Thursday, January 03, 2008

♥ Huckabee for President. Mind, Not So Much.

So Huckabee and Obama have won the primaries and if nothing else this shows that Americans care about what kind of a person you are rather than how much money you can raise, how politically astute you can be or how you can dodge the issues. From the day I was exposed to Huckabee in 2006, listening to him talk about the health challenges in America and what he has personally done to lead, I was impressed.

I found him real, charming, articulate, honest and a do-er. The fact that he is not from New York-California (or as AT&T would call it, New Yorkifornia), makes him more real in some ways with a feel for what life is like for millions of Americans.

I liked him enough to check out his website to see where he stands on issues. That's where I was a little taken aback. Here are some of his stands:
  • Replace all taxes with "FairTax": The name Fair Tax notwithstanding the proposed tax would essentially be a national sales tax. The unintended (or unseen) consequences of this could include consumers buying more second-hand goods or even conducting transactions in tax without reporting them. A simple taxation system could also mean its simpler to avoid taxation. The incentive to cheat would be much higher given that the proposed fair sales tax would be around 20%+. I am all for reforming the tax code but any time a huge change like this is proposed I am worried about unintended consequences. For example, the rich could spend more of their time and money in foreign countries while earning in the US. Take your (much maligned) hedge fund trader who could do his job in London as well as in New York and compare that to the Wal-Mart clerk. Doesn't seem fair to me!
  • Immigration: He wants to crack down hard on illegal immigrants and employers. Although, I agree that enforcement of laws needs to be strengthened there seems to be very little emphasis on immigration reform. By way of example, he wants to eliminate the visa category for brothers and sisters of citizens - I don't understand why this is a key issue. After all, does pro-family stop at the border? He does propose to increase the visas for highly skilled and highly educated immigrants - I support this increase but few highly skilled and highly educated immigrants want to live in a country that doesn't let their spouse, siblings or parents in. Germany tried a restrictive program to attract top talent from countries like India and the program was a failure.
  • Marriage and Sanctity of Life: Huckabee wants to define marriage. As a union of man and a woman. I am relieved. I guess this is a huge problem. Why bother with real issues like poverty, climate change or disease when you can define marriage.
There are several issues on which I do agree with Huckabee including his healthcare reforms agenda but I need to see him articulate his positions on immigration and taxation with more nuance and show his understanding of the issues involved for me to be able to trust him.

6 comments:

fiat lux said...

Take another look at Obama. No candidate is perfect, but I honestly believe he's a great choice for America.

Ian said...

Nicely written article, Anshu. I'd like to elaborate on Huck's FairTax (as I've been working as a volunteer for FairTax since August, 2005).

When Mike Huckabee paid a visit to Americans for Fair Taxation in Houston, months ago, the grassroots movement was thrilled that he so fully understood - and embraced - the Plan (he had formerly supported the "flat" tax). Ever since, he has been true regarding the FairTax and is - essentially ONE with the FairTax grassroots movement.

While many - like Romney, and others, who are invested in the current income tax system - seek to demagog the well-researched FairTax plan, its acceptance in the professional / academic community continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos” drew a sharper contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity


A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee's ardent advocacy:

For INDIVIDUALS:
• No more tax on income - make as much as you wish
• FairTax is paid on retail goods and services when purchased new, not used

• You receive your full paycheck - no more deductions
• Every household receives a monthly amount, or "prebate"
• "Prebate" is "advance tax payback" for monthly consumption to poverty level
• FairTax ensures poverty protection, being less regressive than income tax
• Increased household income preserves real purchasing power against any higher prices

• Reduction of pre-FairTaxed retail prices (due to reduced costs; increased competition)
• 29.9% mark-up yields 23% FairTax portion of new price tags
• FairTax portion of new prices reveal true cost of gov't to consumers

• FairTax is captured on illicit forms of income, when spent
• Parasitic income tax filing industry eliminated
• No double taxation on goods and services
No more IRS or FILING OF INCOME TAX returns
• Savings is bolstered with reduction of interest rates


For BUSINESSES:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Global "free (and equitable) trade" becomes possible for currently-disadvanted U.S. exports
• U.S. exports increase their share of foreign markets


For the COUNTRY:
• 7% - 13% economic growth projected in the first year of the FairTax
Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow


Passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy: Main Street will have to demand that their legislators deliver the bill.

(Permission is granted to reproduce, in whole or part. - Ian)

Anshu Sharma said...

Ian,
Thanks for your comment. I would have liked for you to address the concerns I raise, namely: How will you prevent tax fraud when it would be easy to circumvent this tax by creating an underground economy? Income Tax and Dividend Tax are easier to collect. Also, how do you prevent the citizens from shifting their purchasing of goods and services to foreign locations?

Even if Fair Tax is workable I would find it more responsible (and less risky) to move to it over 10 years or so.

Mark Wilcox said...

Hi Anshu,
Simply put - there will likely be less fraud because it will be easier to catch. Unlike today's system where it's practically a game if you can afford it.

It's doubtful if a second non-taxable economy came up because the primary one will be easier to use and lead to more wealth.

Plus even if a 2nd one sprang up with cheaper prices and met people's needs - um, why would that be a bad thing?

Third - if a person can afford to live in UK and earn money by working remotely for a job in NYC. While buying stuff in France. Why should we punish that talented person by forcing taxes on them? My guess is that person through their consumption - would be pouring more money in through purchases of goods & services to more than amply cover any taxes they might be avoiding.

I mean when you consider Britney Spears contributes $100 million to the US economy (saw that today in Dallas Morning News but I think it's a wire story) via her various "products" (music, perfume, tabloids, photogs) - it's much more efficient than hoping a govt would take some percentage of that & do something useful with it.

Anshu Sharma said...

Mark: Thanks for the thoughtful comment. I am not so sure the proposed tax is really fair. Consider this - if people that live near the borders (Canadian or Mexican) decide to live and spend most of their money in Canada/Mexico, and continue to hold jobs in USA - using roads, enjoying the security provided by the government etc. then they are getting services they no longer pay for.

I would be more supportive if the taxation was part consumption and part income based.

But I do see that several of us just want a simpler system that works. The current system is definitely broken.

Mark Wilcox said...

I guess it should be called "Mostly Fair Tax" but that doesn't quite have the same ring to it :).

I think the worry about people using resources without paying for it - is not likely.

Remember - everything you buy - will have the tax applied to it. So your rent/mortgage, car, etc will have the tax applied to it. So while I'm sure it would be possible to do what you say - that would require a bigger change in our current border policies anyway :). We are after all the only developed country to see decline in immigration and tourism since 9/11. And that's even amid the current dollar downturn. And IMHO - that's a bigger worry than Al-Queda (AQ/terror is a threat but pales into what we're facing with imminent retirement of a significant portion of our work-force).

Another way to solve the problem you mention (e.g. use roads) is to apply tolls. That's much more equitable system and if we can merge tolls with modern economics - we'd actually improve things. For example - imagine on the 101 that instead of the silly HOV lane (silly being that so few people can actually car pool) - that lane was reserved for a high toll (e.g. $5 per booth). The benefit is that those who would want to pay for that luxury - would use it. And it could help offset the cheaper lane which could be sold at a loss (or even free).

Or you look into some type of system where you encourage private enterprise develop the roadway as part of another package. That is the roadway is paid for by a shopping mall investor - who uses it as a way to get people to more easily get to their mall.

I know that one sounds far-fetched but that's because it's never been done. But I agree with Amory Levins (the smartest guy when it comes to oil) - if we made real-estate developers have to pony up more cash for the infrastructure we'd probably see more innovative & cost-effective solutions.

Remember - anytime the govt. builds something - it's a monopoly project. Not saying that's necessarily bad in its own right but over long run we know competition makes things better.