E
EconomicDemocracy Coop
Guest
None other than President Bush's 2005 advisory panel on federal tax
reform rejected a Fair Tax-like retail sales tax, saying it "would
increase the tax burden on the lower 80% of American families, as
ranked by cash income, by approximately $250bn per year. Such families
would pay 34.9% of all federal retail sales taxes, more than double
the 15.8% of federal income taxes they pay today."
They offered some specific examples of just how unfair a Fair Tax
would be: the Treasury Department estimates that a hypothetical single
mother with one child making $20,000 per year currently pays $723 in
total federal taxes (including both the employee and employer shares
of the social security and Medicare taxes). Under the stand-alone
retail sales tax, her tax bill would go up to $6,186 - a tax increase
of over 750%. A hypothetical married couple with two children making
$40,000 per year would pay an additional $6,553 in taxes, an increase
of more than 110% of total federal tax liability.
So much for Mike Huckabee, friend of the poor
=====
Published on Sunday, December 23, 2007 by The Guardian/UK
Tax Lunacy
America's tax system may be complex. But Mike Huckabee's plan to
institute a flat tax is sheer madness
by Tim Watkin
I've been waiting and waiting. For several weeks now Mike Huckabee has
been the rocket man on the Republican side of the presidential race,
and critics and journalists have been digging around in his policies
and past to see if the poll surge is backed by substance. As a result,
stories have broken about the former Arkansas governor's desire in the
early 1990s to isolate Aids sufferers and his belief that wives should
submit to their husband. We already knew he doesn't believe in
evolution, so these hicksville beliefs, while concerning, were hardly
surprising. Indeed, these beliefs and the fundamentalist Christian
worldview they stem from are exactly why Huckabee has been climbing
the poll ladder in states such as Iowa and South Carolina.
However, in the midst of Huckabee's platform is a policy that will
charm the good farmers of Iowa about as much as a cloud of locusts.
Huckabee, the supposed friend of the poor and all-round nice guy,
supports a flat tax - in his case a flat tax on consumption, as
opposed to one on income, that its supporters call the Fair Tax. A
more ironic name is hard to imagine. His scheme would be about as fair
to average working Americans and their hard-earned income as that
flock of locusts would be to a field of corn.
In any other western democracy, being a flat-taxer would put Huckabee
at the outer limits of political sanity. The detail is complicated,
but the concept is as simple as the name suggests: an end to a
progressive income tax, an end to the consensus that those who can
afford to contribute more to the good order and running of society
should pay more than those struggling to get by. Outside of the former
Soviet states, a flat tax system is a political non-starter for the
simple reason that asking you, me and Bill Gates to pay the same tax
rate on either our income or the goods and services we buy, would
destabilise a country's economy, government spending and social
cohesion.
So when Huckabee says, "When the Fair Tax becomes law, it will be like
waving a magic wand releasing us from pain and unfairness," why isn't
he laughed all the way back to Little Rock? Why have I waited in vain
for the media to start reporting the lunacy of huckster Huckabee's
plan? (With the exception of Rich Lowry in the New York Post). Because
on the Republican side of the ticket he's far from alone. It's one of
the unwritten stories of the campaign thus far - incredibly, most of
the Republican contenders support some kind of flat tax.
Having called the idea a "disaster" in the 1990s, Rudy Giuliani has
gone all Mitt Romney-esque and now likes the idea in some unspecified
form. Fred Thompson wants a voluntary flat tax. And even old John
McCain has spoken admiringly of it, although his latest economic
policies seem to assume an ongoing income tax. Only Romney has called
flat taxes "unfair". It's hardly surprising to see Republican
politicians revelling in the opportunity to claim they could close
down the IRS, but it's surprising no-one's looking into the details of
what such a radical claims would mean in practice.
The idea of a one-size-fits-all tax rate first got mainstream
attention in the US when mega-millionaire Steve Forbes (who has
endorsed Giuliani this time) ran for president as a flat-tax reformer
in the 1990s. Like school vouchers, it was a new right cause celebre
for a while, but when the Republicans were finally in a position to
push through major tax reform in the early 2000s they backed away from
it. Now, it seems to be back in vogue. Just without any media
scrutiny.
There are any number of practical reasons why a flat tax is a bad idea
in practice. For one, switching to the Fair Tax - that is, an
effective 30% tax rate on every purchase, with rebates paid in advance
on purchases up to the poverty level - would mean repealing the 16th
amendment of the US constitution, which empowers Congress to "collect
taxes on incomes", but not consumption. Huckabee's as likely to get
the constitution amended for tax reform as he is to walk on water.
(Some commentators, such as Dean Baker in Comment is Free earlier this
week, point out that in reality the rate could climb as high as 40%.)
For another, government services would depend on people continually
increasing their spending at a time in history when we need to learn
to live sustainably and save more.
Flat taxes also mean an end to tax deductions, which in the US means
an end to deductions on household mortgages and the whole array of
deductions businesses claim each year. If you've every wondered if the
current mortgage crisis could get worse, or asked what it could take
to tip America over the edge and into, not just a recession, but a
full-on stock market crash, there's your answer.
Without doubt it would increase inequality in a country that is
already as dangerously skewed as it was in the Gilded Age of the
1920s. Averaged across the 1920s, the richest 10% of Americans grabbed
43.6% of total income (excluding capital gains), and the richest 1% a
whopping 17.3%. In 2005 the comparable figures were 44.3% and 17.4%.
The richest Americans already have a much greater slice of the pie
than they have had for several generations and are doing very nicely
indeed under a graduated tax rate (complete with Bush's tax cuts). A
flat tax would destroy the system that seeks to redistribute some of
the country's finite wealth amongst its people in the form of schools,
roads and other public goods. And before the whining begins, this
isn't a cry of class warfare, it's economic common sense. Even if you
reject arguments around fairness and moral obligations to those less
fortunate, by and large economies with more equality are more
prosperous and the countries more stable.
None other than President Bush's 2005 advisory panel on federal tax
reform rejected a Fair Tax-like retail sales tax, saying it "would
increase the tax burden on the lower 80% of American families, as
ranked by cash income, by approximately $250bn per year. Such families
would pay 34.9% of all federal retail sales taxes, more than double
the 15.8% of federal income taxes they pay today."
They offered some specific examples of just how unfair a Fair Tax
would be: the Treasury Department estimates that a hypothetical single
mother with one child making $20,000 per year currently pays $723 in
total federal taxes (including both the employee and employer shares
of the social security and Medicare taxes). Under the stand-alone
retail sales tax, her tax bill would go up to $6,186 - a tax increase
of over 750%. A hypothetical married couple with two children making
$40,000 per year would pay an additional $6,553 in taxes, an increase
of more than 110% of total federal tax liability.
So much for Mike Huckabee, friend of the poor. Huckabee has scored
points in Republican debates by appealing to America's better nature.
Yet a flat tax system would be a great example of its greed over-
coming its better self. Core to the American mindset is the idea of
individual liberty - and with it, the dream of individual prosperity.
Anyone should be able to live - and prosper - on his own terms,
rewarded for hard work and talent. Fair enough. But on its own, that's
a recipe for a cruel, winner-take-all society.
Thankfully, Americans also have a great community spirit and deeply
value care and respect for your neighbour. A flat tax abandons those
latter beliefs. It fails to recognise that, like a blossom on the
vine, any individual's success stems from the society in which he
lives - its public education, its social welfare, its roads and
infrastructure, law and order, and a middle class well-off enough to
buy the products that made those individuals rich. If the flower sucks
all the nutrients from the vine, they both wither and die.
Americans are rightly fed up with their complicated and ever-changing
tax system. They spend $150bn every year just complying and having
their taxes collected. We can all agree it's nuts and needs
substantial reform. But don't fall for the snake oil of flat tax, just
because it's simpler. There are any number of ways to achieve tax
simplification within the existing progressive tax system. As
America's fragile economy once again becomes the number one concern
amongst voters, hopefully the media and candidates will start giving
tax reform the attention it deserves.
Tim Watkin is a freelance journalist in San Francisco.
http://www.commondreams.org/archive/2007/12/23/5967/
= = = =
STILL FEELING LIKE THE MAINSTREAM U.S. CORPORATE MEDIA
IS GIVING A FULL HONEST PICTURE OF WHAT'S GOING ON?
= = = =
= = = =
Sorry, we cannot read/reply to most usenet posts but welcome email
FOR MORE INFORMATION: http://EconomicDemocracy.org/wtc/ (peace)
http://economicdemocracy.org/eco/climate-summary.html (Climate)
And http://EconomicDemocracy.org/ (general)
New email: econdemocracy[at]gmail[dot]com
reform rejected a Fair Tax-like retail sales tax, saying it "would
increase the tax burden on the lower 80% of American families, as
ranked by cash income, by approximately $250bn per year. Such families
would pay 34.9% of all federal retail sales taxes, more than double
the 15.8% of federal income taxes they pay today."
They offered some specific examples of just how unfair a Fair Tax
would be: the Treasury Department estimates that a hypothetical single
mother with one child making $20,000 per year currently pays $723 in
total federal taxes (including both the employee and employer shares
of the social security and Medicare taxes). Under the stand-alone
retail sales tax, her tax bill would go up to $6,186 - a tax increase
of over 750%. A hypothetical married couple with two children making
$40,000 per year would pay an additional $6,553 in taxes, an increase
of more than 110% of total federal tax liability.
So much for Mike Huckabee, friend of the poor
=====
Published on Sunday, December 23, 2007 by The Guardian/UK
Tax Lunacy
America's tax system may be complex. But Mike Huckabee's plan to
institute a flat tax is sheer madness
by Tim Watkin
I've been waiting and waiting. For several weeks now Mike Huckabee has
been the rocket man on the Republican side of the presidential race,
and critics and journalists have been digging around in his policies
and past to see if the poll surge is backed by substance. As a result,
stories have broken about the former Arkansas governor's desire in the
early 1990s to isolate Aids sufferers and his belief that wives should
submit to their husband. We already knew he doesn't believe in
evolution, so these hicksville beliefs, while concerning, were hardly
surprising. Indeed, these beliefs and the fundamentalist Christian
worldview they stem from are exactly why Huckabee has been climbing
the poll ladder in states such as Iowa and South Carolina.
However, in the midst of Huckabee's platform is a policy that will
charm the good farmers of Iowa about as much as a cloud of locusts.
Huckabee, the supposed friend of the poor and all-round nice guy,
supports a flat tax - in his case a flat tax on consumption, as
opposed to one on income, that its supporters call the Fair Tax. A
more ironic name is hard to imagine. His scheme would be about as fair
to average working Americans and their hard-earned income as that
flock of locusts would be to a field of corn.
In any other western democracy, being a flat-taxer would put Huckabee
at the outer limits of political sanity. The detail is complicated,
but the concept is as simple as the name suggests: an end to a
progressive income tax, an end to the consensus that those who can
afford to contribute more to the good order and running of society
should pay more than those struggling to get by. Outside of the former
Soviet states, a flat tax system is a political non-starter for the
simple reason that asking you, me and Bill Gates to pay the same tax
rate on either our income or the goods and services we buy, would
destabilise a country's economy, government spending and social
cohesion.
So when Huckabee says, "When the Fair Tax becomes law, it will be like
waving a magic wand releasing us from pain and unfairness," why isn't
he laughed all the way back to Little Rock? Why have I waited in vain
for the media to start reporting the lunacy of huckster Huckabee's
plan? (With the exception of Rich Lowry in the New York Post). Because
on the Republican side of the ticket he's far from alone. It's one of
the unwritten stories of the campaign thus far - incredibly, most of
the Republican contenders support some kind of flat tax.
Having called the idea a "disaster" in the 1990s, Rudy Giuliani has
gone all Mitt Romney-esque and now likes the idea in some unspecified
form. Fred Thompson wants a voluntary flat tax. And even old John
McCain has spoken admiringly of it, although his latest economic
policies seem to assume an ongoing income tax. Only Romney has called
flat taxes "unfair". It's hardly surprising to see Republican
politicians revelling in the opportunity to claim they could close
down the IRS, but it's surprising no-one's looking into the details of
what such a radical claims would mean in practice.
The idea of a one-size-fits-all tax rate first got mainstream
attention in the US when mega-millionaire Steve Forbes (who has
endorsed Giuliani this time) ran for president as a flat-tax reformer
in the 1990s. Like school vouchers, it was a new right cause celebre
for a while, but when the Republicans were finally in a position to
push through major tax reform in the early 2000s they backed away from
it. Now, it seems to be back in vogue. Just without any media
scrutiny.
There are any number of practical reasons why a flat tax is a bad idea
in practice. For one, switching to the Fair Tax - that is, an
effective 30% tax rate on every purchase, with rebates paid in advance
on purchases up to the poverty level - would mean repealing the 16th
amendment of the US constitution, which empowers Congress to "collect
taxes on incomes", but not consumption. Huckabee's as likely to get
the constitution amended for tax reform as he is to walk on water.
(Some commentators, such as Dean Baker in Comment is Free earlier this
week, point out that in reality the rate could climb as high as 40%.)
For another, government services would depend on people continually
increasing their spending at a time in history when we need to learn
to live sustainably and save more.
Flat taxes also mean an end to tax deductions, which in the US means
an end to deductions on household mortgages and the whole array of
deductions businesses claim each year. If you've every wondered if the
current mortgage crisis could get worse, or asked what it could take
to tip America over the edge and into, not just a recession, but a
full-on stock market crash, there's your answer.
Without doubt it would increase inequality in a country that is
already as dangerously skewed as it was in the Gilded Age of the
1920s. Averaged across the 1920s, the richest 10% of Americans grabbed
43.6% of total income (excluding capital gains), and the richest 1% a
whopping 17.3%. In 2005 the comparable figures were 44.3% and 17.4%.
The richest Americans already have a much greater slice of the pie
than they have had for several generations and are doing very nicely
indeed under a graduated tax rate (complete with Bush's tax cuts). A
flat tax would destroy the system that seeks to redistribute some of
the country's finite wealth amongst its people in the form of schools,
roads and other public goods. And before the whining begins, this
isn't a cry of class warfare, it's economic common sense. Even if you
reject arguments around fairness and moral obligations to those less
fortunate, by and large economies with more equality are more
prosperous and the countries more stable.
None other than President Bush's 2005 advisory panel on federal tax
reform rejected a Fair Tax-like retail sales tax, saying it "would
increase the tax burden on the lower 80% of American families, as
ranked by cash income, by approximately $250bn per year. Such families
would pay 34.9% of all federal retail sales taxes, more than double
the 15.8% of federal income taxes they pay today."
They offered some specific examples of just how unfair a Fair Tax
would be: the Treasury Department estimates that a hypothetical single
mother with one child making $20,000 per year currently pays $723 in
total federal taxes (including both the employee and employer shares
of the social security and Medicare taxes). Under the stand-alone
retail sales tax, her tax bill would go up to $6,186 - a tax increase
of over 750%. A hypothetical married couple with two children making
$40,000 per year would pay an additional $6,553 in taxes, an increase
of more than 110% of total federal tax liability.
So much for Mike Huckabee, friend of the poor. Huckabee has scored
points in Republican debates by appealing to America's better nature.
Yet a flat tax system would be a great example of its greed over-
coming its better self. Core to the American mindset is the idea of
individual liberty - and with it, the dream of individual prosperity.
Anyone should be able to live - and prosper - on his own terms,
rewarded for hard work and talent. Fair enough. But on its own, that's
a recipe for a cruel, winner-take-all society.
Thankfully, Americans also have a great community spirit and deeply
value care and respect for your neighbour. A flat tax abandons those
latter beliefs. It fails to recognise that, like a blossom on the
vine, any individual's success stems from the society in which he
lives - its public education, its social welfare, its roads and
infrastructure, law and order, and a middle class well-off enough to
buy the products that made those individuals rich. If the flower sucks
all the nutrients from the vine, they both wither and die.
Americans are rightly fed up with their complicated and ever-changing
tax system. They spend $150bn every year just complying and having
their taxes collected. We can all agree it's nuts and needs
substantial reform. But don't fall for the snake oil of flat tax, just
because it's simpler. There are any number of ways to achieve tax
simplification within the existing progressive tax system. As
America's fragile economy once again becomes the number one concern
amongst voters, hopefully the media and candidates will start giving
tax reform the attention it deserves.
Tim Watkin is a freelance journalist in San Francisco.
http://www.commondreams.org/archive/2007/12/23/5967/
= = = =
STILL FEELING LIKE THE MAINSTREAM U.S. CORPORATE MEDIA
IS GIVING A FULL HONEST PICTURE OF WHAT'S GOING ON?
= = = =
= = = =
Sorry, we cannot read/reply to most usenet posts but welcome email
FOR MORE INFORMATION: http://EconomicDemocracy.org/wtc/ (peace)
http://economicdemocracy.org/eco/climate-summary.html (Climate)
And http://EconomicDemocracy.org/ (general)
New email: econdemocracy[at]gmail[dot]com
