Leader Blues

Wednesday, June 06, 2007

EDITORIALS>>Huck’s tax falls flat

If something sounds too good to be true, it usually is. In a political campaign, make that always. So it is with Mike Huckabee’s FAIR Tax, which he regularly promises to implement if he is elected president. The FAIR Tax — a heavy national sales tax of around 25 percent — is not original with the former governor.

It has been promoted by a congressman and TV host. They are trying to get presidential candidates committed to it to give the crazy nostrum some momentum. Huckabee has obliged.

To hear them tell it, by supplanting federal income taxes with the national sales tax, Americans would be rid of the intrusive Internal Revenue Service and everyone in America would be better off financially.

Economic growth would surge, retirees would be happier and more prosperous, young and middle-aged people would have more money to spend, and we would achieve an unprecedented level of freedom. The good times would never end.
The tax would be levied at a level that would produce exactly the same money that the current tax code produces so that services would not be cut. They estimate that it would be less than 25 percent, although others calculate that the tax would have to exceed 30 percent.

That is an extra 30 percent on your groceries, your doctor bill, the barber, the kid who mows your grass, your gasoline buy. Every single transaction in America would be taxed. Everyone would be a tax collector. Who would miss the IRS?
A sales tax ordinarily is terribly unfair because it lands most heavily on poor and middle-income people and those with great wealth hardly feel it.

But the FAIR Tax is supposed to be different because the federal government would cut a check every month to every single American reimbursing him or her for the estimated taxes a poor person pays for subsistence. The assumption of the authors is that people of great wealth would pay an inordinate amount of the sales taxes because they can spend more, so everyone else would come out way ahead.

Every legitimate study of consumption shows that to be a phony assumption. Every businessman and probably every consumer in America would soon be calling for heads to roll.

If Huckabee is somehow elected president, the FAIR Tax will not be enacted. Congress will never take a shot in the dark that would put the resilient American economy at such risk. Pin your campaign on something else, governor — besides your wit.