Wednesday, January 16, 2008

The Fair Tax

I've read up some on the fair tax, but mostly just understood some of the basics of it. In order for it to be put into place, the 16th amendment would need to be repealed, several Democrat Congressmen would need to support it, and then you would need to sell it to the baby boomer generation that has saved their money (after paying taxes on it already) to retire on. It looks to me like a non-starter and the political candidates that use it as part of their platform aren't helping their case to well, in my opinion.

J. Bradford Delong is a liberal economist who has a good writeup on it that shows even more downside. I ran across Brad DeLong: The Fair Tax while looking for an article from him about working with Hillary and her health care fiasco back in 1993 and 1994. I haven't found that one yet, but for those of you curious about what an economist thinks of the fair tax check Brad's article out.
  • Mike Huckabee wants to abolish the IRS: His loopy tax plan would be an economic disaster -- but it's more honest than the schemes being peddled by the establishment Republican candidates.
Brad points out that the actual consumption tax would end up being higher than the 23% claimed by the fair tax supporters. Up to as much as 57%.

He also points out that it's a tax break for people making over $200,000 a year, but a tax hit for people making $30,000 to $200,000.

He has several other points to, so go check out the whole article.

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