The “Fair” Tax Is Always An “Unfair” Label
By John A. Tures
Associate Professor of Political Science
LaGrange College
January 14, 2008 — One of the most frequent questions students ask me is: “Do you support the fair tax?” To this, I always respond “Which one?” Amazingly, this surprises them. What they don’t realize is that everyone considers their tax plan to be “the fair one.” There are so many “fair taxes” to choose from these days. Arkansas Governor Mike Huckabee has staked his campaign on having a national sales tax, which he dubs “the fair tax.” There’s nothing that explains why this is a “fair” tax, other than the Evangelical Baptist preacher’s claim that taxing income taxes productivity, and it would be more fair to go after our consumption habits. Normally, sales taxes are seen as unfair because the burden of them falls upon the poor, who are least able to pay for the price of goods these days, much less the extra tax (tacked onto state and local levels, no doubt). Huckabee’s website smartly claims “All of us will get a monthly rebate that will reimburse us for taxes on purchases up to the poverty line….that means people below the poverty line won’t be taxed at all.” Unfortunately, economists generally contend that in order to make up the difference for income and corporate taxes, the sales tax has got to be quite high. I can’t see this is benefiting the economy, especially since we’ve had anemic growth this decade. Sam Brownback, Mike Gravel and others support a “flat tax,” that they dub “the fair tax,” where everyone pays the same rate. Steve Forbes was a noted champion of this plan. Supporters claim it will be fairer, since everyone pays the same rate. Opponents note that while it does a good job of simplifying the tax code and eliminating some sneaky deductions, it will fall disproportionately on the backs of the poor. Furthermore, those who rely on key deductions like first time home buyers and students with loans would be forced into choices that would devastate the housing and education markets. Former North Carolina Senator John Edwards probably considers his “progressive” tax plan the most “fair,” where the rich pay higher rates, because they can. Such “soak the rich” policies, however, can hurt those who pay less, when capital owners spend more on government taxes than on business investments that could employ many. I’m sure even Mitt “Dubbya” Romney feels his tax plan is the most fair. He favors extending the Bush tax cuts, which disproportionately benefit the wealthy. He also supports requiring 60% Congressional approval before enacting a tax. Romney’s plan identifies the core of the problem. No tax plan is going to work if you make it easy to spend, but hard to tax. That’s a recipe for economic disaster, a problem that’s been building this decade, leading to a decimated dollar and deficits that will be hard for us and our children to afford. Instead of asking politicians what their latest “fair tax” gimmick is, we need a plan to reduce spending. John McCain’s recent rebound in the polls is likely due to his continued emphasis on his record of cutting spending. Otherwise, who cares how many thousands or millions of dollars we pay in taxes when much of it will simply go to waste? |
