August 6, 2015

Former Arkansas Gov. and GOP 2016 contender Mike Huckabee continued his anti-government rhetoric, with a call to dismantle the Department of Education, the EPA, and the IRS, which Huckabee claimed could be replaced with a "fair tax" during this Thursday's presidential debate.

HUCKABEE: And the fact is, there are a lot of things happening at the federal level that are absolutely beyond the jurisdiction of the Constitution. This is power that should be shifted back to the states, whether it's the EPA. There is no roll at the federal level for the Department of Education. And I'm still one who says that we can get rid of the Internal Revenue Service if we would pass the Fair Tax, which is a tax on consumption. rather than a tax on people's income, and move power back where the founders believed it should have been all along.

Here's more on Huckabee's proposal, which he was pushing earlier this year on Fox from The Tax Policy Center: The Trouble with the FairTax:

GOP Presidential candidate Mike Huckabee recently got into a spirited debate with Fox News anchor Chris Wallace about Huckabee’s proposal to replace all federal taxes with a national retail sales tax, called the FairTax by its supporters. Wallace pointed out that low-income people spend a much larger share of their income than high-income folks and thus a FairTax would be regressive. As evidence, he cited TPC (although the particular statistics he used came from earlier research by economists Dan Feenberg, Andrew Mitrusi, and Jim Poterba).

Gov. Huckabee was dismissive:

They have it exactly wrong. In fact, it’s the bottom third of the economy who benefit the most from the Fair Tax, and the people at the top third who benefit the least. Everybody benefits some. That tax study is one that has been discredited by the people who spent over $20 million, very thoughtful economic study developing the FairTax. It’s not just some political idea.

The governor is right in one respect: The tax is designed to protect low-income people from higher taxes via a large new cash transfer program called a “prebate.” Every household would get a cash transfer equal to the amount of tax that a family at the poverty level would owe. (Ironically, this would be the largest welfare program in history.)

The problem is that very high-income households spend only a fraction of their income, while low- and middle-income people spend all or most of what they make. A sales tax, by design, exempts a large share of income at the top. If it includes a prebate to protect people at the bottom and doesn’t add to the deficit, then it must raise taxes on people in the middle.


FairTax advocates counter that their proposal would also replace regressive payroll and excise taxes (as well as highly progressive estate taxes), but the bottom line is that tax burdens on middle-income households would surely rise while high-income families would get a big tax cut.

Some people might call that an UnfairTax.

Read on...

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