Flat vs Fair Tax

The Opinion Journal (Wall Street Journal's editorial show) talked about Fred pushing for the optional flat tax and Huck pushing the Fair Tax. They noted how none of the other Republican candidates (and even Democrat candidates) have any substantial tax plan other than these two. (My opinion: Huck's isn't particularly a detailed plan--nothing against the fair tax, but all that he has done is said that he supports and would push for the Fair Tax--he has no other details. As compared to Fred who has a multi-point approach that is far more comprehensive.)

Let's assume for a second that either plan would be effective. Whose plan would be better? The folk at opinion journal observe:

Gigot: OK. All right. Why do you like the voluntary part of this so much, Steve?

Moore: Because, you know, when Steve Forbes ran for president in 1996 on this idea, all of the special interest groups--and remember, Washington, the K Street lobbies are all in favor of keeping the tax system as complicated as possible. That's the way they make their money. And so if you allow it to be optional, then Americans can decide for themselves whether they want to give up the sacred cow deductions or not. And as I said earlier, I think most would say, Yeah, I'll give them up if I can have a flat tax.

Gigot: So it's a way of really dealing with the political opposition to the flat tax.

Moore: That's right.

Gigot: All right, Kim, let's talk about the fair tax, which Mike Huckabee is proposing, which is this idea that you throw out all of the federal taxes we have--the payroll tax, the income tax--and you substitute it with one national sales tax at 23%. Is this helping Mike Huckabee at all?

Strassel: Yeah, I think it is in places like Iowa, because there is a devoted kind of group of people out there who love the idea of the fair tax--I think Steve is one of them. The problem, though, is that the long-term, politically, this is really a nonstarter. Columnists like this; it's a good idea in principle. Thing is--a couple of things. One, you want the fair tax? You have to have a repeal of the 16th Amendment, which established the income tax. Otherwise there's this huge political peril that you--

Gigot: Forgive me, Kim, but how likely is that to happen? I mean, don't you have to get through three-quarters of the states and two-thirds of the Congress?

Strassel: That's absolutely right, so it will never happen. Never happen. And this is what allows us--until you can do that, you can't actually go where Mike Huckabee is going, saying, I'm going to eliminate the IRS. The other thing, it makes someone--because you can't--very politically vulnerable in a general election, because your opponent is going to say, You want to add a new tax.

So their essential point is that the voluntary flat tax is politically possible, where the Fair Tax will not even get off the ground. I agree. I personally haven't been completely sold on a 23% sales tax--particularly since this is a major revenue source for the States. Some states have upward of 10% sales tax--a 33% total sales tax is a bit extreme.

They continue to give Fred some good props on his overall plan and feel that it can help him politically going forward.