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Mike Huckabee on the FairTax:
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.
As Governor of Arkansas, I pushed through the Arkansas Legislature the first major, broad-based tax cuts in state history – a $90 million tax relief package for Arkansas families. I also doubled the standard deduction to $2,000 for single taxpayers and $4,000 for those who are married. Some taxes I eliminated entirely: the marriage penalty, bracket creep caused by inflation, income tax on poor families, and capital gains on home sales. To encourage investment, I cut capital gains for both individuals and businesses. To help people better themselves, I provided tax credits for employee training and education. In total, I cut taxes and fees nearly 100 times during my ten-and-a-half years as Governor, saving the people of Arkansas almost $380 million.
When I left office in early 2007, Arkansas had nearly $850 million in state surplus, which I urged should go back to the people in the form of either a tax rebate or tax cut.
I believe that our massive deficit is not due to Americans’ being under-taxed, but due to the federal government’s over-spending. Achieving and maintaining a balanced federal budget is an important and worthy goal necessary to our long-term economic well-being. To achieve a balanced federal budget, I believe the President should have the line-item veto.
I believe in free trade, but it has to be fair trade. We are losing jobs because of an unlevel, unfair trading arena that has to be fixed. Behind the statistics, there are real families and real lives and real pain. I’m running for President because I don’t want people who have worked loyally for a company for twenty or thirty years to walk in one morning and be handed a pink slip and be told, “I’m sorry, but everything you spent your life working for is no longer here.”
I believe that globalization, done right, done fairly, can be a blessing for our society. As the Industrial Revolution raised living standards by allowing ordinary people to buy mass-produced goods that previously only the rich could afford, so globalization gives all of us the equivalent of a big pay raise by letting us buy all kinds of things from clothing to computers to TVs much more inexpensively.
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Mike Huckabee discusses the FairTax on YouTube
————————————————————–Huckabee’s Follow-up about the FairTax on YouTube
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The FairTax - “It’s Time”
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Neal Boortz & Rep. Linder Explain The FairTax on FoxNews
May 23, 2007 at 10:44 am
[...] The FairTax [...]
June 22, 2007 at 6:58 pm
Will the FairTax be an incentive against purchasing goods; thereby, hurting our economy (especially retail, restaurants, etc. which have in recent economic downturns kept our economy afloat)?
June 22, 2007 at 9:49 pm
“In an open letter to the President, the Congress, and the American people, seventy-five economists, including Nobel Laureate Vernon L. Smith, stated that the FairTax would boost the United States economy. According to the National Bureau of Economic Research and Americans For Fair Taxation, GDP would increase almost 10.5% in the year after the FairTax goes into effect. Real investments could increase by as much as 76% initially and remain 15% above present levels. In addition, the incentive to work would increase by as much as 20%, the economy’s capital stock would increase by 42%, labor supply by 4%, output by 12%, and real wage rate by 8%. Laurence Kotlikoff of Boston University finds that the shift to the FairTax would raise marginal labor productivity and real wages over the course of the century by 18.9% and long-run output by 10.6%. Further, studies of the FairTax at Boston University and Rice University suggests the FairTax will bring long-term interest rates down by as much as one third. As falling tax compliance costs lower production costs, exports would increase by 26% initially and remain more than 13% above present levels. According to Professor Dale Jorgenson of Harvard University’s Economics Department, revenues to Social Security and Medicare would double as the size of the economy doubles within 15 years after passage of the FairTax. Research in 2006 on the FairTax plan by Arduin, Laffer & Moore Econometrics shows that consumption would increase by 2.4% in the first year of the FairTax. The increase in consumption would be fueled by the 1.7% increase in disposable (after-tax) personal income. By the 10th year, consumption would increase by 11.7% over the current tax system; and disposable income would be up by 11.8%. An estimated $11 trillion is held in foreign accounts (largely for tax purposes), which former Federal Reserve Chairman Alan Greenspan predicts would be repatriated back to U.S. banks if the FairTax were enacted, becoming available to U.S. capital markets, bringing down interest rates, and otherwise promoting economic growth in the United States. Even the primary economist opposing the FairTax (William Gale) states that the FairTax would create economic growth.
Retail prices are inflated due to embedded taxes and compliance costs passed to the consumer by producers and suppliers.[3] John Linder states the FairTax would eliminate almost all federal taxation costs from the supply chain, which could lower production costs by up to 30%.[41] Americans For Fair Taxation has claimed that the production cost of domestic goods and services could decrease by approximately 22% on average after embedded taxes and compliance costs were removed, leaving the sale nearly the same after taxes.[11] This is based on a study conducted by Dr. Dale Jorgenson, who found that producer prices would drop between 15% and 26% (depending on the type of good/service) after the switch to a consumption based tax.”
August 5, 2007 at 9:23 am
[...] Original source: http://huckabee.wordpress.com/the-fair-tax/ [...]
August 15, 2007 at 12:56 pm
[...] Um, no Fred. The FairTax is the goal, not the starting point. He doesn’t have Mike Huckabee’s commitment to the cause, but it is a start. Maybe a couple more FairTax rallies will help him see the light. [...]
September 12, 2007 at 11:10 am
I think this might help the poverty stricken areas of the country that have bad credit, by making them cut back on the spending, with credit cards.
November 4, 2007 at 7:28 pm
Fair Tax will work. Your campaign needs to be on LinkedIn.com with a fairtax group AND/or a Huckabee for President group. Don’t let losers beat you online.
November 11, 2007 at 4:16 pm
Neil supports Huckabee! [url=http://www.onlineathens.com/stories/110607/news_20071106049.shtml] click here to go to the Online Athens article.[/url]
November 18, 2007 at 6:56 pm
Gov. Huckabee
Your fair tax proposal appeals to me. I do have some questions however.
This sounds like a national sales tax but yet you talk about a tax rebate each month for purchases below the poverty line.
1. Exactly how will this tax be colllected ?
2. will this tax be completly of all Federal Income Taxes. If this is the case will you push to ammend the 15th ammendment to the constitution and completely abolish all federal income taxes
3. What about higher income earners who make thier money here then spend it abroad ?
Sincerly , Dave mendenhall
November 27, 2007 at 10:06 pm
God bless Mike Huckabee! As a conservative Christian, I didn’t know what to do about the upcoming presidential elections. Now I have the answer. Mike, my husband Greg and I are strongly behind you and we are talking you up to all our friends. We’ll take a lawn sign! LOL. Thanks for being a candidate we can believe in.
December 23, 2007 at 2:46 pm
The two-fold Fair Tax proposal is based on two premises with major shortcomings:
(1) Replace the Federal personal income tax, Federal corporate tax, and they payroll tax (Medicare and Social Security) with a 23% sales tax to provide the funding to run the US Government.
(2) Providers of goods and services will reduce prices up to 30% offsetting the 30% sales tax applied to new purchases and all services.
The problem with item (1) is that the Fair Tax is in effect a 30% tax. The proponents arrive at 23% sales tax rate by saying the $30 tax on a $100 purchase of goods and services is really 30/130, or 23%. In addition, it overlooks the massive tax evasion that will occur as consumers either order goods from abroad, or go to Mexico or Canada to purchase goods, and those who will make “under the table” cash purchases.
The problem with item (2) is that providers of goods and services will not reduce prices up to 23% to offset the new sales tax of 30%. Many products, including imported items such as oil, do not have a product price based on the US tax code. In addition, it is intuitively obvious that the vast amount of the tax savings, reduced costs, and increased profits will flow to the bottom line and be passed onto executives and investors, not the customers or employees.
The savings and increased profits gained from moving millions of manufacturing, service, and technical jobs that began in the early 1990s to low-cost sweat shops in Asia, China, India, and Mexico, cutting millions of US jobs, and dropping Federal Corporate taxes to 5% to bring back money from overseas entities went directly to the executives and investors and no one else.
Note: If you think that US employees receive pay increases when work is moved offshore, then you should review the situation in the Information Technology (IT) industries. The IT industries have moved tens of thousands of previously high-paying jobs for engineers, programmers, data base analysts, systems analysts, etc. offshore and laid off tens of thousands of US professional employees since the mid-1990s.
When US technology corporations need more technology personnel, including engineering and IT professionals, in US locations, they tell the US Government that they can’t find the skills in the US labor force and petition and receive H-1B visas to bring in computer technology and engineering specialists from foreign countries (primarily India and China). The offshore employees are given temporary work visas, paid substantially less than comparable US employees, and reminded that they can be replaced (and returned to their home country) if they should ask a salary increase deemed inappropriate by the employer.
When the Medicare Advantage HMOs talked the Government into giving them a $7 – $9 Billion dollars more than Medicare spends on Medicare Part A and Part B beneficiaries, most went to executive perks, bonuses, and retirement for the HMO executives (such as the $400-Million Dollar retirement bonus taken by one HMO executive).
In addition to eliminating the payroll tax (Social Security and Medicare), the Federal personal income tax, and the Federal corporate income tax, the Fair Tax proposal in effect also eliminates the system used to report earnings to calculate Social Security benefits and would eliminate the Social Security Trust Fund.
The Fair Tax proponents have not mentioned how they would calculate a Social Security benefit since the earned income will no longer be reported under the Fair Tax plan.
The program is in essence a reverse “Robin Hood scheme” that shifts raising funds to finance the US Government by shifting the raising of tax revenues) from the higher income Americans (top 5%) to the Middle Class and retirees via the proposed (the 30% National Sales Tax).
The Fair Tax proposal works directly against the needs and contribution of tens of millions of current retirees and increasing numbers of baby boomer retirees approaching retirement.
With no mention or statement of intent that the Social Security program and Medicare will be maintained and no way to caluate individual Social Security benefits, it’s a safe assumption that the Social Security and Medicare programs will be declared “no longer required” and the Social Security Trust Fund eliminated (no return of the Trillions borrowed or returned to the individuals who provided them via the payroll tax, just eliminated).
The Fair Tax proposal will enable retirees, most of whom have a Federal Tax obligation of less than 10% of their gross income and no payroll tax to now pay a sales tax of 30% on all their purchases of services and new products with an offset for people below the poverty line.
Retirees will also pay a 30% tax rate on purchases made with Roth-IRA income which was supposed to be tax free, and a 30% tax on services and new productys made with Social Security income that is currently tax free for many retired individuals and couples, and partially taxed for the rest.
(1) Eliminate the Social Security Trust Fund (which has loaned Trillions of Dollars to the US Government) and state there is no need to return the Trillions they borrowed and spent. They will propose funding Social Security and Medicare out of the annual Federal budget.
(2) Declare the Social Security and Medicare beneficiaries to be “freeloaders sponging off the largesse and charity of the Government” and guilty of a giant entitlement fraud perpetrated upon the hardworking titans of industry, notwithstanding that tens of millions of Americans have prepaid payroll contributions that will sustain current Social Security benefits for another 30-35 years. This was based on the foolish assumption that the US Government will pay back funds borrowed from the Social Security Trust Fund (the Payroll Taxes paid by tens of millions of working Americans and legal resident aliens).
Note: If we can pay back funds borrowed from China and Saudi Arabia, we ought to be able to pay back the contributions borrowed from the Social Security Trust Fund (that were received as payroll taxes paid by working American citizens and legal resident aliens.
(3) The final step will be to means-test the receipt of Social Security and Medicare to make sure that no one ever receives back benefits they paid for over working careers of 40-50 years or more.
(4) Now that they have decimated retirement and health care for tens of millions of retired Americans, they will now subject them to a 30% sales tax for the rest of their lives to continue the charity program for the friends of the Fair Tax and Global Economy (does not include the middle class). American Industry,
Members of Congress and the current Administration have participated in the decimation of defined benefit pension plans, eliminated millions of US jobs and run the Federal deficit from approximately 5 Trillions Dollars to well over 9 Trillion Dollars in the name of Global Economy (and a welfare program for their friends and supporters).
The name of the proposal should be “Your Money is My Money”. The quote that comes to mind on this giant Ponzi scheme, which I believe was made by Joseph Welch at the Congressional Army hearings in the late 1950’s regarding Congressman Miller (R-Buffalo, NY), is “HAVE YOU NO SHAME”?
February 11, 2008 at 1:25 am
To find out more about the fair tax listen to the you tube links above especially the third link called Fair Tax-”It’s Time” It gives a break down and explains how it benefits you and grows the federal government at the same time. Also go to fairtax.org
It feels like we are working to give all our money to the federal government. The federal government was designed to work for us.
This election has been about bringing “Real Change” to Washington. It starts with voting for “Mike Huckabee”. The other candidates just talk about change without a clear plan. However, Mike Huckabee has a clear plan to bring “Real Change” to our goverment.
Vote for Huckabee! He has a proven track record of improving the economy. Governor Huckabee cut taxes over 90 times in the state of Arkansas and turned a $200 million deficit left by the Clinton Administration when he was governor into an $850 million surplus.
Jude