The Wall Street Journal is giving the FairTax some props:
The FairTax proposal is certainly ambitious. It would abolish the Internal Revenue Service and income taxes for individuals and corporations, taxes on estates and capital gains, as well as payroll taxes for Social Security and Medicare. It also would end tax breaks — ranging from homeowners’ mortgage-interest deduction to corporate credits — that are embedded in the economy and important to many voters and special interests. To ensure the income tax never returns, the group proposes repealing the 16th Amendment that created it a century ago.
In its place would be a 23% national sales tax on goods and services though other analysts say the rate would have to be higher. Where the income tax is intended to be progressive, taking more from those with greater wealth, a consumption tax would be regressive, hitting lower-income people proportionally harder because they spend all or most income on necessities while richer people can save and invest much of theirs.
To address the regressivity argument, FairTax.org proposes a “prebate” paid monthly to every family to cover their sales taxes, up to an amount equal to the poverty level. But, without an IRS, that raises questions about who would compute checks for families of various sizes and get them out. FairTax.org says state tax authorities could do that, though not every state has such offices.
I think that you have to expect the implementation of this tax to have some problems. But before you dismiss it for that, ask youself if the current tax system has problems. How long has it been in place?Â
Giuliani and Romney are both against the FairTax, both saying the solution lies in simplifying the 10,000 page tax code. (Isn’t the FairTax a simplification? Anyway.)
Of the Republican presidential candidates, because you know the Dems are not about to endorse this idea, John McCain is a yes, but doubts it will ever happen. Only Mike Huckabee has endorsed the FairTax with open arms, and that is a big reason he came in second in the Iowa Straw poll.
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