What do you think of Huckabee's FairTax?

[ladiesbballcoach]

For all of you Huckabee fans out there.

 

http://www.mikehuckabee.com/index.cfm?FuseAction=Issues.View&Issue_id=5

 

The FairTax will replace the Internal Revenue Code with a consumption tax, like the taxes on retail sales forty-five states and the District of Columbia have now. All of us will get a monthly rebate that will reimburse us for taxes on purchases up to the poverty line, so that we're not taxed on necessities. That means people below the poverty line won't be taxed at all. We'll be taxed on what we decide to buy, not what we happen to earn. We won't be taxed on what we choose to save or the interest those savings earn. The tax will apply only to new goods, so we can reduce our taxes further by buying a used car or computer.

Expert analyses have shown that the FairTax lowers the lifetime tax burden of all of us: single or married; working or retired; rich, poor or middle class.

 

 

The FairTax will instantly make American products 12 to 25% more competitive because the cost of those goods will no longer be inflated by corporate taxes, costs of tax compliance, and Social Security matching payments. When we buy products now, those taxes are built into the cost, so all of us pay corporate taxes indirectly on top of the personal taxes we pay directly. Compliance costs are just make-work with no real added value, yet they consume as much as 3% of our gross domestic product annually. These costs are an especially heavy burden on small businesses, which generate most of our jobs.

 

Our current tax system puts our goods at a disadvantage both here and overseas. Other governments give their goods an advantage on the world market, an advantage estimated at 18% compared to American goods.

 

So no matter how hard Americans work, no matter how innovative and creative we are, no matter how superior our products are, we suffer from a built-in competitive disadvantage simply because of our tax system. A recent study by MIT found that our tax system deprives us of about $1 billion in exports annually.

[ladiesbballcoach]

Last night at the debate, several candidates pointed out that the US has the 2nd highest corporate tax rate in the world. And it isn't even close with a lot of companies. One candidate pointed out that on some items, China sends the finished product at a price that an American company can ONLY buy the raw materials for that product.

 

When dealing with trade, and our economy is firmly entrenched on trading with the world, we send our business out with a disadvantage in competing with other countries. They used the dreaded term "level the playing field."

[IM4THEHOUNDS]

On the surface this seems like an excellent idea.

[Hasbeen]

Am I understanding this correctly? No income tax, no inheritance tax, no capital gains, no FICA, etc, just a sales tax on new goods? My first inclination is to think it's not posible but then I consider how Tennessee has done away with a state income tax and relies only on sales tax.

[ladiesbballcoach]

I liked his answer last night when questioned whether this would stump spending. He laughed and said basically are you kidding me. Nothing stops people from spending in this country. Go to a mall and see how much spending is going on.

 

If the product ONLY gets taxed when it is sold, I can see easily how the product is leaving this country at a lot lower price than it is presently.

 

More products sold worldwide means more jobs in this country.

[Hasbeen]

I enjoyed this question: "But wouldn't this plan cause people to save money rather than spend it?"

 

I would need to see a serious study showing revenue estimates before I could consider this but it would be nice to be able to increase one's holdings and income without having to give a huge chunk to the government.

[ladiesbballcoach]

I enjoyed this question: "But wouldn't this plan cause people to save money rather than spend it?"

 

I would need to see a serious study showing revenue estimates before I could consider this but it would be nice to be able to increase one's holdings and income without having to give a huge chunk to the government.

 

I believe we are one of the few countries in the world where our spending is more than our earning. Last time I saw it we were something like 1.5% on the negative. Meaning we spend more than we make.

 

That said, the question was asked like it saving money was a bad thing.:lol:

[Hasbeen]

Savings account = Tax evasion.

 

My wife would achieve "Great American" status under this plan. We might even see our tax load increase.

[HHSDad]

Expert analyses have shown that the FairTax lowers the lifetime tax burden of all of us: single or married; working or retired; rich, poor or middle class.

 

 

The FairTax will instantly make American products 12 to 25% more competitive because the cost of those goods will no longer be inflated by corporate taxes, costs of tax compliance, and Social Security matching payments. When we buy products now, those taxes are built into the cost, so all of us pay corporate taxes indirectly on top of the personal taxes we pay directly. Compliance costs are just make-work with no real added value, yet they consume as much as 3% of our gross domestic product annually. These costs are an especially heavy burden on small businesses, which generate most of our jobs.

These two paragraphs don't make sense.

 

In the first paragraph, it says that it will reduce the tax burden on all of us, but how does that work? The total tax burden doesn't change. If everyone's tax burden goes down, who makes up the difference?

 

The second paragraph is just flat wrong. The average large corporation has a taxable profit of about 10% of revenue. The highest tax rate is 35%. That means the average large corporation only pays a tax of about 3.5% on its sales. How does that make American products 12 to 25% more competitive? And how do you eliminate social security payments? What's his tax rate going to be? 25%???? It will have to be to make up for all the taxes Huckabee thinks he's going to eliminate.

 

If anyone thinks that a sales (consumption) tax is simple, they need to check out their states sales tax laws. :eek:

 

I would prefer that a flat tax be implemented. I would also eliminate most personal deductions with the exception of a standard deduction based on size of household. I would leave business taxes alone. I would eliminate the cap on social security wages, but reduce the tax rate for wages above a certain amount.

[ladiesbballcoach]

The second paragraph is just flat wrong. The average large corporation has a taxable profit of about 10% of revenue. The highest tax rate is 35%. That means the average large corporation only pays a tax of about 3.5% on its sales. How does that make American products 12 to 25% more competitive? And how do you eliminate social security payments? What's his tax rate going to be? 25%???? It will have to be to make up for all the taxes Huckabee thinks he's going to eliminate.

 

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My understanding, as Mike's campaign manager , is that you look at all the taxes on products and not just the corporate tax rate. Look at the excise taxes on gas that gets the raw materials to the factory to make the product. You look at the taxes that businesses pay all over the place and not just the revenue tax. When all of those are added up, that runs the cost up 12 to 25%. What all those are, I have no clue.

 

So an item costs $10 to make and the American business has to charge $12.50 abroad to sell it while other foreign companies do not have this tax burden and selling their products at $10 or lower.

 

So, the mindset behind it is removing the American Government and tax structure from being one of the obstacles behind American businesses being able to fairly compete with foreign businesses.

[ladiesbballcoach]

In the first paragraph, it says that it will reduce the tax burden on all of us, but how does that work? The total tax burden doesn't change. If everyone's tax burden goes down, who makes up the difference?

 

.

 

Not quite sure how that works. If it is not true or even close to being true, I would expect another candidate or the media to be calling him out on it easily. But that has not happened. So, I assume from the lack of attack on him, either a)they are not worried about his candidacy and not worth their time; b)it is factual in some way.

 

The one way that it does relieve some % of tax burden is that presently you are taxed on all money you earn. The other way, you are taxed on money you spend. So saving $100 out of your paycheck and you are not taxed on it. Buy a used computer and the tax is only on new goods and you are not taxed on it.

 

I would assume that one path of replacing the taxes is the creation of new jobs. If American companies are more competitively overseas that means selling more goods overseas which means more jobs are needed to produce these said products.

 

More and better paying jobs means more money in American citizens pockets and them spending more money.

[Hasbeen]

I would prefer that a flat tax be implemented. I would also eliminate most personal deductions with the exception of a standard deduction based on size of household. I would leave business taxes alone. I would eliminate the cap on social security wages, but reduce the tax rate for wages above a certain amount.

 

I like your plan better. Have you considered throwing your hat in the ring? Shucks, almost everyone else has.

[ladiesbballcoach]

 

I would prefer that a flat tax be implemented. I would also eliminate most personal deductions with the exception of a standard deduction based on size of household. I would leave business taxes alone. I would eliminate the cap on social security wages, but reduce the tax rate for wages above a certain amount.

 

Does that last one take into account that $75,000 earned in KY is not the same as $75,000 earned in NYC?

[AcesFull]

I strongly favor the Fair Tax but it will never be enacted. There are way too many special interest groups, including the IRS and a huge income tax preparation industry, alligned against the Fair Tax for it ever to become a reality. Huckabee, Tancredo, and I believe Hunter seem to understand the Fair Tax, but most politicians are too busy mischaracterizing it to take time to understand it. It is easy to support or oppose something that will never become a reality and which few people understand anyway.

 

I am impressed that Huckabee and a few other candidates have taken the time to actually learn about the Fair Tax instead of attempting to appear knowledgeable on the subject. I have not been impressed with those candidates who support or oppose the tax who obviously have no time invested in understanding it and cannot discuss it intelligently.

[HHSDad]

I strongly favor the Fair Tax but it will never be enacted. There are way too many special interest groups, including the IRS and a huge income tax preparation industry, alligned against the Fair Tax for it ever to become a reality.

Where do you get your information, because its wrong. The IRS doesn't make tax law. The more complicated the law, the harder their job is. And the AICPA has been a long time proponent of tax simplificaton. It's long past the point where any one CPA completely understands the tax code. If you want to lay blame, do it at the feet of industry lobbyists and the congressmen that they wine and dine.