Monday, December 24, 2007

Huckabee supports 23% national sales tax

The more I read about Republican presidential hopeless Mike Huckabee, the more I can't stand the guy.

The former Arkansas governor is often portrayed as a "Pat Buchanan lite", featuring a blend of fiscal populism and cultural conservatism (though more nuanced than Buchanan's bigoted tirades). But as long as it's under the modern Republican banner, this alleged economic populism always seems to fall to rack and ruin under closer scrutiny.

Huckabee's supposed populism thumps false. Fuckapee is a cultist of the so-called FairTax, a perennial cause celebre of the Far Right that would establish a confiscatory national sales tax to replace other taxes - not just personal income taxes but also corporate, capital gains, and estate taxes. Detect a pattern here? Capital gains and estate taxes are generally paid by the wealthy, and those would be abolished. Corporate taxes are paid by major corporations, and those too would be history. By contrast, the proposed sales tax on all goods and services - which has no exceptions even for food - would hit the poor and working class harder.

So much for Huckabee being the great working-class champion!

The amount of the sales tax that would be charged under the UnfairTax plan has varied over the years, but has generally inched upward. Fuckapee's version would establish a 23% sales tax. Yes, 23%! But it'll end up being even worse: William Gale of the Brookings Institution says that for a national sales tax to generate as much revenue as the current tax structure, the sales tax may run as high as 50%.

If you thought (whoosh...whoosh) inflation was bad now under idiot Bush, wait until you have to spend another 50% every time you go to Kroger. On the other hand, Gale says the tax will end up being so high that stores and consumers will just evade it anyway - so the government won't even bring in any revenue from it!

Either way, that would pretty much do in the economy for good: If people obey the tax, they have far less buying power. If they don't, the government goes further into debt and forces everyone to pay for it later.

But that doesn't deter the FairTax movement that uses talk radio and right-wing websites to draw its small but loudmouthed group of followers to public rallies and Internet forums.

I do my own taxes. There have been easier tasks, but I ended up not paying nearly as much as I would under the UnfairTax. In some years, I actually got a refund. I think this underlines the thrust of the FairTax cult: The Movementarians who support the UnfairTax want to see elimination of the tax brackets that exist under a progressive taxation system. This shows that the UnfairTax and the Huckabee campaign aren't supported by the working class but by the phony populists who are economically secure but self-righteously scream about being "robbed" by the government (even though they never have to worry about becoming poor). The proposed sales tax isn't even designed to bring in more revenue. It's just designed to make the poor pay more. The modern FairTax movement itself was begun by an organization called Americans for Fair Taxation, which was founded in 1995 (when else?) by a group of millionaires from Texas.

The FairTax is regressive because if a person who earns $10,000 a year buys an item, they pay a much greater percentage of their earnings on the tax than someone who makes $10,000,000 a year buying the same item. If that isn't soaking the poor, what is? I don't see how it can possibly be any clearer.

If Huckabee's UnfairTax passes, individuals and the smallest businesses would in effect be tax collectors who would form the personal IRS benefiting each wealthy person or corporation.

How does Mike Huckabee expect to win support from the average American who has to work hard for a living? Right now he doesn't need to, because he's running in the Republican primary. In fact he has to work harder at supporting it. Most of the other Republican contenders support a hefty national sales tax too (despite their lies about being the party of lower taxes) - but only Huckabee makes it central to his campaign.

However, even the usually conservative economist Bruce Bartlett said of the FairTax, "Anyone who supports it should not be taken seriously." That the Republican faithful take Fuckapee seriously is proof of how far outside the mainstream his party has become.

Outside the GOP fold, nobody believes the FairTax cult's mindless blatherings. That frustrates them, and it makes them crazier. But it's gotten old. A 3-year-old who throws a tantrum eventually gives up when they realize they're not getting their way. The UnfairTax crybabies are different in that they haven't given up yet. Don't give in to this zillionaire cult that tries to brainwash people into thinking the poor have it so easy.

(Source: http://www.latimes.com/la-na-salestax24dec24,0,5286232.story?coll=la-home-center)

26 comments:

  1. Robbing the poor to give to the rich...

    How so not-very-Christian of you, Mike...

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  2. Also I don't see how they can display this as a benefit to the working class??

    Honestly I don't see how the fairtax types can claim the progressive income tax is unfair. If it makes the rich pay a greater percentage, then it works...if it makes the poor pay a greater percentage, it doesn't. Simple enough.

    They can't possibly claim the fairtax isn't regressive. For fucks sake, it's the millionaire group in Texas that's pushing it!!

    The only way the common man and woman will support this is if they think they should surrender their autonomy to the rich and have them decide what's best for them. "Hey, this CEO makes more money than me, I think we should trust him as a lifelong 'true parent'". Surrender today! It is like expecting people to join a cult.

    If you buy a computer for say $1000 say...you pay $230. For a person who makes $10,000, that's 2.3% of their income. For a millionaire that is 0.0023%.

    How is that not regressive, Fairtaxers??

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  3. In Europe they have something similar to a tax like this. It isn't quite the same, and isn't as confiscatory, but it 'works' the same way.

    The problem is that the tax doesn't support itself..so they have to keep feeding the monster by upping the tax. It's been around for so long that there isn't the political will power to replace it with a more efficient tax.

    This is encouraged in Europe as the E.U. are free marketeers to the core. You cannot be a social democratic republic and be in the E.U....the E.U. requires all countries to be strictly free market, with only minimal regulation.

    It's interesting the stuff you learn sometimes.

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  4. In my example about the computer it should be 0.023% not 0.0023%.

    My point still stands that the fairtax makes a person with $10,000 pay 100 times the percentage that a millionaire pays.

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  5. First of all, readers ought to beware of FairTax naysayers in the media; many contributors simply parrot what other contributors are saying - contributing little, or nothing! - because of failure to check out the other side of the story. Readers will do well to review FairTax.org's rebuttal to the President's Tax Panel referenced by Ms. Hook. Afterall, the Panel was the proverbial fox guarding the hen house, i.e., the Tax Code, from whence lobbyist and special-interest blessings flow as a result of currying favor of the Lords in Washington.)

    Economist Dale Jorgensen, Harvard University, was commissioned to find out what portion of current prices were represented by costs for complying with the federal income tax code (i.e., embedded tax costs). He concluded that 22% (average) of every retail dollar, spent by consumers, constituted a price-embedded tax. Thus, in addition to individual income tax and FICA withholding, individuals are unwittingly paying these unseen, embedded business tax costs with every purchase of a new product, or service.

    Under FairTax, prices would fall, due to removal of embedded business tax-related costs. Concurrently, wages may rise due to a mix of factors, including reversion of withheld pay (or some portion thereof) to employees, advancement opportunities due to business expansion resulting from retained earnings, and/or increased demand for labor accompanying increased competition (from that expansion). Where profits (or wages) appear lucrative, competition will move into the market space, driving out excesses (immediately present after FairTax is enacted), arriving at new "market-adjusted" prices.

    For FairTax to constitute 23% of new transaction cost (i.e., "market-adjusted" price plus FairTax), a mark-up of 29.9% (tax exclusive rate) on the new "market-adjusted" price is necessary. (Before balking, consider what we're paying now if income tax rates are converted to tax-exclusive sales tax rates on net income instead of percentage of gross income. The following figures can be compared to the 29.9% FairTax mark-up: Fifteen pct bracket = 17.6%, twenty-five pct bracket = 33.3%, twenty-eight pct bracket = 38.9% (! really), and thirty-five pct bracket = 53.8% (! that's how bad it is).

    In order to make FairTax a progressive consumption tax (such as that recently called for by Warren Buffett), all citizen-families are simply sent a monthly consumption [tax] allowance, called a "prebate." This prebate is intended to reimburse taxes on necessities for every citizen family without need for record-keeping or reporting. Moreover, the direct payment bypasses the creation of a tax code specifying exempted products and services around which a lobbyist industry could grow. The amount is variable, based on family size, and is equal to the FairTax rate on poverty-level spending, as defined by the Dept. of Commerce. At present, a family of one would receive ~$200/month, a family of four, ~$500/month. Thus, the "effective" FairTax rate paid by citizens, will *never* equal the full 23%. Of course, U.S. visitors (legal, and illegal) will pay the full FairTax when they purchase anything new, at retail (used are not taxed again). Under FairTax, working families will have their whole paychecks (minus any state or local income tax withholding) plus their monthly family prebate.

    Additionally, citizens will no longer have to spend the average 50 hours per year preparing their federal tax returns. Having more monthly income may result in using credit less, and saving more. Larger savings will make it easier to purchase a home, at a lower interest rate and monthly payment. (Thus, mortgage deductions are no longer applicable when income is not the basis for taxation).

    But is FairTax actually "fairer"? To provide substantive answers, Prof.'s Kotlikoff and Rapson (10/06) have concluded,

    "...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

    "Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

    Further, per Jokischa and Kotlikoff (2005) ...

    "...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

    The current income-based tax system is also more expensive to run, because of the manner in which the tax code is gamed by politicians and lobbyists. Politicians realize great power, and attract constituencies for support, by granting tax favors (i.e., credits, deductions, exemptions) through lobbyists. Fully, fifty-three percent of Washington lobbyists are there because of the tax code! The tax code is continually changing, making it more complex - more difficult to understand. And, the salaries and costs of tax lawyers and lobbyists end up in higher prices of the products and services we buy. Additionally, the time and money required to keep records, file returns, report for audits, retain accounting and legal help, pay IRS penalties and interest, is time and money lost for other productive, or recreational, activities. Depriving us of the use of withheld wages increases our expenses through zero-interest withholding, inflation, return preparation time, and interest paid on credit cards and loans that otherwise may not have been necessary. Summed up, the cost of tax compliance, nationally, has been estimated to range anywhere from $265 billion to twice that amount, depending on the extent to which tax-avoidance consultation is sought and utilized. These expenses constitute a substantial hidden tax which is incomprehensible to the average working American. And the FairTax gets rid of all of it for most Americans, and most of it for business owners.

    We, as FairTax advocates, believe that government should serve We, the People, with a fair tax system that will not enable politicians to pit poor against rich (creating barriers to achieve wealth, adding tax penalty to the sacrifices made for personal success). Nor do we want politicians to continue using business as a tool to hide taxes from consumers, often villifying business, which discourages entrepreneuship, personal achievement, economic growth. Liberty and happiness depends on restoring the fruits of labor to those who produce them. We believe that the tax function should align with economic growth, not against it, that government should be paid for in the same manner as working Americans - when, and because, something is sold!

    As things stand at present, the system primarily benefits politicans who cater to special interests through lobbyists who game the tax code. The politician seeks to capture them as constituent voting blocks, dependent on continued syphoning of taxpayer dollars to their members' benefit. This is increasingly repugnant to the average working American who often finds it difficult to meet the needs of his, or her, own family in an environment where federal and state business income taxes substantially contribute to trade inequities resulting in the loss of American jobs! Thus, the Sovereign are continually degraded by features of Congress's income tax policy. The most rapidly-growing needs-based "special interest" group has become the Citizens! You see? Congress has nearly all the power; and We, the People, have become We, the Serfs, robbed and enslaved. Getting the federal government's hands out of our family paychecks is the single most important reason to replace the income tax with a consumption tax, the FairTax.

    Many of us have joined FairTax.org in order to build a national movement to free ourselves, our family pocketbooks, and our businesses from confiscation of income, and punishment of productivity. And this we say to our federal representatives,

    "Either scrap the code and enact the FairTax, or we intend on replacing you with someone who will."

    (May reproduce in whole or part. - Ian)

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  6. The IRS needs to be abolished. It's wasteful, far too complicated and it costs government, employers and the taxpayers billions just to collect the taxes.

    The only way to eliminate the IRS is to eliminate income taxes and replace it with a simple national sales tax. Through "prebates" in which a check equal to the tax cost of essential goods like food, clothing, non-food groceries items like soap, detergent, etc., would be sent to every citizen, the poor and middle class would not be disadvantaged.

    Those who can only afford these basic necessities anyway would pay zero net tax or close to it. Middle class families take home their entire paychecks and can choose how much taxes they pay based on how much of their discretionary income they spend and how much they put in the bank. There would be no loopholes for the wealthy. They will pay their fair share on what they spend. If they choose to live on poverty-level spending and put the rest in the bank, that's their right. You won't see that happen very often. It was never the founders of this country's intention that government should be entitled to a portion of what any of us work for.

    Replacing income taxes with a national sales tax also ensures those who are "off the books," (i.e. illegal immigrants) are paying their taxes. They would not receive the prebate checks, so they would would pay the full tax - a deterrent to skirting immigration law.

    Eliminating the taxes paid before goods even reach store shelves, much of which is passed on to consumers, would drive down prices. This also provides great incentive for manufacturers to keep their factories/jobs here.

    It's not a perfect system. Sending out millions of prebate checks requires bureaucracy. But in its simplicity it would be a drastic improvement over current tax code.

    And think of the other great advantage of this: the buying and selling of tax breaks in Washington would be put out of business.

    I think we can go quite a bit lower than 23% with long-overdue downsizing of the government.

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  7. Dec. 24 - Bandit talks about a FairTax/Huckabee 'cult' flooding website with their propaganda.

    Dec. 25 - This 'cult' proves Bandit right by flooding his website with their propaganda.

    The conservs/funds have gotten too predictable.

    I can go into more detail about how they're wrong but I'm playing with my new Christmas toys..

    And Happy Holidays to you too, sirs.

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  8. Uh-oh Reality Based you said Happy Holidays, not Merry Christmas....

    Tsk tsk...

    The Bill O'Reilly Thought Police is gonna getcha for that!

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  9. It's a shame liberals or so-called "progressives" can't accept something that is beneficial to all Americans simply because they don't want anyone with more money than them to pay a dime less in taxes.

    Go ahead, keep feeding the tax system that encourages corruption, wastes time and money, allows dishonest taxpayers to avoid paying their share if they know how to play the game right. We'll probably never see a fair tax anyway, as both the Republicans and Democrats by and large don't want to give up the power the current tax system gives them. These politicians who make a very comfortable living writing and rewriting tax legislation to please their interests don't want us to suspect for even a second that we don't need them.

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  10. Hey Scheff don't you have a new My Little Pony to play with?

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  11. One other thing for Reality Based about the European Union:

    The "Ein Volk"-ists at the EU also support establishing a "common culture" despite the differing cultures across Europe. Did you know that the classic STOP sign must now be printed in English throughout the continent? I believe in Spain it used to say PARE', now (thanks to a EU directive) it says STOP in English...yes in SPAIN of all places! (And throughout Europe!)

    All countries in the EU now have the same drivers license requirements. They all have the same currency (except UK). They all use the Metric System. (I think UK used the English system until the EU made it stop.)

    I'm glad there's a lot of people on the right AND left in the US that oppose a similar North American Union.

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  12. For Ian:

    The following figures can be compared to the 29.9% FairTax mark-up: Fifteen pct bracket = 17.6%, twenty-five pct bracket = 33.3%, twenty-eight pct bracket = 38.9% (! really), and thirty-five pct bracket = 53.8% (! that's how bad it is).

    ...And Ian guess what else? The lowest tax bracket now pays ZERO compared to the 29.9% they pay under FairTax!

    Z E R O ! ! ! !

    I don't give a fuck about the high tax brackets paying 53.8%. I do not shed one tear for them.

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  13. Loopy, correction: The lowest current tax bracket NOW pays a hidden 22% avg embedded tax (representing business' cost to comply with income and payroll taxes) in everything it purchases new, at retail.

    What we're talking about is making taxes visible. FairTax untaxes (via rebate) poverty-level spending - period.

    And if you say you don't care about the high brackets, you ought to. If it is your quest to become financially successful, do you want to be penalized for your hard work and sacrifice? This is ludicrous! As you spend more, you'll pay more, but it will be in the process of meeting your needs and wants, and those of your family. FairTax properly subordinates payment to the government as the Sovereign meet their needs. No more confiscation that leads to going deeper in debt using credit because the money isn't there in the paycheck.

    C'mon man, get the edge off.

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  14. 1. Ian posts massive rant claiming FairTax is progressive.

    2. Scheffbd complains liberals "can't accept something that is beneficial to all Americans simply because they don't want anyone with more money than them to pay a dime less in taxes." Thereby admitting FairTax is regressive (but acting like we're not supposed to care).

    Which is it??

    Is it progressive, or is it regressive??

    Then...Dec. 26 Ian says: it's progressive! Then 2 paragraphs later: You shouldn't care if it isn't progressive.

    Or to put it differently: "Trust us rich folk...We know how to handle the economy better than you poor folk."

    Like we're supposed to believe anyone who puts Mike Huckabee's picture (isn't that Mike Huckabee) in his profile.

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  15. How about if we settle this.

    Let's propose a constitutional amendment that says this:

    "No federal sales tax shall be levied on the purchase of food."

    Are the handful of conservatives who keep defending Fairtax willing to take me up on this?

    This argument is sounding just like the one on the late, lamented CFOTD blog where that right-wing police investigator in Kentucky kept defending the cold medicine ban, even while 20 people kept pointing out that he was wrong.

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  16. IIRC, the police sergeant was the head of the KY chapter of Partnership For A Drug Free America. Anything that supports the "war on drugs" he supported.

    He was caught in several contradictions by God only remembers how many people.

    I suspect Ian is kind of like that guy. He's a Johnny One Note who will never shut up even after being tossed around like a rag doll.

    I wonder if the FairTax will become the new war on drugs...a failed policy that continues because no politician wants to deal with the flat-earthers who still insist it works.

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  17. I wouldn't object to exempting food. The less tax the better. And I think the 23% is too high. Downsize the government first.

    I'm not voting for Huckabee, at least not in the primary.

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  18. scheffbd, if you believe in FairTax, Huckabee offers the best shot at ushering it in. The man has gotten behind it in a major intrepid manner.

    Also, anything you exclude kicks the rate up. The basics are covered in the prebate. After enactment, the shift turns immediately toward Congressional spending.

    Cruella, you're living up to your name. (Oooh, whip me, beat me! BTW, the "failed" policy is the current income tax, duh, with its invisibility that only promotes bad congressional behavior.)

    Loopy, the FairTax is progressive (in a healthy way!)

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  19. You're a failed policy yourself, Ian.

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  20. is ian the big baby gonna defend himself or did he finally take his ball and go home?

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  21. A question for you Ian....

    Since the late 1990's the government has required all adult residents of public housing to perform unpaid "community service" or lose their housing. What is your opinion of this law?

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  22. You're trying to trap Ian with a trick question. The correct answer is the government shouldn't provide public housing or require community service. There's better ways to reduce poverty.

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  23. Let's not help the little baby. Let him answer for himself like a man.

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