There is a lot of criticism going around about Mike Huckabee’s Fair Tax. Right off the bat, let’s get one thing straight. Mike Huckabee did not conceive the Fair Tax, but according to him, he wishes he had came up with the idea. You can go to the Fair Tax website to find out more, but it basically does away with the current tax code and puts a 23% (not 30%) national sales tax on all new good and services. Used goods would be exempt.
Now, I can not pretend to debate all the nuances of the Fair Tax and all the pros and cons of the plan, but let me address a couple of articles that have been floating around, criticizing the Fair Tax. First, Rudy Giuliani has said:
Rudy Giuliani criticized the “fair tax” proposal crafted by fellow Republican presidential hopeful Mike Huckabee, calling the plan a waste of time.
Giuliani, who was campaigning in Greensboro, N.C. on Monday, said Huckabee’s plan would be detrimental to home buyers who have come to rely on the home mortgage deduction each year as a tax break. Under the Huckabee “fair tax” proposal taxes on income and investments would be eliminated while federal sales tax would increase significantly.
By eliminating taxes on income and investments the “fair tax” would also eliminate the tax deductions that went with them. Giuliani noted, “The home mortgage deduction is considered by many critical to the ability of people to buy a home and keep their home.” In addition to eliminating home mortgage deductions, the “fair tax” would also be the end of deductions for charitable contributions.
Giuliani doubted the viability of such a plan and said “Why waste our time trying to do this if we can’t actually accomplish it? I try to put my time into things that we can actually accomplish.”
To start with, yes, the home mortgage deduction would be eliminated, but the tax code requiring such a deduction would be gone as well. No income tax equals no deductions necessary. I’m not a real smart fella, but that looks pretty plain to me.
The Wall Street Journal has came out with another uninformed article that states:
As a political matter, the fair tax would offer a bull’s-eye for Democrats, who would love to run against a plan that would instantly make most purchases 30% more expensive. Though the fair tax includes a complicated rebate system to shield the working poor, a levy on consumption would nonetheless hit hard the young, middle-income families that Mr. Huckabee is courting. It would also tax medical services and home prices, sure to be flashpoints this election season in particular.
The above statement is simply not true. The prices we all pay for new goods and services are already inflated by around 23%, due to the taxes businesses and corporations have to pay. They simply pass them on the you and I, the consumer. The price of new goods and services would remain basically the same, since those taxes would be eliminated. Not only that, but just think about it. We would receive our entire paycheck with which to pay for what we need. Sounds like a plan to me.
Another criticism of the Fair Tax is how it will be hard for the families below the poverty line to pay this tax. The thing most of these articles fail to mention is that every legal household in America will receive a prebate check in the mail every month, which would eliminate the tax on the basic necessities of life. A family of four would received around $500.00 per month.
I urge you again, please visit the Fair Tax website. Do your own research and come to your own conclusions, but please do not take these negative articles at face value. That is the worst thing you can do. Give Mike Huckabee and the Fair Tax a fair break. It’s clear, our government and it’s tax system is not working and most certainly, is not fair. Maybe it’s time to give someone else with another plan a chance to help our country.
That’s my take!