Saturday, December 22, 2007

The Rev. Mike And The Not-So-Fair Tax

Even though this is the Christmas season, I can not let this day go by without another reminder a Rev. Mike Huckabee Republican presidential candidacy is a disaster for the GOP.
The Rev. Mike has jumped aboard the "Fair Tax" express and has become the only presidential advocate in either party and of all the candidates.
To the Rev. Mike's credit, at least he is talking some kind of tax reform. I wish that all of the Republican candidates would take some kind of stand on tax reform, not just cuts. However, the plan the Rev. Mike advocates is the worst of the reform plans and one aspect is a bald-face lie.
Lets examine what the "Fair tax" is.
The "Fair tax" is nothing more than a national sales tax. Most advocates say it would be roughly about 23%. And, there are some economists who say the real figure is about 30%. Either way, in a consumer-based economy, this is a disaster. Also, there is no real aspect as to whether it will be on every purchase made or selectively on some items. Details, details!
As a resident of California, the land where anything and everything is taxed whether it moves or not, I will look at this from my perspective.
The California sales tax starts at 7.25%. Counties can vote to make the sales tax higher. Here in Los Angeles county, the sales tax is 8.25%. Now, if I where to purchase, oh say a new car, let us assume the "Fair tax" is in effect. The car that I really like is say $25,000, a pretty average price. There are many other extras, but let us talk about the California sales tax, in Los Angeles county and if there was a 23% and 30% "Fair tax". Here is the break down.
My $25,000 car becomes $32,812.50c at an 8.25% California sales tax and a 23% "Fair tax". And keep in mind, these are the sales taxes only, not anything else. If there is the 30% "Fair tax, then the $25,000 car becomes a $34,562.50c car, before I decide on any thing else. And, that is "fair"?
And, what if the "Fair tax" is extended to food and grocery purchases? It would have to be. In other words, every purchase that you make will be subject to being taxed. Period.
It is the most regressive tax because it will make the consumer even more penny-pinching than many have to be now. And, there would be no avoiding it unless you purchase in what will be a growing underground economy.
A big claim of the Rev. Mike is that it would eliminate the Internal Revenue Service. Oh, really? It would do not such thing. Who does the Rev. Mike think will be in charge of compliance? The Holy Ghost? No, it may change the name, but it would be a different kind of IRS and it would be potentially more vindictive and vicious in going after legitimate businesses to insure compliance.
And, something that is not talked about, pro or con, is the fact that it would be the way that illegal aliens could say that they do pay taxes. And, with paying taxes, they would expect to be taxed with representation, right? Thus, the opening to give illegal aliens full amnesty. Think about that, "Fair taxers"!
No, there not a perfect way for the citizenry to pay taxes, but the "Fair tax" is the worst idea because it would do more economic harm than good. It would be a tax that is totally dependent on the whims of a free market economy, which sometimes include such things as inflation. I, for one, advocate the flat income tax, but that is for another posting.
Those that support the Rev. Mike need to take a closer look at the "Fair tax" and the good Reverend's tax record as governor of Arkansas. Remember, there is more to being a good Republican than one's record on social issues.

2 comments:

Richard J said...

Good points on the fair tax. It sounds like a great idea, until you start examining it. Also consider that the fair tax doesn't punish people enough for making money. There would likely be a push for an additional income tax on the "rich" to make things more fair.

Who would be considered rich? That's a question I don't want tax-and-spenders like Huck and Hillary to answer...

J&L said...

In reading the comments on the fair tax, it is easy to see that no one thus far have read the book, probably not gone to the web site nor even has a remote understanding of how the unseen tax structure operates in our unfair tax system we have hamstrung ourselves for years with. Please guys, do your homework before spilling your ignorance for all to see.