Mike Huckabee’s FairTax “Is Mike Huckabee’s FairTax actually fair?” by Len Burman appeared in the May 28, 2015 issue about Mike Huckabee’s FairTax. In this article we know about presidential candidate Mike Huckabee proposed ‘FairTax’, a national retail sales tax that would replace all federal tax code. It is complicated for lower-income families.
Len Burman tell us Mike Huckabee plans to create “prebates”, which untaxes people for their necessities. According to the statistics about “Consumer Expenditures as Share of Pre-tax Income, 2011”, people earning over $150,000 spend only of of their income, and the share continues to fall as income rise, but the low-and middle-income people spend all or most of their income. The design of sale tax exempts a large share of high-income households. If FairTax wants use prebate to protect lower-income households without adding to the deficit, then it must raise taxes on people in the middle.
Also this article tells us a decade ago, president George W. Bush’s Tax Reform rejected the idea about considered a sale tax as a revenue-neutral replacement for the income tax, because after concluding they found out that the rates would have to be much higher than promised by the FairTax people. And it also caudated the tax would be very regressive.
On the other hand, the Panel also found the defect of prebate would be extremely expensive, hard for taxpayers to manage, and complex for the IRS to administer. However, the FairTax advocates counter believe that their proposal would replace regressive payroll and excise taxes if tax burdens on middle-income households.
