Thank you for this article!!! I thought Huckabee's tax plan sounded great when I first heard about and used to say so, but then all the pundits said it was terrible so I kept my mouth shut. The obvious critique is that it is regressive, but it's easy to make it progressive - just don't tax things that the poor spend a disproportionate of their income on, like food and rent. Then their income will be taxed at a lower rate. You could also have a higher tax rate on goods rich people spend money on, like yachts. Hmm, no sales tax on food and a higher luxury tax? Sounds familiar... oh, we do that already. Problem solved!

That proposal doesn't solve the problem that some of the very wealthy simply don't consume much of their income. I am fortunate to have been born into a wealthy family, with values that leave me with few material needs. Consequently, my consumption is relatively low compared with my income. I don't buy yachts or cars, so I'd save lots in taxes of we shifted to a sales tax. The tax I'm presently paying on my income would have to be picked up by someone else--probably someone who actually works for a living. That doesn't seem fair to me.

I started a thread on this issue below.

I generally agree with the idea of a sales tax rather than an income tax, with no tax up to certain levels on food, rent, education, clothing -- perhaps set at the poverty level (as calculated by Mayor Bloomberg, not the entirely food-driven poverty calculation most people use). And perhaps there could be lower tax zones to encourage purchasing from (and investment in) poorer areas?

As for the rich who don't consume that much, let's not forget that personal income and sales are not the only two forms of tax. There's corporate income tax, property tax, inheritance tax, capital gains tax, import tarifs, fees for governmental services, etc. These could all be adjusted (particularly the inheritance tax) in line with our national values that preference hard work. But, that having been said, if you're not consuming all that much, then I'm inclined to say enjoy the tax savings.

The IRA idea is horrible and is certainly not the same thing as implementing a sales tax. People save for many reasons, to send a kid to college, to buy a home, to start a business, in case of medical emergency -- and to encourage only saving for retirement as an IRA (unless I am mistaken) does would be a disservice.

Of course, there's also the theory that we could make the Federal Reserve actually part of the government, boost the bank reserve requirement, cut interest rates, and let the government replace personal (but not corporate) income taxes with the interest made from lending money to banks. That's pretty much a sales tax but only on those that are living outside their means, without people actually paying more -- just leaving fewer profits in the bank intermediaries (who, let's be honest, perform a pretty banal service for all the profits they rake in).

The "fair tax" abolishes all the other taxes you mentioned. Read the bill.

I don't understand the argument that sales taxes are regressive because the rich don't consume all their income. What is the purpose of income except consumption? Sure, the rich invest (a good thing), but they do so to make more money to consume--which is then taxed. A consumption tax is therefore also an investment tax.

Or do the rich make money just to burn it?

Sales taxes wont be progressive because they increase inflation, lower the worth of the dollar, and sink the economic value over seas costing us jobs and ruining our economy.

Bill Gates (or whoever) is worth billions of dollars specifically because he doesn't spend every penny he makes. With an income tax, every $ that you make is taxed (not counting pre-tax accounts or whatever.) With a sales tax you are only taxed on what you spend. As you move up the income scale, people spend a smaller percentage of their income - people who make tens of millions of dollars a year would be hard pressed to spend all of it and they don't, because saving/investing is important! To answer your question - the rich make money to invest/save it and pass it on to their children/grandchildren.

If this "Fair Tax" is actually a zero-sum game (i.e. it's not going to increase or reduce federal revenues) then either everyone's taxes are going to stay the same, or one group is going to have taxes go up and another is going to have their taxes go down. Since we have already shown that the taxes on the rich will go down (since they don't spend anywhere near what they make,) then taxes on the middle and lower classes must be going up.

Furthermore, I don't like the idea of the further concentration of wealth in the upper classes. This can only lead to more people inheriting wealth by default.

Finally, I don't think the plan will really work. People with more resources (the rich) will just buy their big-ticket items elsewhere to avoid paying the tax.

You can theorize this all you want, Alive. But at the end of the day, facts are facts. Facts exist. It is a fact, a measured and quantified fact that all agree on, that wealthy people "spend" small fractions of their income, and that poor people spend almost all their income. It is a fact.