Fair Tax

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.

Advertisements

Leave a comment

Filed under economics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s