Huck's Daft Tax Plan

Rich Lowry
|
Posted: Dec 03, 2007 4:31 PM
Huck's Daft Tax Plan

Mike Huckabee is not running a substance-free campaign based on biography and applause lines. No, the former Arkansas governor has the distinction of advocating the most radical -- and politically unsalable and substantively daft -- proposal of any major presidential candidate of either party.

It is the so-called FairTax. It would eliminate the income and payroll taxes and replace them with a (supposedly) 23 percent national sales tax. Not given to rhetorical understatement, Huckabee says, "When the FairTax becomes law, it will be like waving a magic wand releasing us from pain and unfairness." Waving a magic wand is about right -- since the FairTax is a bedtime story for IRS-hating conservatives.

Huckabee adopted the plan when he, unknown and languishing far back in the polls, was a Not Ready for Prime Time Player. It probably seemed a cheap way to inoculate Huckabee from his tax-raising history as Arkansas governor. Huckabee both raised and cut taxes during his 10 years as governor, but his tax hikes outweighed his tax cuts by half a billion dollars.

An editorial in the newspaper The (Arkansas) Leader recounting Huckabee's tax increases reads like a roll call of most of economic life. Huckabee repeatedly increased or expanded the sales tax; hiked the corporate income tax; imposed an income-tax surcharge on individuals and domestic and foreign corporations; raised the tax on gasoline and diesel fuel; taxed admission to theme parks and other tourist activities; taxed snuff, cigarettes, mixed drinks, private clubs and retail sales of beer; and so on. To all of this, Huckabee can now respond, "Yes, but I want to eliminate the IRS."

Tactically, the FairTax offered Huckabee a built-in cadre of activists in the crucial state of Iowa. He knew that he needed to do well in August's Iowa straw poll, where just a few hundred votes either way could make all the difference. As the champion of the FairTax, he tapped into the busloads of FairTax supporters there, finishing second and beating fellow social conservative Sen. Sam Brownback -- who was never heard from again -- by less than 400 votes.

So the FairTax has given Huckabee a convenient talking point, and it boosted him in a key test of Iowa strength five months before anyone actually votes. For the seat-of-the-pants Huckabee operation, this must make it ipso facto good policy. Never mind that it is unworkable and would be politically deadly in a general election.

To avoid the risk of getting both a national sales tax and an income tax, FairTaxers would have to repeal the 16th Amendment. Good luck. Huckabee's magic wand will come in handy.

Then, there's the rate of the sales tax. FairTaxers say that a 23 percent rate would be enough to replace current revenues. What they really are talking about is a tax of 30 cents on every dollar -- what most people would consider a 30 percent rate. The government would pay the tax on all its purchases, a gimmick "done solely to make revenues under the FairTax seem larger than they really are," writes economist Bruce Bartlett. Budget trickery aside, the congressional Joint Committee on Taxation has estimated that the rate would have to go as high as 57 percent.

The tax would apply to everything, even medical expenses, so it would amount to an incredibly regressive tax on even the most necessary purchases of low- and middle-income taxpayers. The home mortgage deduction would be gone, and instead buyers would pay a 30 percent (at least) tax on their homes. To make up for this burden, the government would send monthly "prebate" checks to all Americans based on income. (And you thought our current tax scheme was complex?)

Any of these points makes the FairTax so vulnerable to attack that it would kick away the tax issue as a Republican strength. This is why no serious candidate would ever endorse it. And why, despite his stupefying rise in Iowa and other states, Huckabee seems likable and talented -- but still something less than a serious candidate.