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“Life may not be exactly pleasant, but it is at least not dull. Heave yourself into Hell today, and you may miss, tomorrow or next day, another Scopes trial, or another War to End War, or perchance a rich and buxom widow with all her first husband's clothes. There are always more Hardings hatching. I advocate hanging on as long as possible.”     H. L. Mencken

August 15, 2007

The Fair Tax Gains Momentum in Iowa Straw Poll

by Stephen Littau

There have been some very encouraging developments regarding the Fair Tax movement. Brad Warbiany noted in this post that much of Mike Huckabee’s second place showing in the Iowa Straw Poll can be attributed to his support of the Fair Tax. The Americans for Fair Taxation group had a very large presence in Iowa but did not endorse any candidate in-particular. While the Mitt Romney first place campaign bused in supporters and paid their $35 voting fee, the Americans for Fair Taxation did not pay the fee for their members to vote for candidates who support the Fair Tax but apparently still were a major factor in Huckabee’s second place showing.

It seems that the other candidates have taken notice to the grass roots support for the Fair Tax as well. In my previous post, I had listed Ron Paul, Duncan Hunter, and Sam Brownback as “considering other tax reform” (read: on the fence) and Mitt Romney, Rudy Giuliani, and John McCain among those opposed to the Fair Tax. Since writing that post, I found the updated scorecard for the presidential candidates which show that some have changed position and others I misread their position (Duncan Hunter is a co-sponsor of the legislation, not on the fence). While Huckabee is perhaps the most vocal proponent of the Fair Tax, Ron Paul, John Cox, Tom Tancredo, potential G.O.P candidate Fred Thompson and Mike Gravel (the only Democrat candidate who supports the Fair Tax) either endorse the Fair Tax or have stated would sign it into law if passed by congress. Even John McCain who has been on record as being opposed to the Fair Tax has apparently done a 180 to jump on board with the Fair Tax (a last ditch effort to save his campaign perhaps?). By my count, that’s 8 candidates who now support the Fair Tax!

Unfortunately, none of these candidates are considered ‘top tier’ at this point. Rudy Giuliani, Mitt Romney, Sam Brownback, and the entire Democrat field (except for Gravel) are opposed to this bold legislation. But who knows, if John McCain and some of the fence sitters could be convinced that the Fair Tax could be a winning issue, maybe some of these other candidates will also see the light. There is still plenty of time between now and Super Tuesday for them to get the message if the momentum continues to build.

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13 Comments

  1. Ron Paul has said he would support the FairTax because he took a pledge to do anything to get rid of the IRS. But the FairTax legislation doesn’t guarantee the IRS will be abolished nor does it guarantee repealing of the 16th Amendment. Indeed, Paul has acknowledged he is afraid of the FairTax being enacted and the Income Tax remaining in place. It seems to me a legitimate worry and I would hope anyone supporting the FairTax would explicitly state that it has to go along with abolishment of the IRS and repealing of the 16th Amendment. I don’t hear any of the FairTax proponents calling for a repeal of the 16th Amendment other than Paul. This worries me.

    Comment by Thomas — August 15, 2007 @ 4:54 pm
  2. I’m all for simpler tax codes and eliminating the IRS, and the Fair Tax along side a repeal of the 16th amendment does both those things.

    I wonder though if the advent of a national sales tax would create even more bureaucratic nonsense.

    The idea of a monthly rebate check is similar to the EITC. In terms of helping the poor, it’s better than the EITC in that the poor get that check every single month when they need it most instead of at the end of the year, when they’ve already been struggling for a long time. But now the government sends EVERYBODY a monthly check, and that just sounds like a horrible idea.

    My second concern is that the Fair Tax was designed so that it would be revenue neutral, and bring in the same amount of tax as the income and payroll taxes. Some progressives are wary that the Fair Tax proposals will reduce the ability of the government to pay for awful programs. On the other hand, I think any new tax system should have that as a goal, and end the funding of so many wasteful programs and corporate giveaways. Have the Fair Tax reduce government revenue would be an improvement.

    Lastly, I want some reassurances that the Fair Tax won’t be susceptible to BS “social engineering” policies that end up just acting as welfare for one special interest or another. It seems like there are some assurances that this indeed will be the case, but I want solid, unyielding rules against social engineering in the tax code.

    Despite my misgiving, I’d admit that the Fair Tax is much better than the current system.

    Comment by TanGeng — August 15, 2007 @ 5:23 pm
  3. I am proud to be an American when I see the way the Iowa straw poll seemed to cut through some of the hype created by the media that was in favor of the over financed candidates.

    Back about 1915 or so we had a politician named Woodrow Wilson that accepted a bribe to create the Federal Reserve. They were a group of very powerful bankers and businessmen from around the world at the time. Through the monopoly of being the source of our money and by being outside of our government, or paying any taxes, they have built up a fortune that, I believe, includes owning most of the politicians of the world.

    It is going to take a determined, We the People, to restore law and order in our government before we can restore law and order in our streets.

    “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

    -Woodrow Wilson

    Comment by Carson — August 15, 2007 @ 5:29 pm
  4. Thomas:

    That’s the only major concern I have. I went to http://www.fairtax.com and found the following answer:

    “Is there any provision in the FairTax bill to prevent both an income tax and a sales tax?

    The short answer is that there is no provision in the FairTax bill (HR 25) that would prevent having a national sales tax and the income tax. However, the FairTax legislation does three things that effectively dismantle the income tax: (1) it abolishes the IRS, (2) it repeals all statutory language having to do with taxing income and payroll (i.e., the Internal Revenue Code), and (3) it eliminates the filing of annual income tax returns to the federal government for over 140 million Americans. The 16th Amendment does not “require” an income tax, it only “allows” one, and the FairTax will have broken that egg in a million pieces. It would be extremely difficult to put that egg “back together again.” Once the FairTax is enacted it would be an extremely daunting task for Congress to make people start filing income tax returns again. There would be a public uproar. Once the American public has experienced the freedom from filing income tax returns it’s hard to imagine them tolerating going back.

    Furthermore, the sponsors of the FairTax are totally dedicated to the permanent repeal of the income tax. No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. There is a separate bill, HJR 16, which repeals the 16th Amendment to the Constitution but it must go through a different adoption process than HR 25. HJR 16 has to be passed by a two-thirds vote of members of both the House and the Senate and be approved (or ratified) by three-fourths of state legislatures (38). We are currently laying the organizational groundwork for this push and have already started the educational process at the state level.

    Finally, the reality is that we already have both an income and a type of sales tax today. All of our U.S. produced goods and services are burdened with an “embedded” tax due to the cascading of income and payroll taxes paid by U.S. employers to the U.S. Treasury at every step of production. Of course, these costs are passed on to the ultimate payer, the customer. It’s fair to call these embedded taxes a “sales tax” because we pay it every time we buy any goods or services we just don’t see it. The FairTax eliminates these embedded taxes, resulting in a single-rate national sales tax visible to all.”

    Comment by Stephen Littau — August 15, 2007 @ 5:34 pm
  5. A national sales tax might be slightly better than a national income tax, but not by much. As currently envisioned in the Fair Tax proposal, the margin is awfully thin (income verification, rebates, etc.)

    The problem with government isn’t the way it collects our money. The problem is the AMOUNT it collects and spends. The Fair Tax does nothing to change this.

    Getting the Fair Tax passed would require a colossal, drawn out, political battle. Afterward, the federal government would still be spending three trillion dollars a year, and ten trillion dollars in debt.

    So what would be the point? Why waste the effort? Why waste the political capital? Why not redirect the energy and the effort behind a substantial reduction in spending instead? Or even a minor reduction in spending?

    Wouldn’t a 10 percent reduction in federal spending make us all a lot better off than changing the way our taxes are collected?

    Comment by Lex — August 15, 2007 @ 5:56 pm
  6. While we might (I emphasize *might*) get rid of an income tax in exchange for a fair tax, I think that without a repeal of the 16th amendment, we will see an income tax just as soon as enough progressives (of any party) are elected. They’ll call it a tax on the sale of labor.

    I can not support a sales tax unless it is explicitly linked to a repeal of the 16th amendment and I would not support any candidate dumb enough to agree to anything less.

    That is why I prefer Ron Paul’s plan of eliminating the cost of keeping our military stationed in 137 foreign nations (most of which have nothing to do with fighting terrorism) then we can eliminate the IRS, and then finally, we can rip out the root by repealing the 16th amendment.

    Later,

    Comment by Kevin Houston — August 15, 2007 @ 7:17 pm
  7. Ron Paul does NOT support the “fair tax”, Ron Paul supports the elimination of the income tax and the federal reserve entirely, he does not, nor has he ever advocated replacing one form of un-constitutional tax (the income tax) with another form of un-constitutional tax (the so-called “fair tax”). Ron Pauls views on the issue of tax reform are easily found by a search of the web (his web site is a good starting point), anyone who would like to pay NO income taxes (but thinks it’s a pipe dream) should read Dr. Pauls writings on the subject…

    Comment by LibertyNH — August 15, 2007 @ 8:47 pm
  8. LibertyNH:

    “I’ll vote for the FairTax if it comes up…”-Ron Paul

    http://www.fairtax.org/site/PageServer?pagename=news_presScorecard

    Comment by Stephen Littau — August 15, 2007 @ 10:58 pm
  9. I stand (sit) corrected!

    Comment by LibertyNH — August 15, 2007 @ 11:30 pm
  10. For the most comprehensive scorecard on where all the presidential candidates stand on the FairTax, see the following link:
    http://www.tampabayfairtax.org/2008presidentialcandidates-fairtax

    Comment by David Nelson_VanDette — August 16, 2007 @ 8:04 am
  11. “Wouldn’t a 10 percent reduction in federal spending make us all a lot better off than changing the way our taxes are collected?”

    Honestly, I’d rather have the FairTax than a 10% reduction in federal spending. The reason is simple.

    First, the current income tax costs a couple hundred billion dollars in compliance costs. Thus, the roughly $3T in spending of our government likely costs about $3.3T to our economy (directly) in compliance costs.

    Second, the current income tax, with all its loopholes and cut-outs, is designed to reward all sorts of behaviors that are not economically efficient. Removing the income and corporate tax from the decision-making process of businesses will result in an economic boom. (In addition, it will give us a great new ability to export products, as that “embedded tax” no longer hurts us globally).

    Third, the tax moves from invisible to visible. If anything, that might eventually get people fed up with the level of taxation they’re paying, which is currently hidden from them. I think that would make it a lot more likely we get the 10% spending reduction you request, because people don’t get upset by costs they don’t see.

    For the record, I’ve moved away from supporting the FairTax, but only because I don’t trust politicians to enact it as designed. It takes a lot of power away from them, and I expect they’d mangle it up to eventually resemble our campaign finance “reform” laws, and destroy any semblance of reform completely. But the plan, as advertised, is pretty solid.

    Comment by Brad Warbiany — August 16, 2007 @ 3:16 pm
  12. Brad,

    Good point about being fed up with the way taxes are paid. Paying a 23% tax on everything we buy would really slam that home. Of course looking at the hundred of dollars being withheld at salary time is will hit that home too. I like the idea of doing away with the IRS. Of course there are compliance cost associated with the Fair Tax as well.

    And I agree with that sentiment about politicians fucking up the Fair Tax proposal.

    Comment by TanGeng — August 16, 2007 @ 5:04 pm
  13. Brad,
    The only way to get politicians to enact the FairTax as written is to keep it non partisan and garner support on both sides.
    By letting it become a partisan issue, we do a huge disservice to the research that gave us the plan. We cannot allow the Republican Party or candidates to use the FairTax to expand its base at the expense of bipartisanship.

    Try targeting your presentation to the Democratic side.
    Here is a good link that helps you learn some talking points.
    http://www.runningincircles.com/archive/2005/05/06/the_progressive_democrats_sale
    or here:
    http://mountainpridemedia.org/oitm/issues/2005/09sep2005/col06_tongue.htm

    DavidN@TampaBayFairTax.org

    Comment by David Nelson_VanDette — August 17, 2007 @ 10:27 am

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