Ed Brayton is a journalist, commentator and speaker. He is the co-founder and president of 
A couple of recent polls shows that Mike Huckabee is both the most popular choice to be the Republican nominee for president in 2012, he also fares the best against Obama head to head. First, a Rasmussen poll showed Huckabee leading his presumptive opponents with 29%. Mitt Romney got 24% and Sarah Palin was at 18%.
Then a newer poll from Public Policy Polling showed that while all the GOP candidates would lose to Obama at the moment, Huckabee fared the best of the group, losing 47-43 with 10% undecided.Romney was next at 48-40, Palin was at 52-40. Now, bearing in mind that it is far too early for such poll results to be meaningful, it's never too early to remind ourselves what Huckabee said during the last campaign:
"I have opponents in this race who do not want to change the Constitution," Huckabee told a Michigan audience on Monday. "But I believe it's a lot easier to change the Constitution than it would be to change the word of the living god. And that's what we need to do -- to amend the Constitution so it's in God's standards rather than try to change God's standards so it lines up with some contemporary view."
Absolutely frightening. So our leading candidates for the GOP are Huckabee, a nutball prosperity gospel preacher who wants to make the Constitution into an explicitly Christian document; Sarah Palin, a nutball Pentecostal who believes in faith healing and credits her political success to an utterly crazy African pastor who spends his time chasing witches out of villages; and Mitt Romney. A Mormon.
Politics
Comments
He's got his own Frakking TV show. That's got to be an advantage.
Posted by: Mr. Upright | October 26, 2009 9:30 AM
Huckabee has always scared me. He is just so down home likable and seems very reasonable.
Would there really be a downside to just giving the religious crazies and non left wing Republicans their own sovereign state? Everything below the Mason Dixon line and count ourselves lucky. I'm sure they wouldn't want a dime of Federal money. There may come a time when that would seems like a very good deal. ;)
Posted by: gingerbaker | October 26, 2009 9:34 AM
but but but... he plays the base guitar! how could he be bad?
Actually the only thing he needs to do is make sure he weighs less than Al Gore, so he can call Al fat and make fun of him. The base loves that...
Posted by: Kevin(NYC( | October 26, 2009 9:38 AM
I'm not surprised, as he is the most civil of the leading GOPers. Even though I disagree with him on most issues, I don't mind watching him when he debates a topic (which he has done with Jon Stewart twice in good fashion).
But maybe his most disturbing position outside of religion is that he is in favor of the "fair tax". I bought my mom (a strict Republican) his book on tape, and I listened to it as well, with the "fair tax" being the most objectionable thing he said (as well as being the most contradictory).
I would love to see him get the nomination though. Because when election time comes, I trust that our country will be smart enough to not elect a religious leader into the White House.
Posted by: Jordan G | October 26, 2009 9:41 AM
Jordan G - please articulate your objections to the FairTax intiative. Would it depress after-tax median income, GDP, job opportunities, trade balances, wage depression, what?
Posted by: Michael Heath | October 26, 2009 9:47 AM
The Huckster is most assuredly a frightening prospect in any position of power. He and Scalia make quite a set of bookends as long as the books are all religious (and xtian at that).
I do not believe he is electable nationally but, like Paloon, polarizes the right causing the disaffection of many independents. In that sense, he is good for the democrats but it is way too early for that sort of baloney. I believe that the more he speaks, the more clearly he displays his delusional religious crap and begins to take on water. Unless he recants, he will sink long before 2012.
Posted by: MikeMa | October 26, 2009 10:24 AM
I wouldn't consider him electable either, but that's assuming a rational electorate. The way things are going the crazy and not-Obama vote could be substantial a few years from now.
Posted by: senor | October 26, 2009 10:35 AM
Come the 2012 primary season, I would so absolutely help finance spots showing that video to voters. Finally, a clearly enunciated choice on the issues.
IMHO, he could run on that platform alone and win the nomination hands down. The only thing that might stop him would be massive plutocratic sponsorship of a competitor so that (as in 1999) the race was effectively over before it started.
Posted by: D. C. Sessions | October 26, 2009 10:47 AM
@gingerbaker:
While I am quite willing to give them The Holy Christian Kingdom of North America, there are a few things we need in exchange. Such as Greater North America and the work of Charles and Katherine Turner.
Posted by: Rick Pikul | October 26, 2009 10:47 AM
I don't see what everyone is worried about. This is the best news I have heard in a while. Every Dem should be jumping for joy because any of these three nut-jobs will basically be gift wrapping Obama a second term. Sounds good to me!
And while the Rassmussen poll does show Huckabee closing in I am not too worried. These polls usually show such results, but are completely different during the actual election year. I think the majority of Americans would cringe at the thought of a Huckabee, Palin, Romney presidency and will gleefully cast their ballot for Obama.
At least this unaffiliated voter will!
Posted by: bradhart78 | October 26, 2009 10:49 AM
The only reason McCain won last year was because social conservatives split their vote amongst Romney and Huckabee and the party's base still didn't look as insane to independents as they were, providing an artifice of support for McCain that crumbled further into the electoral season.
Huckabee is perfectly representative of those still claiming affiliation to the GOP in terms of the voting constituency, in spite of Palin and Limbaugh's objections towards him. Romney reflects the financial constituency of what's left of the GOP's plutocracy which has always required aligning itself with other caucuses given there's never been many of them in terms of numbers. Romney obviously has more difficulties with the current GOP voting constituency than Huckabee or Palin though I know many social conservatives who voted for Romney in the primaries for purely pragmatic reasons (and I think they were correct that Romney was their best shot last year, which the party probably realized once the credit crisis hit and McCain totally freaked out).
It would have been a far more interesting election season last year if Huckabee or Romney ran against Obama since it would have better defined the challenges the party faces in the future.
Romney came off as completely empty-headed in the debates, which surprised me, I thought he had a lot more on the ball in terms of general intelligence. Instead he came off as a very good looking suit. He also proved to know little regarding history, economics, or the constitution - where Obama looked weak only on economics but surrounded himself with economic heavyweights to mitigate his mundane ignorance in that realm (an area which Kerry did as well but failed to reveal his economic advisors in his 2004 campaign, to his detriment).
Posted by: Michael Heath | October 26, 2009 10:52 AM
I agree that the top tier (at least in terms of support) of GOP likelies at this point represent a range of crazy, but I'm curious what chatter there is about the B squad. Who else is out there that is being considered should Huck, Barbie, and Mitt prove unsupportable?
Our own Tim Pawlenty (TPaw) has been mentioned, but is that serious? Who else?
Posted by: chris | October 26, 2009 10:55 AM
Chris @ 12 - I see nothing about Mr. Romney that suggests "crazy". Vapid? Yes. Unprincipled? Yes. But crazy? I don't see it.
And yes, I realize he's a Mormon. However his brand of Mormonism appears consistent with that of many Catholics, a cultural tradition he and his family are rooted within while not taking the dogma all that seriously when it comes to applying it to public policy - unless there's political gain to be had by doing so.
Posted by: Michael Heath | October 26, 2009 11:05 AM
Well, I don't think a lot of them would "gleefully" cast a vote for Obama, but they'd probably do it with a certain sense of relief that the nutball GOP candidate wasn't going to win.
How a Sarah Palin, for example, can be considered a credible candidate by any voter with a functioning nervous system is still beyond my comprehension. Huckabee, by contrast, is still a religious nutball, but he's not massively ignorant in the same way Palin is -- he's merely blinded by religious fanaticism.
Romney isn't a nutball, though he's tried to convince the nutballs that he's actually one of them. However, the Mormonism alone will continue to make him anathema to the religious right.
Posted by: Dave | October 26, 2009 11:13 AM
Maybe they are, but I'm not a member of the Democratic Party. While I certainly don't want the current incarnation of the GOP to regain power, I also don't want Obama to have a cakewalk into a second term. I find government behaves best only when it sincerely believes it will be out on its ass if it doesn't. We need a viable opposition, with cogent arguments and realistic policy alternatives.
Posted by: DaveL | October 26, 2009 11:14 AM
Ack, no! I think we here in Maryland should be annexed by the northern states to show compassion.
Posted by: Mandrake | October 26, 2009 11:20 AM
I took a quick look at the fair tax at wikipedia. It looks to be a partially regressive tax, basically a 30% effective tax rate on purchases. Exemptions seem to favor upper income households as savings, investments, or education tuition expenses are not taxed. It does seem to be a somewhat favorable tax for households below or just above the poverty line, but these household pay very little taxes as it is , but under the fair tax they would be dependent on monthly government rebate checks.
The middle class seems to get hammered by this tax, however. And the top 1% to 5% of households apparently will see their tax burdens drop even further from current levels, which are still very low compared to levels of 40-50 years ago.
I use a lot of modifiers here, because the wiki shows that analyses on this tax are all over the place, with some glaring disagreements even on relative tax burdens.
The other troubling aspect of the tax is how it might transform investment, real estate, and the black markets.
It does look more progressive than the flat tax, and our current tax system is a train wreck. It is an interesting proposal. Of course, it is favored by Republicans which makes me distrust it right off the bat. :D
Posted by: gingerbaker | October 26, 2009 11:33 AM
"Jordan G - please articulate your objections to the FairTax intiative. Would it depress after-tax median income, GDP, job opportunities, trade balances, wage depression, what?"
I'm not Jordan G, but if I may cut in:
The FairTax (which would replace federal income tax with a 30% national sales tax, according to the wiki) is profoundly regressive - that is to say, it will hit low-income people the hardest, because they spend the greatest percent of their income on items for personal consumption.
In order to get around this, supporters of the FairTax also suggest a 'prebate' - money from the government distributed yearly to all families (not just the poorest) to cover the sales tax on the first $10k of purchases. As a conservative, I can see many many ways that this sort of welfare payment could go wrong.
Since that 'prebate' only goes to lawful residents, the FairTax would levy a tremendously unfair tax burden on illegal immigrants (sure, they're not supposed to be here, but it's also not fair to tax them 30% on food, ffs).
The FairTax would seriously depress the commercial economy (since stuff is 30% more expensive - talk about sticker shock!) leading to a revival of the barter system and an enormous black market (like cigarettes, only on everything), with associated enforcement costs w/r/t tax evasion, not to mention, you know, throwing us into yet another recession :)
The FairTax is being pushed by the Grover Norquist crowd, who believe that taxation via income withholding is too painless; they want people to feel every penny of tax they pay, in order to gin up public outrage and compel the government to tax less (which, with the current crop of Republicans, doesn't mean that the government spends less, just that it borrows more - where the HELL did the fiscal conservatives get to?). It's a cynical partisan ploy that will cripple the United States government if enacted, pushed by Paulites and Groverians out to drown government in their bathtubs, as the saying goes.
Want more? I can go all day on this :)
Posted by: mad the swine | October 26, 2009 11:39 AM
@5 Michael
Jordan G - please articulate your objections to the FairTax intiative. Would it depress after-tax median income, GDP, job opportunities, trade balances, wage depression, what?
My objection with the "fair tax" is that it encourages the wrong thing. If the only time taxes are paid is when you buy things, it will be an institutionalized tax avoidance strategy for the wealthy. The wealthy already have the "Rich Dad, Poor Dad" mindset of investing rather than buying, but at least now they eventually pay taxes from their investment gains. If you eliminate those tax revenues, it will make buying things even more unattractive to the wealthy, and they'll simply invest more of their income.
If we discourage buying, our economy can not survive. All discretionary spending will decrease (as it will be more expensive).
So the tax burden will shift from those who can afford it to those who can't. The lowest income families, which have a large percentage of their expenditure going to essentials such as groceries, will now have to pay more taxes. Families with discretionary income will spend less and invest more, thereby paying a lower portion of the nation's tax revenue.
So, as to the stats you referenced, my opinion would be:
GDP would decrease from the vast number of industries suddenly becoming more expensive, leading to lower returns on investment. Domestic demand would plummit.
Job opportunities would have an initial increase, as investment would spike, but then when the low demand for those new ventures is realized, those jobs will be lost, along with many others.
The cost of living would increase, and the government would have to raise wages as a result (increase the minimum wage), but it is questionable (and doubtful) whether they would match the increase in the cost of living. And with the higher minimum wage, that would also negatively impact job creation.
Trade balances- I'm not 100% sure how the initiative addresses tariffs and trade policy. If the imported goods also have the increased taxes placed on them, the demand for them will decrease as well, which will help to balance the trade deficit. I guess this is maybe the one bright spot of the initiative. If we can increase the demand overseas for our products (which could be possible from the increased investment), then that would have positive benefits on the GDP, job opportunities, and ROI to counter the negative impact of lower domestic demand. But it is by no means certain that foreign demand would increase, as our products would still be relatively expensive (even more so, as labor costs would have to increase in order for our lower class families to survive).
So that's my best analysis of the "fair tax". I am open to a logical argument in favor of it. Especially since your request got me to realize one benefit I had not thought of before (the trade impact), I assume you are aware of others.
Posted by: Jordan G | October 26, 2009 11:50 AM
I really hate Presidential prediction polls three years out from the actual election. How many recent party nominees were poll leaders three years in advance?
Obama wasn't. McCain wasn't. I don't think Kerry or Dole were. Dubya and Clinton probably weren't even *listed* on the polls three years before they were elected.
I can't say I'm surprised or terribly bothered with a poll asking "Romney, Palin, Huckabee, Gingrich, Pawlenty, or somebody else?", that more people didn't pick the latter option. I wish they had, but I imagine that most polled persons feel some pressure to pick a named option.
Heck, just look at Rasmussen's own question, which favors exactly that response: "If you had a choice between Mitt Romney, Sarah Palin, Mike Huckabee, Newt Gingrich, and Tim Pawlenty, for whom would you vote?"
Posted by: Loren | October 26, 2009 11:59 AM
As others mentioned, it's regressive as Hell. It's basic flaw is the same as the income tax (it punishes economic activity, which is theoretically what you want) but it's worst in that it applies disproportionately to the highest-velocity parts of the economy.
IMHO, if we're going to screw around with the basic structure of the tax system we might as well go all the way to a general tax on wealth. Stocks, bonds, real estate, you name it -- a flat tax on property. Historically the big problem with doing that is that it's always been hard to do, but with the economy so heavily electronic now it's much simpler. Even that original DeGrazia you have in the hunting lodge is insured, after all.
The benefit of a "property tax" (besides being intrinsically progressive) is that it favors productive use of resources rather than conservative ones -- you want the money to grow faster than the tax rate, instead of hiding in a tax shelter.
Posted by: D. C. Sessions | October 26, 2009 12:06 PM
Not if the economy keeps tanking. If the economy is sufficiently bad in 2012, Obama could lose to any of them.
Posted by: llewelly | October 26, 2009 12:11 PM
mad the swine and ginger baker - both of you avoided the primary context I requested and one of you framed his tax liablities in a context so narrow it avoids the biggest tax poor people pay, which is currently regressive. So I ask again:
You seem to be arguing the following:
Even if GDP grows, job opportunities grow, wages increase, and my after-tax income goes up, I reject the FairTax because a poor person might be paying a marginally higher percentage of their disposable income than their richer neighbor and in spite of the fact this poor person's job opportunities, wages, and after-tax income rises. That is not a rational argument and while you might not think my framing is fair, I did set the stage for a framing consistent with the national interest in my original question to avoid class war arguments that avoid addressing the economics of the matter.
In addition, you both ignored the embedded tax we all pay in the goods and services we purchase that fund that product/service's business tax liabilities (e.g., corporate income tax, employer's share of employee withholding taxes - this one also depresses wages). That portion of the price we pay for goods and services is a very steep regressive tax on the poor, as is the payroll withholding taxes for entitlements they also pay as employees.
Liberals need to get off this worrying about my neighbor bit. It's as irrational as many conservative positions, e.g., there is no room to tax the rich more (there's plenty of room, even their conservative economists admit that).
There is a reason I framed my initial question the way I did and italicized "median" in after-tax income. Again, why the objection to the FairTax? Would it depress after-tax median income, GDP, job opportunities, trade balances, wage depression, what?
Rejecting a tax scheme because you don't like some of the proponents and would make you better off but might help a richer person even more are not very respectful arguments. I've made many arguments to conservatives that we were better off with a 39.6% top rate with a balanced federal budget since it kept the real rate interest lower ("real"= nominal rates minus inflation), which encouraged private capital investment and our stock holdings grew. I.e., would you rather make $300K with a 35% tax rate or $500K with a 39.6% rate? That is the story of the Bush 41 and Clinton era. One must consider the proper framing of taxes and economic growth to argue optimal schemes.
A respectful position is one that attempts to grow the economy in a manner that optimizes private capital investment in America, grows the economy, increases jobs (remember we've been in a jobless recovery since 2001 largely due to lower mfg'ing costs elsewhere and no next big thing, but also due to tax avoidance by the very rich who store capital off-shore), increases wages - especially for the poor and working class, and increases after-tax median net income. That's a respectful framing position of a tax policy argument. Have at it.
I've been an advocate of a consumption tax since the late-1990s (though I support policies a little divergent from the FairTax crowd). In that time I've seen only more economists resolve themselves to the fact either a VAT or a consumption tax is best for long-term economic growth of mature economies, liberals are increasingly getting on that band wagon as well though with a dip of the toe in the water (VAT for new tax needs without getting rid of the income and withholding taxes).
Obama's biggest opportunity to solve the federal debt problem is the same opportunity all large businesses successfully use to repair really stupid financial mistakes they made previously - grow their way out. Consumption taxes rather than income taxes are generally thought to provide optimal growth opportunities. (If they don't grow their way out, they fail, or get sold at a discount - the latter has been happening to America since the 1980s.).
In addition, there is no reason a consumption tax can't be tweaked for certain goods or services to make it more progressive, excluding some items like states do now with their sales tax, or increasing the rate for luxury goods - like cars that are sold for more than $60K. My point was that I suspected Jordan G rejected the FairTax for reasons having little to do with economics, your responses validated my previous observation that liberals don't give the idea fair consideration in spite of its promise.
Posted by: Michael Heath | October 26, 2009 12:26 PM
Michael, about "which surprised me, I thought he had a lot more on the ball in terms of general intelligence. Instead he came off as a very good looking suit."
Perhaps it's because I compare Mitt's comments and political outlook to that of his late father George, our former governor, but I've never been impressed with Mitt's ability.
Final comment - I've never seen a compelling argument that a fair tax would raise anything resembling enough money to fund essential services, let alone any other actions. It could be that the locals here in MI aren't good at making their arguments.
Posted by: dean | October 26, 2009 12:45 PM
Jordan G @ 19 - do you have citations for your argument? They sound completely surreal and they completely contradict the ones I've read, which are best summated in both of Rep. Linder's books on the FairTax - though I support a divergent strategy from the FairTax. In fact it sounds like you rationalized all that in your head.
Just as one example, I've heard zero economists argue the FairTax would depress GDP, instead the estimations are all quite high. Here is one of many citations on this matter:
While the Beacon Hill Institute are conservative economists, their work is respected and there are also non-partisan economic insitutions who've concluded the same. In addition, it's not like the plutocracy favors the FairTax, they do not. Bush wouldn't even allow his tax reform research committee to study it because the current tax scheme helps current businesses create barriers to competition from new companies or emerging technologies. They do this to keep their hold on the government and maintain a regulatory framework harmful to new businesses and technologies, and they defend their own high prices because of these oligarchies by way of how they manipulate tax credits, subsidies, and the depreciation schedule of their exhaustible capital investments - all of which would mostly go away (except regulatory pressures) with a consumption tax.
Posted by: Michael Heath | October 26, 2009 12:46 PM
With out without wanting to re-write the constitution to create God's vision on earth the GOP is doing a good job of imploding anyway.
Quote: "An otherwise sleepy special election in the sprawling NY-23 congressional district hard by the Canadian border has become the main event in next week's election, overshadowing the gubernatorial races in New Jersey and Virginia. The battle to capture the seat that opened up when John McHugh (R) resigned to become Secretary of the Army has fractured the Republican party badly. The Republican nominee, assemblywoman Deirdre 'Dede' Scozzafava, was chosen by the 11 Republican county chairman in the district with an eye to winning the election in this swing (R+1) district. She is pro choice and pro gay marriage, something many area conservatives cannot stomach so they are supporting the Conservative Party's candidate, local businessman, Doug Hoffman. But now many high-profile Republicans are now also supporting Hoffman against the NRCC and the Republican establishment. These include former Alaska governor Sarah Palin, former House majority leader Dick Armey, former senators Rick Santorum and Fred Thompson, Rep. Michelle Bachmann (R-MN), and former Ohio Secretary of State Ken Blackwell. Numerous conservative organizations including the Club for Growth and the Wall Street Journal also support Hoffman.
If this split results in newbie businessman Bill Owens (D) winning, an increasingly likely possibility given a recent poll showing Owens leading Scozzafava 35% to 30% (with Hoffman at 23%), all hell will break out within the Republican party. Conservatives will see this as a victory and say to the party establishment: 'If you nominate moderates, we will make sure that you lose' to which the party establishment will reply: 'If we run only true-blue conservatives, we will be a minority forever.' It would be as if Ralph Nader's supporters tried to blackmail the Democrats with: 'If you don't run extreme left candidates like Nader, we will see to it that you lose.' But with Florida 2000 still fresh in Democrats' minds, nothing like this has happened."
Source.
Posted by: David Durant | October 26, 2009 1:14 PM
Michael @13
if the word Mormon isn't enough to scare you shitless, you need to meet more Mormons....
signed, trapped in Utah....
Posted by: shane | October 26, 2009 1:40 PM
@25 Michael.
Do you disagree with my opinion that domestic demand for goods would decrease from the "fair tax"? I'm by no means well-read in this topic (as I am sure you are), but I do have a reasonable economics education, and I am aware that increased taxes lowers the optimal quantity of any given product. Even if some people do have more expendable money (as a result of not paying payroll taxes), they'll still be weighing the choice between consumption or investment, and the taxes will make the former much less attractive.
Even if GDP stays the same- increasing investment, while decreasing consumption, is not a sustainable policy.
Unless you are relying on investments not providing much of a return, thereby making them less attractive as well. So both consumption and investment are equally unattractive, and maybe some would then choose consumption.
Understand though that I am also coming from a socialist-type point of view. I believe that policies should be made with an ideal distribution of wealth in mind, rather than setting policies and letting the distribution of wealth turn out however it may. And in my opinion, the "fair tax" would result in a distribution of wealth that is not morally optimal (as others have argued in different terms).
Posted by: Jordan G | October 26, 2009 1:43 PM
Funny how you don't really need any adjectives to describe Romney's crazy apart from "Mormon". ZING!
Posted by: Sara | October 26, 2009 2:10 PM
Gah, the only thing scarier than Huckabee for president is Romney for president. I'm independent politically (not neutral; it's that the Democratic party is too centrist), but I actually registered as a Republican in for the 2008 primaries, just so I could vote for McCain and keep the two worst ones out of it.
For those of you who are optimistic that Americans won't elect Huckabee or Romney, let me remind you that we actually elected G.W. Bush the second time, even after he had proven himself to be incompetent.
Posted by: catgirl | October 26, 2009 2:16 PM
Despite whatever else Huckabee has said I've always had some greater amount of respect for him for at least having some belief in economic justice. I'm not saying he's got the right solution, but the fact that he was even talking about it was good, to me. And out of the list Ed gave of GOP front-runners, he's still my favorite, even if it be that he is crazy.
Posted by: KKairos | October 26, 2009 3:01 PM
Huckabee is the first politician I've seen that really resembles the fictional nutjob politician Greg Stillson in Stephen King's "The Dead Zone". A likable, hail-fellow-well-met kind of "guy you'd like to have a beer with" politician who, when you look deeper, scares the hell out of you.
Huckabee is scary because he seems sane on the surface.
And I second the humor factor of Ed's descriptions of the three-
Huckabee- he's X,Y and Z
Palin- she's D,E and F.
Romney- he's Mormon.
And Michael Heath, his Mormonism is a big red flag. There is a wide diversity of adherents to Catholicism, when it comes to adherence to doctrine and positions on such things as social justice, civil rights, abortion and gay marriage.
Mormonism is FAR less forgiving of heresy on these issues. It really is true that Mormonism is a great deal more monolithic when it comes down to what people are allowed to believe and still call themselves Mormons. This becomes abundantly clear when you spend some time conversing in depth with a variety of Mormons.
I can dig up some references that may help you understand this better. A commenter at Pharyngula named Lynna is also a very good source of how the church operates to enforce this monolithic viewpoint, and what kinds of pressures the church applies to members to conform.
IMO, there is no such thing as "culturally Mormon" that is, in any sense, similar to what we mean when we say "culturally Catholic" or "culturally Jewish".
Posted by: Rick R | October 26, 2009 3:31 PM
For once, magic underwear is the sanest idea out there. In a separate Rasmussen poll, Romney and Huckabee had double-digit leads over Palin in 2-way races. It didn't test Huckabee vs. Romney. But nationwide polls are irrelevant-they're horrible predictors of what will happen in Iowa, New Hampshire and South Carolina-and it's still 2+ years until Iowa votes.
Posted by: Kwyjibo | October 26, 2009 4:05 PM
@ #31: I remember at least a vocal minority of Christian Reich types dumping Huckabee and calling him a traitor because he'd shown less than the expected 100% hostility toward the idea of gummint-run health-care.
@ #32: I agree about the Mormon Church (I've heard nonconformists get kicked out of the church, which means they lose any chance to benefit from all that money they'd been required to tithe to the church). I wonder how well the public will react to a political campaign that tries to confront Romney over his church's questionable actions.
Posted by: Raging Bee | October 26, 2009 4:08 PM
Synergy:
A Romney-Huckabee ticket, with Palin as Sec'y of State!
Can't miss. Watch it happen, people.
Posted by: threetorches | October 26, 2009 4:14 PM
Michael Heath:
I don't have a clue what the effect of the fair tax would be on those parameters, and as far as I can see from my quick perusal of the wikipedia entry, economists don't either, as they, as I said, contradict each other at virtually every juncture.
I do believe in progressive tax structures, however, as I feel that they represent the American ethos which prevailed until Reagan and the ultraconservative Republicans like Norquist got on the scene and started to distort the relationship between Americans and their government. I think it was FDR who captured the American sentiment that government was devised to protect the ordinary citizen from the wealthy and powerful, when he said that (quoted loosely) " There is no reason for any American to make more than $200,000 ( ~year 2000 adjusted dollars) per year". The upper bracket at that time was, I believe, over 90%.
Consumption taxes are quintessentially regressive, so there must be a significant amount of compensation for this if the fair tax is going to appeal. From the looks of it, I have doubts about whether the middle class is sufficiently protected. That is the extent of my analysis. I don't see why you should conclude that " your response validated my previous observation that liberals don't give the idea fair consideration in spite of its promise." I said the fair tax looks interesting, but I can't see how to go further than that until such time as there is some degree of consensus among economists on what its actual economic and social justice ramifications will be.
Posted by: gingerbaker | October 26, 2009 4:19 PM
Huckabee would never share a ticket with Romney, and the reverse is probably true as well. I believe there's bad blood between them.
Posted by: Jordan G | October 26, 2009 4:20 PM
Am i missing something in the "fair tax" debate, or wouldn't we all see a 20 - 30% increase in our takehome pay as soon as the current income tax withholding went away?
Posted by: skmarshall | October 26, 2009 4:51 PM
I think the GOP should nominate Mitch Daniels. Not that I'm a fan, but his resume is far superior to any other major candidate yet mentioned. It helps that his state is in the black, and he's not a religious wacko. I don't think he wants it, though.
Posted by: jws | October 26, 2009 5:00 PM
As True Christian™ voters, we've gathered a list of all of Pastor/President Mike Huckabee's beliefs and placed them below. Please feel free to spread the good news of Jesus Christ and Pastor/President Huckabee to your family and friends so they know without a doubt who God wants them to put into the White House for the upcoming election.
Posted by: TRUECRISTIAN | October 26, 2009 5:07 PM
"Would it [FairTax] depress after-tax median income, GDP, job opportunities, trade balances, wage depression, what?"
Hi again.
After-tax median income? Lol. Yes, if you eliminate the federal income tax, after-tax income will increase. Who'd have thought?
GDP? Yes, GDP will decrease, and significantly, because (as Jordan points out) consumer expenditures will decrease, and consumer expenditures power the wheel of the economy [ie, money spent by consumers turns into wages which go back to the consumer as income to be spent again; the faster the wheel spins, the faster the economy grows]. As for your argument that prices on consumer goods will decrease, because businesses no longer have to factor in their own income tax? You know what we call that? Deflation. Not a good thing, for many reasons. (Also: never mind factoring in their own income tax; they'll have to cut prices drastically to react to consumer FairTax sticker shock - again, extremely painful in the short run, and, best case, neutral in the long run.) The whole point, and the whole problem, is that the FairTax (tm) will funnel income away from consumer goods into investments, savings, and other non-taxable benefits, which (1) depresses the economy, and (2) screws over people who are forced to spend large percentages of their income on consumer goods (like food, for instance) - although those latter are surely beneath your notice :P
Job opportunities? Don't usually show up in a recession, you know?
Trade balances? Well, if the FairTax is applied to US-made foreign goods, I can see a lot of exports having trouble competing - if it isn't, I can see a lot of countries appealing to the WTO that the US is unfairly refusing to tax exports...
Wage depression? I couldn't say. Short run, obviously, wages go up due to lack of income tax; long run, when the depression hits, depends on whether you keep your job or not :P
Seriously. I admit that all the flaws listed above (except for the retrogressive nature of the tax) might shake out after a period of depression and general financial misery, and we'll end up paying basically the same percentage of income to the feds as we do now, just redistributed to focus more on contributions from the lower and middle classes. My question is, why bother? Especially when what might also happen is that tax revenues decline so drastically that the US gvmt is forced into bankruptcy?
(Well, I know why the FairTax pushers bother: they're ideologues who want to screw over the government.)
Posted by: mad the swine | October 26, 2009 5:08 PM
"Am i missing something in the "fair tax" debate, or wouldn't we all see a 20 - 30% increase in our takehome pay as soon as the current income tax withholding went away?"
Yes, exactly. You'd also see a 30% increase in the price of consumer goods. In theory, this balances out - think of it as a magical overnight 30% inflation rate with a corresponding cost of living increase. In slightly more realistic theory, this provides an incentive to buy less stuff and spend your money on untaxables (which, due to greater demand, also end up getting more expensive), save or invest.
Posted by: mad the swine | October 26, 2009 5:12 PM
Loren @ 20:
I agree. While it's fun to speculate who may be the GOP's top candidate in 2012, at this point trying to do so is like reading tea leaves from 200 miles away.
But were I to wager who the final bunch would be for the Republicans, I'd say Pawlenty, Romney and Huckabee - albeit the latter two hardly set their party's house on fire in terms of public enthusiasm in 2008. Rather, Romney and the Huckster were met with loud, collective yawns during the primaries.
Posted by: CHV | October 26, 2009 5:28 PM
Michael,
I have to add my $.02 to the "fair tax" discussion. We've spoke about it before in the past and disagreed quite extensively. I have a number of major problems with the "fair tax." First, as has been addressed here, it is a regressive tax, it hurts those who make less money far more than it impacts those who make more money. This has been addressed via the "prebate," but there are serious fundamental problems with this solution. First, of course, is that it only helps those with a low enough income. That means that those of us in the middle income ranges are hit with the maximum tax burden with the minimum positive benefits. Second, the implementation of the "prebate" will require a level of document keeping and intrusion into the lives of private citizens on a level that makes the current combination of Social Security, Welfare, and all of the other social welfare systems seem like child's play. For this system to work, the government would have to know, month to month, everything a family purchased, their income, and likely be able to predict their future purchases. This system, even if it did work, would be massively intrusive and subject to equally massive abuses. Finally, the "prebate" would be unable to cope with the fact that a fair tax would discourage lower income families from purchasing big ticket items, or they would be forced to borrow to pay the taxes on that big ticket item and then gradually pay it back over the length of a loan artificially increased by the added tax.
On top of all of those issues with, effectively, screwing over the middle class, and institutionalizing the "lower class," you have the impact that this would have on buying in general. Regardless of how you implement a "fair tax" you are going to see a dramatic increase in prices across the board. Advocates always love to quote the entirely bogus low end numbers for the tax rate, but in reality we are looking at a tax that will increase prices by roughly 1/3. Add to that state and local taxes, which people gripe about already, and you could be talking about sales taxes in the neighborhood of 40-45% or more. Here in AZ, we already see a situation with businesses and consumers moving their transactions to areas with lower tax rates; out into the county, driving over to a nearby city (by nearby I mean 50 and even 100 miles) to save 2/10th or 3/10th of a percent on big ticket items. For a 30,000, 40,000, 50,000 purchase, that quickly moves into the hundreds of dollars. If you implement a tax that increases those prices to 43,500, 58,000, or 72,500, people are going to do everything within their power to avoid paying. That is simple economics, by adding these expenses to the transaction you are going give people the incentive to either forgo the transaction if they can, IE keeping cars longer, not buying new TVs as often, etc., or they will cheat, a black-market will develop.
The most difficult thing I see for the implementation of such a tax is how to stop the wealthy from purchasing their big ticket items in foreign markets and then having them shipped to our markets directly. Certainly there could be provisions in such a tax policy to try to stop that, but given the push by Republicans and conservatives who never met a tax they didn't hate, how long would it be before someone tried to claim that such restrictions weren't necessary and had them rescinded.
Really, in my opinion, this is like the flat tax, the capital gains tax, and the argument against the "estate tax," another attempt to eliminate our progressive system that, if they'd quit gutting it, hamstringing the IRS, etc., would deal with our needed revenue in a manner that most of the world agrees, is already fair.
Posted by: dogmeatib | October 26, 2009 5:41 PM
Since I don't care much for politicians' religious views, I though I might rephrase:
So our leading candidates for the GOP are Huckabee, a nutball prosperity gospel preacher with fake Southern charm who believes the constitution doesn't actually protect free speech; Sarah Palin, a nutball Pentecostal who believes is just a total ignoramous; and Mitt Romney, a phony sleazeball who has never held a political position he didn't want to change and thinks the biggest threat to the world's largest military power is a bunch of pissed off Mulsims with nothing except cajones.
There's no such thing as a fair tax, but my inner Muslim thinks an LVT might make some sense.
Posted by: Louis B. | October 26, 2009 7:53 PM
Ed, after looking through this poll, I have to say that I think one of the things that struck me was that most people aren't really sure how they feel about Huckabee, to the tune of 38%, as opposed to Palin (13%) or even, though this is much closer, Romney (33%).
Frankly, I think that while Huckabee doesn't come off as that insane with regards to his religious ideology (though I tend to think he's a lunatic, for reasons made clear by the quote you included, and many more), his positions on a lot of major issues (liberal use of pardons and pro-life in all instances, among other things) are going to come under some scrutiny and put him in an awkward position.
Additionally, I think the clear limits of his foreign policy experience are something that will be well addressed, though he's not nearly the gaffe monster that Palin was.
Most polls get tighter as the election date gets closer, I don't think that's the case with Huckabee. I think part of why he gets support is that, superficially, he seems like a moderate. I think that Romney will end up getting the moderate draw that seems to be swinging partially for Huckabee right now.
Posted by: JStein | October 27, 2009 2:06 AM
I don't think Huckabee as GOP nominee would be good for the Left. He'd get all the wingnuts and Christofascists worked up to a fevered pitch - then, when he loses, what will happen? These people collectively have a hair trigger, and they're on the edge as it is. They're already convinced Obama stole the election (of course, Bush won fair and square). If their golden boy doesn't win - what then?
Would there really be a downside to just giving the religious crazies and non left wing Republicans their own sovereign state? Everything below the Mason Dixon line and count ourselves lucky. I'm sure they wouldn't want a dime of Federal money. There may come a time when that would seems like a very good deal.
I've been saying this for some time, although they shouldn't be allowed to have sovereignty. They aren't capable of running with scissors, let alone running a government, and they're truly dangerous. I'd be in favor of creating a kind of holding area.
Posted by: Jeff Eyges | October 27, 2009 3:22 AM
Jeff Eyges:
You posted on the wrong thread. The interment caps post is the one below this one!;)
Huckabeliever, The Impalinator and Mittunswillard--heroes of the new reich.
Posted by: democommie | October 27, 2009 8:46 AM
Ah, the religious triad - or is that triumvirate? Well, it would be triumvirate if Palin had a gender change. The country is seriously whacked if it still considers that imbecile Palin as a potential candidate for president.
Posted by: MadScientist | October 27, 2009 9:01 AM
Jordan G @ 28:
Consumption taxes are a more producer-centric tax than consumer tax. One of the reasons we are continuously losing wealth in this country relative to other nations is because of our trade deficit. In addition, please do not forget the fact that you currently already paying 17%-22% in the price of your goods and services to subsidize business' federal tax liabilities. In addition, you are paying for goods and services now with after-tax money, wherein you still pay more tax after that for businesses as mentioned previously.
I have not seen data on aggregate demand changes so I can't answer your question, however what I can answer is that GDP would go up since we'd produce more, and that would increase wages, and a consumption tax would also provide additional visibility to people regarding how much they earn (most do not know what their total wages are relative to what their employer's know since given withholding taxes and other benefits like health insurance).
However, I suspect aggregate demand would go up given job opportunities would increase (private capital sitting offshore would pour in and domestic bankers would be forced to invest it to cover their interest liabiities to investors).
Jordan:
There is not an economist on the planet that would argue we shouldn't save more and consume only out of our wealth rather than future earnings as many do now. So consumption might lag in some people's life cycle, but that would be a feature, not a bug. I did the math for some son once to explain how much he pays for a $100 in clothes by using a credit card vs. how much I pay out of my savings - he was shocked at the fact he was paying geometrically more while I paid only a fraction of a $100 - and I was able to do this since I was in my early-20s (and yes, I borrowed money like anyone, but on smart stuff like a college education and my homes).
Jordan
The only predictions I've seen are that would marginally increase GDP, and again, I see no reason why nominal consumption would fall given the rise in GDP under this plan would increase both job opportunities and wages.
Jordan:
I do not understand what you are arguing here. Investment under a FairTax plan would be extremely advantageous since there'd be no taxes on your returns. Trillions of capital sitting off-shore avoiding U.S. taxes would come flooding in as fast as private capital investments are ready to be made. In fact I think such a plan would jump start a move to a green economy by providing much needed capital.
Jordan:
European countries are increasingly moving toward a VAT, which is very similar to a consumption tax. While I agree the VAT is superior to how we tax, I don't like how its hidden, whereas a consumption tax tacked on top of a price (contra the FairTax people's proposal who want it embedded) provides perfect visibility to taxpayers on exactly how much they're paying.
Socialists can also favor producer-centric economies - in fact much of the activity we saw in Europe was to architect such a society. But don't let your desire to rob the rich and give to the poor blind you to a policy that would give the poor what they've always wanted - more opportunities, higher wages and higher after-tax income. I would argue that the type of socialist policies most Americans desire would much easier to impement in a consumption tax world since it would be clear how much it would cost each of us to achieve such rather than being hidden from us as it is now, it would also mostly take business interests out of the influence equation since such policies wouldn't cost them anything (though we should remember it does only if they lose money, if they make money they've passed that cost on to the consumer).
As I stated previously, the plutocracy in this country also opposses consumption taxes or VATs since it transfers significant amounts of control of the government and the marketplace to citizens, start-ups, and companies with a competitive advantage who are kept from entering the market.
Posted by: Michael Heath | October 27, 2009 9:17 AM
...however what I can answer is that GDP would go up since we'd produce more, and that would increase wages...
Yet another pie-in-the-sky promise from yet another "tax reform" scheme. Why should I consider this one any more credible than any of the others I've been hearing since 1978?
If we really want to increase GDP, my sugggestion is to quit bitching about taxes and get to work on energy self-sufficiency. Ending the greatest wealth transfer in human history would probably have a much greater positive impact than rewriting the fucking tax code.
Posted by: Raging Bee | October 27, 2009 9:32 AM
Alright Michael, I will concede to your arguments, as you appear more knowledgable on the subject. I'm not saying that I now agree with you, but that you present a valid & respectable position.
But there is one last aspect that I want to address. Under the policy you are in favor of, will the total tax revenue remain the same? Will the government still collect the same amount of taxes, just from different sources? Or is it going to result in lower tax revenue, leading to a cut in government services? Or do you feel that the tax revenue will increase as a result of increased GDP?
And regardless of how you answer that, I then would ask: does the tax burden remain the same for each individual? Is the middle-class still responsible for XX% of the tax revenue, or would that percentage increase or decrease? What about the wealthy and the poor, would they see any difference in what portion of the government's revenue comes from them?
Posted by: Jordan G | October 27, 2009 9:46 AM
All this 'Flat tax' nonsense reminds me of this from Keating! (the Musical).
Now that's how to run a debate. :) - DJ
_______________________
Note:
'GST' (Goods and Services Tax) is essentially the same thing as this proposal or VAT.
Dr. John Hewson (the short-lived Leader of the Australian Opposition) tried to introduce a policy called 'Fightback!' which would place a 15% tax on goods and services bought by consumers (GST).
This proved to be Hewson undoing as it was electoral poison; the idea lay dormant until Howard revived it (with modifications to reduce the amount of regression) years later.
Also, much of Keating's invective in this song are direct quotes.
Posted by: DingoJack | October 27, 2009 10:38 AM
Well, I'd pick Huckabee before Palin, I think... Maybe... Oh god, do I have to choose?!?
It's scary when Mitt Romney is by far the lesser evil. (shudder)
Posted by: James Sweet | October 27, 2009 11:32 AM
Painful to even think about the 2012 election and the long stupid campaign slogs toward it.
Can we just all agree to not even mention this until at least early 2011?
Posted by: cm | October 27, 2009 11:32 AM
Jordan G @ 52:
We need to separate out the FairTax initiative from consumption taxes in general for several reasons. We also should consider the FairTax merely for its being a convenient plan in terms of its comprehensiveness regarding the tweaks needed to make it equitable.
The first reason to distinguish between the two is because the FairTax is a legislative initiative with little chance of succeeding. Even if those proponents were successful in getting their bill passed, there'd be a lot of major modifications to the plan given the frame of reference this particular consumption tax proposal is coming from, which is the libertarian Right - therefore you'd see elected legislators creating sliding scales on prebates, exclusions on some goods/services, and premium rates on luxury goods to make it more progressive.
So you're question on whether it's revenue neutral is yes it is, and in the long-run no it won't be, it'll be revenue positive for two reasons. The FairTax proponents are advocating it'd be revenue neutral which is smart of them, i.e., the tax rate they propose matches the current budgeted amount of federal tax revenues. However, my study of this issue, in line with what economists that have also studied this issue realize, is that economies that do move their tax receipts more towards consumption taxes like sales and VATs tend to have a far larger consensus for more government spending. In addition, all the studies I've perused show GDP growth rates are larger in VAT/consumption centric economies and therefore government receipts and spending go up given receipts are a function of income growth.
Bruce Bartlett recently got on the band wagon for VATs after ignorantly dismissing them much like we see out of the rhetoric in other comments posts on this thread (though he still rejects the consumption tax scheme). However, he's finally come around given Europe's success with them and his acknowledgment that our current system doesn't raise sufficient revenues while we obviously need more revenues, just to cover future entitlement obligations. Bartlett thinks the way to sell this idea is to show liberals how the VAT increases government receipts, spending, and better balances the budget for several reasons I won't go into here; while conservative should like it since it appears more regressive (though our current plan is far more regressive than the posters on this thread realize).
So to answer your question - I support moving to a consumption based tax collection system because it would both grow our economy, increase job opportunities for all, increase after-tax median income, increase private capital investment, and increase government tax receipts and spending, while moving much of the influence of government away from businesses and more towards citizens (though certainly not all).
Posted by: Michael Heath | October 27, 2009 12:43 PM
Thank you Michael. I'm not fully grasping what you are saying, but I know you are sincere in your evaluation and have a sound mind from which to give it.
I'll look into it further for my own benefit, and try to better understand the FairTax initiative and your side. I am still only able to argue my side, as I'm not following all of your logic, but that's fine for now.
Posted by: Jordan G | October 27, 2009 1:32 PM
Well then there is Newt, who thinks women should not be in combat because they get yeast infections and who thinks that marriage vows are until the onset of wrinkles or disease.
Posted by: Herb | October 27, 2009 3:41 PM
Yes, I agree that Mitt Romney would be the best choice to be our commander and chief. He could give our country the confidence we need to go forward investing and looking to a future filled with hope in ourselves and a stable economy. I agree with his policies on immigration, belief in the little guy, pro-life, and yes, his belief in Jesus Christ. In his talk defending his religious beliefs he had the courage to not put them aside to gain favor, but also respected the individual beliefs of others no matter what religion they were. That is one reason and a big reason our country is so great. Let's not lose a great candidate because he is a Mormon and a good one at that. That makes him a little different in some very good ways. He doesn't drink alcohol or smoke cigarettes or pot. He doesn't step out on his wife. He values chastity and virtue, honesty and integrity, voluntary service and work without pay helping others.
Posted by: kl | October 27, 2009 4:16 PM
Yes, I agree that Mitt Romney would be the best choice to be our commander and chief. He could give our country the confidence we need to go forward investing and looking to a future filled with hope in ourselves and a stable economy. I agree with his policies on immigration, belief in the little guy, pro-life, and yes, his belief in Jesus Christ. In his talk defending his religious beliefs he had the courage to not put them aside to gain favor, but also respected the individual beliefs of others no matter what religion they were. That is one reason and a big reason our country is so great. Let's not lose a great candidate because he is a Mormon and a good one at that. That makes him a little different in some very good ways. He doesn't drink alcohol or smoke cigarettes or pot. He doesn't step out on his wife. His life has been one I wish I could emulate.
Posted by: kl | October 27, 2009 4:20 PM
He doesn't step out on his wife.
Neither did Richard Nixon or Bush Jr. That didn't exactly make them good Presidents.
He values chastity and virtue, honesty and integrity, voluntary service and work without pay helping others.
And Obama doesn't?
Posted by: Raging Bee | October 27, 2009 4:35 PM
I would agree that we shouldn't lose a great candidate because they're a Mormon*. Except Mitt Romney is an unprincipled, self-serving, power hungry dumbass without an ounce of sincerity or political ability. If an incompetent hack is your ideal candidate, you might need to re-adjust your priorities.
*For example, Jon Huntsman, current ambassador to China.
Posted by: Kyorosuke | October 27, 2009 4:39 PM
kl:
Certainly, if by some unlikely turn of events he was running against a dead monkey without a brain. Or Sarah Palin.
kl:
So, you agree with his belief that Jesus Christ is the child of a polygamous marriage on the planet Kolob, and that his brother is Satan? And that his latest holy book was translated from golden plates that no one was allowed to see using magic rocks concealed in a hat?
kl:
So, you're a drunken, drug-addled, chain-smoking adulterer? Wow, you sound like a GREAT person to take advice from on how to govern this country! :P
Posted by: phantomreader42 | October 27, 2009 4:45 PM
Yeah, just what America needs- a member of a prominent hate group in the White House.
Posted by: Rick R | October 27, 2009 5:39 PM
Rick R: No. Romney DOESNOT belong to the dEMOCARTIC pRATY!
Posted by: POEdusoperandi | October 27, 2009 6:48 PM
Ki opined: "He doesn't drink alcohol or smoke cigarettes or pot. He doesn't step out on his wife. His life has been one I wish I could emulate."
This reminds me of the story about one Representative Choate.
He was pontificating to an assembled crowd of his colleagues about how he had never drunk alcohol in his life . A young representative, listening to him in rapt silence, was finally moved to exclaim: "Gosh, I wish I could say that!"
At that moment Speaker Read, who had been half-listening in to this inane conversation, dryly added "Why not? Choate did." - DJ
Posted by: DngoJack | October 27, 2009 9:18 PM
The last thing any of us should put any credence in is a prediction by an economist about the expected GDP improvements from any tax change. Theres not a group that has missed predictions so badly for so long........except maybe the religious loons predicting the end of the world.
Posted by: Greg | October 27, 2009 10:12 PM
Mittunswillard doesn't need to step out on his wife. When he needs to fuck somebody else, he simply buys a company and fucks its employees. He's a piece of shit in a nice suit.
Posted by: democommie | October 27, 2009 10:12 PM
Greg @ 67:
Do you have a citation for that claim?
My observation as someone that studies economics is that conservative politicians ignore economists, including the ones they pay. I can find plenty of warnings and have done very well financially heeding their advice, and getting burnt as well when I ignored their advice thinking I knew better. Here's one of many warnings by Bush's own economist (Holtz-Eakin was a senior Bush economic advisor prior to getting the CBO advancement): http://www.washingtonpost.com/wp-dyn/articles/A2229-2004Sep7.html
Note the year of this warning, 2004. In addition, Holtz-Eakin had warned Bush not to cut taxes in 2003 given it would enhance the effects of the next recession. Holtz-Eakin did not stand alone in his warnings, there were many others, from those on the left (Krugman, Delong, Stiglitz) to those on the Right (Bartlett, Schiller).
Certainly Alan Greenspan blew it and during Congressional Hearings we came to understood why, Greenspan relied more on his libertarian ideology, fatally flawed by the way, then he did the quantifiable numbers and economic principles that argued against the policies he established at the Fed.
Posted by: Michael Heath | October 27, 2009 11:11 PM
Two fallacies brought up in this thread:
1) Regressive taxation. The fair tax need not be regressive, any more than an income tax would have to be regressive. So all the "I hate it because it's regressive" nonsense just shows how little people are willing to understand a huge change to our tax system, which is why it will likely never gain momentum.
2) We used to tax the wealthy properly. The wealthy paid 90% before evil Reagan showed up and gave all the money back to the wealthy? Sound good as a left wing talking point. Except NO ONE paid 90%. 10 business men go to lunch and each one deducted the Whole tab. Yes it was insane, and Reagan simplified the system in a good way. Actual tax rates never changed very much. But don't bother doing the research, it won't fit your assumptions.
The current system still contains way too many deductions and loop holes put into law by our special interest groups (I mean congresspeople). A whole new system such as fair tax would effectively repeal all these unfair deductions, which will never happen within the current income tax system.
Posted by: Rich | October 29, 2009 3:02 AM
Rich - to your second point. The CBO has an "effective taxation rate" spreadsheet that allows one to compare actual tax as a percentage of income. Regretfully, it only goes back to 1979. You are correct that top marginal rates in no way provide information regarding the percentage of tax on income achieved given ever-changing subsidies, credits, and depreciation schedules.
I don't have access to that information right now (it's in a spreadsheet I downloaded off the CBO site), but it's far more informative on the actual effects on people rather than arguing about nominal rates which tells us very little about how much people actually pay relative to their income. However, the CBO's calculations are still flawed since they don't incorporate the amount of federal taxes people pay that are currently embedded in goods and services they consume. If they did, people would finally begin to realize what they think is a progressive tax system is in fact, not that progressive - and certainly not pro-trade, investment, jobs, wages, or growth. It's instead far flatter than they think.
Posted by: Michael Heath | October 29, 2009 8:55 AM
Michael, if you get a chance to link to the effective tax rate data please do (maybe in a future thread if this one is getting old). I've seen similiar data but don't have it on hand. The IRS does have some good data but I didn't see it going back as far.
Posted by: Rich | October 29, 2009 1:24 PM
Rich,
Here's a link to the last time I posted this on Ed's page. I link to my old comment rather than the CBO site since my comment has both instructions on which PDF file to download at the embedded link and some results I concluded after adding my analysis to the file I downloaded (which was the spreadsheet version rather than the PDF so I could crunch some numbers).
Posted by: Michael Heath | October 29, 2009 4:53 PM
Rich:
"2) We used to tax the wealthy properly. The wealthy paid 90% before evil Reagan showed up and gave all the money back to the wealthy? Sound good as a left wing talking point. Except NO ONE paid 90%. 10 business men go to lunch and each one deducted the Whole tab."
This says that 10 out of 10 businessmen are thieves. It doesn't say that the system is bad, it says it needs more resources for enforcement. Horrible analogy.
Posted by: democommie | October 30, 2009 7:38 AM
democommie:
I don't think it's thievery to utilize the available tax code to insure a taxpayer pays only what is owed. In addition I don't think the top marginal rate was 90% at the start of Reagan first term, I think it was that high until Kennedy lowered it. We should also remember it's marginal, only the amount over a certain level was taxed at that the top rate. Comparing effective rates paid for all income gives us a better picture on who much each group of income-earners pays.
And for the record, food and entertainment business expesnses are piddling relative to avoiding taxes, plus you can only deduct 50% of them, making it a poor approach to tax avoidance. One that is used, but it doesn't promote an unwise use of business funds as a way to avoid taxes. Where you locate your business operations, how you invest and depreciate capital investments, and how you manage your inventory are all far more effective levers for minimizing tax liabilities.
Sometime during Nixon's era, the Alternative Minimum Tax (aka "AMT") was implemented. This tax rate is currently 28%, I think the same as then. It insured that top income earners paid at least 28% of their income given it not only had no deductions, but also looked at income more punitively than the 1040 form. It was highly flawed on how it treated exercised stock options that were held rather than sold (it was indifferent, it should have taxed only that which was sold, not held). It actually punished those who held their stock in spite of the fact it's always a good thing when management owns stock in the company it manages and there was no real gain when exercising stock, only when one sells does one get proceeds. This flaw in the code was taxing paper gains that were never realized. This actually got fixed in the stimulus bill to some degree, where I got 50% of the money back the feds have owed me for 9 years and am getting the rest next year.
As I stated earlier, considering what each income group's effective tax rate equates to is a far more accurate measurement of what each of us pays and how that trends relative to the past. In my opinion, if we're going to utilize the same approach to taxes we've been using, which mostly taxes income, than I think our current tax rates are far too low, especially for the highest quintile and the two lowest quintiles. Even economists on the Right agree that our current tax scheme is not generating enough tax revenue and we don't risk stagnation by raising the rates (after the business cycle bounces back). However, I think the whole tax rate scheme should be scrapped for not just economic reasons, but also as a way for citizens to get the government back in the hands of the people rather than a rather small set of business and special interests groups.
Another reason I favor a consumption tax is that a disproportionate amount of our very best and brightest financial and accounting whizzes in our more mature industries spend a significant amount of energy avoiding taxes within the law. I worked for a company which grew very quickly for years, as our revenue growth rate began to flatten out as that industry matured, the first place we swung some of our best accounting and finance talent to keep our earnings growing was minimizing how much we paid in taxes, something that was ignored when we had easy opportunities to expand our business. They had been focused on how to best invest in growing the company organically or through acquisition.
I think our country would be far better off if the taxes businesses embed in their prices were paid directly by consumers since that would free up all this intellectual capital in these businesses to go back and fight for innovative ways to grow a company's profits by actually doing business rather than avoiding taxes - which increases job opportunities and wages. And let's also remember that businesses have little choice about having to focus on constant growth of their earnings, investors demand, and rightfully so in my opinion, earnings that are constantly growing at an acceptable rate of growth. That's because few organisms can succeed by staying the same, you either get better or worse, that's because external conditions are constantly changing.
Posted by: Michael Heath | October 30, 2009 9:22 AM
If those are the main candidates then I hope that Obama doesn't fuck things up too badly. the thought of one of those three leading is giving me shivers all the way in Australia.
Posted by: Kel | October 30, 2009 6:30 PM
I never hear the "Fair" tax supporters explain whether or not the consumption tax rate would be tax-inclusive, or tax-exclusive. That's probably because after such an explanation, support for their idea would tumble rapidly.
Posted by: jws | October 31, 2009 10:32 AM