Why do simple concepts escape Mike Huckabee?
The Republican presidential candidate often says that one of the selling points of his plan to replace the federal income tax with a 23 percent sales tax is that it would force those who deal in cash to pay taxes.
“You end the underground economy,” Huckabee said at a recent luncheon for the Greater Concord Chamber of Commerce. “Illegals, prostitutes, pimps, gamblers, drug dealers–everybody pays taxes.”
The only problem with this is, as the Wall Street Journal points out , that this would allow people to buy illegal items pretax. Meaning that not only would the fair tax NOT eliminate the underground economy, it would actually INCREASE the underground economy. Except now instead of the underground economy being just drugs,sex, and other illegal products, the underground economy would begin to include average everyday products.
For those of you who aren’t into economics think of it this way. Right now when you get your paycheck taxes have already been taken out. You’ve paid your price to society. Under the fair tax no money is taken out of your paycheck. Instead you pay your taxes when you purchase items at the store. But being the smart S.O.B that you are, you realize that if you bought things somewhere other than the story then you would NEVER PAY TAXES. A quick realization that when demand increases so does supply and BAM. Instant blackmarket. The sad thing is that it wouldn’t even be hard. Ever heard of Costco or Sam’s Club?
UPDATE: From the Comments Section Matt points out this part of a recent New York Times interview with Governor Huckabee :
Huckabee does not have an impressive grasp of its details. When I suggested, for example, that consumers might evade the tax simply by acquiring goods and services for cash on the black market, he seemed genuinely surprised.
Read the entire Interview Here.