I wish I had the time to keep track of all the tax proposals that presidential candidates come up with. In particular I’d like to know more about Huckabee’s “Fair Tax”, a 30% national sales tax would replace all income and payroll taxes. It sounds regressive; generally, a sales tax is. But it depends on how its structured, and they say Huckabee’s a populist, a maverick who isn’t afraid to challenge the Greed Squad (aka the GOP economic conservative wing), so who knows, maybe its a good thing…
Not. Kevin Drum gives us the lowdown on how this works and what the major problem is:
“…it’s retirement savings, which would end up getting taxed twice. Say you earn $1000 at age 64, pay taxes on it, and then stick the remaining $800 in the bank. The next year you turn 65. Under current law, that retirement money is yours free and clear because you’ve already paid taxes on it. But if a sales tax is suddenly legislated into existence, that $800 isn’t worth $800. It’s only worth about $600. Surprise! All that money you’ve saved for retirement is suddenly worth a whole lot less than you thought it was. Better not plan on taking any of those Caribbean cruises you’ve been dreaming about.”
I doubt that Huckabee even knows how this thing works. Like so many things GOP. It’s probably just a brain fart from some true believer in GOP USA.
Update: of course a lot of retirement savings is in tax deferred investments, so that wouldn’t be taxed twice. Still, Social Security is tax free for the majority of Americans. Not under the FairTax.