Our next presidential candidate to be featured in our series of interviews is Mike Huckabee, a Republican and former Governor of Arkansas.
I posed the following six tax-related questions to the Governor:
1. What’s the single most important tax issue facing Americans today?
2. If you could only make one “quick fix” in terms of an extra credit, a disallowed deduction, whatever – what would it be?
3. Which is a more egregious tax on the American public: the AMT or the federal estate tax?
4. It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?
5. Do you think that significant tax cuts are possible considering the current state of the economy, specifically the escalating cost of the war in Iraq?
6. And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?
In response, Governor Huckabee offered this statement which I am posting unedited:
I’d like you to join me at the best “Going Out of Business” sale I can imagine – one held by the Internal Revenue Service. Am I running for president to shut down the federal government? Not exactly. But I am running to completely eliminate all federal income and payroll taxes. And do I mean all – personal federal, corporate federal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment. All our hours filling out forms, all our payments for help with those forms, all our shopping bags filled with disorganized receipts, all our headaches and heartburn from tax stress will vanish. Instead we will have the FairTax, a simple tax based on wealth. When the FairTax becomes law, it will be like waving a magic wand releasing us from pain and unfairness.
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.
Our current progressive tax system penalizes us for working harder and becoming more successful. As we climb the ladder, the government lurks on each rung, hungry for a bigger bite out of our earnings. The FairTax is also progressive, but it doesn’t punish the American dream of success, or the old-fashioned virtues of hard work and thrift, it rewards and encourages them. The FairTax isn’t intended to raise any more or less money for the federal government to spend – it is revenue neutral.
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. Under the FairTax as our disposable incomes rise, so will consumption and our gross domestic product.
Under the FairTax, we’ll all be treated the same: no more tax avoidance by those who can afford the most creative – and most expensive – lawyers and accountants. No more clever loopholes for the few at the expense of the many. No more lobbyists buying tax breaks for their clients from Congress. No more lying and cheating on taxes and no more untaxed underground economy.
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.
If you buy a bottle of domestic wine, you’re paying the taxes/compliance/matching payments of all the folks who produced the grapes, the wine, the bottle, the cork, the label. If you buy a bottle of French wine, the producers had their Value Added Tax rebated to them when the wine was exported. So French consumers pay those taxes, but you don’t. 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. When you export over-priced goods as we have, you inevitably end up exporting jobs and industries as we now are. We are the square peg trying to fit into the round hole of international trade. The rest of the world isn’t going to change, it’s time that we do.
Under the FairTax, American companies are far less likely to move overseas and foreign companies are far more likely to come here, hiring Americans to build and work in their new plants. The FairTax encourages growth by promoting investment and capital formation.
We have to scrap a 20th century tax system that is holding us back and keeping us down in the 21st century. The FairTax is the path to greater prosperity and job security for us and for our children.
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Governor Huckabee also granted me the opportunity to question him by phone on some of his tax policies. That interview will be posted within the next few days.
For more information about Governor Huckabee’s policies, visit his web site.
Governor Huckabee’s FairTax just doesn’t add up and he must know it:
The tax will be ‘revenue neutral’ yet ‘lowers the lifetime tax burden of all of us’.
Um, okay. I suppose he is relying on the old saw: we’ll reduce taxes and economic expansion will increase net tax raised. Well I don’t see how the economy is going to expand when prices suddenly jump. So we’ll have more dollars in our paycheck, but those dollars will purchase fewer things due to the consumption tax.
I am particularly amused by former Governor’s suggestion that the French businesses have an easier time then their counterparts in US. Although the burden of VAT does not fall on businesses they still have corporation tax, payroll taxes, social security, the cost of compliance (and compliance with VAT exports is tortuous) and all the rest. And at higher rates then in the US.
The statement “those dollars will purchase fewer things due to the consumption tax” is simply not true. Please read the entire bill and even The Fair Tax book and you’ll see where you are mistaken. Factor in the elimination of embedded taxes and income taxes and the addition of a prebate, and you’ve got a win/win. (Well, not for lobbyists, tax lawyers and accountants, and bureaucrats, but for the rest of us – YES!)
This is nothing more than a National Sales Tax. It will allow the rich to become even richer. Does anyone believe a CEO should be worth 400 times what the lowest wage earner in his company is compensated. To eliminate the tax on the portion of this income that they do not spend will make the disparity even greater.
I think the tax in Arkansas is too high, and there needs to be some concessions made about it frankly we cannot live like this . I called 3 of the congress people in Little Rock the other day to complain about the high gas prices for me I work an 18 hour job a week and after I drive 50 miles round trip my budget is suffering I have to chose between do I eat or do I buy gas for work. I purchased 2 items the other day 1 @$4.97 the other @ $1.78 total is $5.75 the tax is as follows tax1 is 8.250 the other is 5.250 if those 2 are added together that makes 13.50 for 2 items . HOW DO WE MAKE ENDS MEET THE CONGRESS PEOPLE ARE NOT HURTING I’LL EVEN BET THEY CAN VOTE THEMSELVES A BIG FAT RAISE WHILE WE GET NOTHING.