

    Me: Hmmm, I wonder what income tax rates begin to look like, if calculated, “externally” – as a percentage of what’s left of taxpayers’ income? Care to tell us THAT, BB?

    BB: “This is only the beginning of the deceptions in the FairTax.”

    Me: Oh, like their website, FairTax.org, hasn’t already thoroughly debunked most of these “straw men” that have been floated (all, that is, except this newest Scientology angle – and I doubt that they’ll spend much time on that one – preposterous).

    BB: “the federal government would have to pay taxes to itself”

    Me: The idea here is to prevent government from competing with the private sector. But why even mention this, when later you say, “but its tax collection will also be … higher.”

    BB: “The FairTax rate, however, is not high enough to finance the higher spending it imposes.”

    Me: Didn’t do your research: “…The Beacon Hill Institute at Suffolk University and Laurence Kotlikoff, Professor of Economics at Boston University, have teamed up to provide a sound methodology for estimating the FairTax base and computing the FairTax rate. Their paper demonstrates that the 23 percent rate specified by the Fair Tax Act (HR 25) is eminently feasible and suggests what led Gale and the President’s Advisory Panel on Federal Tax Reform6 to reach the opposite – and incorrect – conclusion. (Paper available at http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf .)” See also: http://snipurl.com/taxpanelrebutted + http://snipurl.com/ftgalerebuttal

    BB: (Regarding the blanket 30% increase attributed in multiple places in your article, “tanks,” “newly-constructed homes,” the added amount that would be paid by “state and local governments.”)

    Me: Nowhere do you point out the price efficiencies that would be gained under FairTax. Kotlikoff and associates found that these ranged from 20% – 30%, and averaged them to 22% across the economy. Thus, we’re ALREADY PAYING an embedded 22% in our retail prices. If you believe in market competition (do you?), then you must allow for the elimination of these embedded taxes – which means relative price stability (due to lower costs of doing business – for every business entity contributing at every stage of production). Thus, representing an add-on of 30% is blatant demogoguery.

    BB: “Aside from the incredible complexity and intrusiveness of tracking every American’s monthly income — and creating a de facto national welfare program — the FairTax does not include the cost of this rebate in the tax rate.”

    Me: The only purpose for tracking income, is for social security payouts. That “incredible complexity and intrusiveness of tracing every American’s … income” – last time I checked – is what the current income tax system, and theIRS, are all about. FairTax bases “prebates” on family size. Prebates are sent to ALL American families to untax the necessities, thus eliminating wasteful bureaucracy,and corruption-producing tax code rules and regulations.

    BB: “the FairTax does not include the cost of this rebate in the tax rate.”

    Me: Somebody told ya wrong – like Prego spaghetti sauce, “It’s in deah.” That extra 5% you then introduce is the amount that Kotlikoff DEDUCTS from the 23% to derive the rate sans prebate.

    BB: “Rejecting all the tricks of FairTax supporters…”

    Me: Hey, you calling me a trickster?

    BB: “…professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%.”

    Me: Then, why hasn’t William Gale, and the president’s Tax Panel, delivered their economic methodology (substantiating higher quoted tax rates) to Kotlikoff or FairTax.org? Hmmm?

    BB: “Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits.”

    Me: Huh? What’s to deceive? Individuals do not file income tax returns. Businesses don’t either; businesses will file basically an expanded state sales tax return. Individuals would keep financial records, but not for the purposes of filing a return. And working families would not be subject to audit unless they ran a business.

    BB: “the idea of making April 15 just another day, this seems to be a major selling point for their proposal”

    Me: Duh. Like that’s bad to get out from under the thumb of an intrusive government that has been proven arbitrary in the manner in which it administers the current tax code?

    BB: “In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it.”

    Me: Sorry, BB. Your commentary is too bad to be credible. Next time, at least familiarize yourself with the research and rebuttals to the demogoguery that is sure to assail it.

    Readers should expect these assaults on FairTax to increase as this eminently workable – in fact, URGENTLY REQUIRED ( http://snipurl.com/meltdowninprogress ) – tax plan gains adherents.

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