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Huckabee's "Fair Tax" gets more press in CNN's Money magazine website. Winning Iowa makes issue prominence dynamics change.
The articles are pretty balanced, while listing legitimate criticisms
that must be worked out. I don't even have a problem with
reporters calling the Fair Tax a radical change. The income tax
is in the constitution, we have a massive income/payroll tax system,
and a consumption tax would be a big change. The kinks should be
worked out. We
simply cannot have our trading partners charge 17% VAT tariffs and
giving 17% VAT rebates for their exports to the U.S. The wacko
free traders have no response for this.
But. How will retail pricing be affected? Will
businesses be able to maintain prices even with their tax savings from
no income/payroll taxes, and then we pay another 23-30%? Solid
economic modeling, which is often hard to come by, would have to show
the good effects on investment and savings. I'd like the
behavioral economists to look at it, because they reject the "rational
economic man" (such a man or woman has never been found in the wild) in
favor of looking at actual responses to incentives by humans.
These good investment and savings effects are likely and worthy, but
how much?
Republicans push this, and Democrats distrust the push.
I've said before and I'll say again that a U.S. consumption tax is dead if it is
mono-partisan.
But 140+ other countries have some sort of
consumption tax, not just retail but wholesale value added taxes.
France, the country conservatives disliked until Sarkozy became
president, and many other European "welfare states" have VAT's.
Democrats need to look at how they did it, because they beat the heck
out of us on trade with their VAT tariffs.
I really would like to
know how France, Germany and others construct their consumption taxes,
because I doubt overall regressivity is prominent.
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