Huckabee taking aim at tax man

December 19, 2007|By Clarence Page

Mike Huckabee wants to put my pal Harry out of business.

Harry does my taxes. Mr. Huckabee wants to make tax preparers obsolete by getting rid of the federal income tax. He'll get rid of the Internal Revenue Service too, if he can.

On that issue, the Arkansas governor belongs to a mighty large club. Few Republican presidential candidates ever went broke calling for tax cuts. Some, like Mr. Huckabee, just take it to a further extreme.

Now that he is surging in the polls, people are beginning to take seriously what he has to say. It turns out, despite all of the attention that the former Baptist minister's religious beliefs, social conscience and friendly teddy-bear personality have received, his war on the income tax is a major reason for his surge.

Essentially, he's proposing to replace virtually all federal taxes with a consumption tax. Instead of taxing what you earn, the government would tax what you spend.

No income tax? Hey, sounds good to me. Tax time is so complicated in this country that about 60 percent of filers rely on professionals like Harry to do their returns, according to President Bush's 2005 tax reform advisory panel. But Harry isn't worried.

"The candidates always talk a good game," he says. "And we're busier than ever in this office."

Harry has been doing other people's taxes for more than 30 years. He's survived privatizers, downsizers, Ronald Reagan and TurboTax. He's not worried about Mr. Huckabee.

Yet Mr. Huckabee's plan excites a lot of people, especially those too young to remember countless other tax-reform dreams that failed to get anywhere.

His plan comes from a group called Americans for Fair Taxation. Its "FairTax" proposal, which is included in legislation before Congress, would replace the income tax, the corporate tax, the Social Security tax and virtually every other federal tax with one big national sales tax of about 23 percent.

"It's the best proposal that we ought to have because it's flatter, it's fairer, it's finite, it's family friendly," he said in a recent Iowa debate.

But there's a problem. The FairTax faces the same big obstacle that President Bush's failed Social Security reforms faced. The more people look at it, the less they are likely to like it.

First, a sales tax is regressive. It puts a bigger burden on poor folks. The FairTax would offset that burden by paying a monthly tax "prebate" equal to 23 percent of the poverty line to everybody. Theoretically, that would compensate lower-income folks for the extra taxes they would pay. But because upper-income earners would feel the least pain with a sales tax, the prebate would only shift the tax's heaviest load from the poor to the middle class.

The 23 percent figure is itself a matter of hot dispute. Proponents don't argue that their proposal would add 30 cents sales tax to every dollar of every purchase, but they arrive at the 23 percent figure by emphasizing that the extra 30 cents would represent only 23 percent of the final $1.30 price. Before your eyes begin to glaze over, let me explain in plain English: Adding 30 cents to each dollar still sounds to me like a 30 percent tax. The more voters hear that, the more bloom falls off the FairTax.

That's too bad, because I too am dissatisfied with our complicated and constantly changing tax code. I also don't expect it to change by much very soon. Our last, best chance came from Mr. Bush's tax reform panel two years ago. It came up with two alternative plans. Each offered lower rates, fewer tax breaks and a lot fewer pages of tax forms, but quickly wound up in some filing cabinet.

As widely despised as our cumbersome federal income tax may be, it is also familiar. It is politically easier to defend what the public already knows than to argue for the theoretical benefits in a system that has not been tried.

That's why my friend Harry isn't worried about having to change his line of work very soon.

Clarence Page is a columnist for the Chicago Tribune. His column appears Tuesdays and Fridays in The Sun. His e-mail is cptime@aol.com.

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