Interesting article in today’s Wall Street Journal: Income-Tax Foes Regroup; Alliance for National Sales Levy Gains With Some Conservatives, by Jackie Calmes:
Americans for Fair Taxation — better known as FairTax.org — has regrouped in the past year. It is spending freely to tap a building anti-Washington mood and hoping to influence both who gets picked as the nation’s next leaders and what their agenda will be. As the group demonstrated recently by its prominence at Iowa Republicans’ much-watched presidential straw poll, it is gaining steam among the conservatives who dominate the party’s nominating process — and by extension with some candidates struggling to gain traction. By all accounts FairTax.org’s mobilization was a factor in the surprise second-place showing of the plan’s biggest advocate, former Arkansas Gov. Mike Huckabee.
Yet the contrast between the idea’s popular appeal and its lack of progress toward becoming law dramatizes a perennial disconnect in U.S. politics — between the easy sound-bite sloganeering of campaign season and the postelection difficulty of filling in the details and making the trade-offs that translate ideas into reality.
The FairTax proposal is certainly ambitious. It would abolish the IRS and income taxes for individuals and corporations, taxes on estates and capital gains, as well as payroll taxes for Social Security and Medicare. It also would end tax breaks — ranging from homeowners’ mortgage-interest deduction to corporate credits — that are embedded in the economy and important to many voters and special interests. To ensure the income tax never returns, the group proposes repealing the 16th Amendment that created it a century ago.
In its place would be a 23% national sales tax on goods and services though other analysts say the rate would have to be higher. Where the income tax is intended to be progressive, taking more from those with greater wealth, a consumption tax would be regressive, hitting lower-income people proportionally harder because they spend all or most income on necessities while richer people can save and invest much of theirs. …
As a tax-exempt nonprofit group, FairTax.org is nonpartisan. But Democrats haven’t rallied to the cause. Mr. Hoagland says its representatives have met with candidates of both parties or their policy experts. …
Republican front-runner Rudy Giuliani has emerged as the only vocal foe, though rivals Mitt Romney and Kansas Sen. Sam Brownback also are listed as "no’s" on the group’s scorecard. …
Last week, FairTax.org hailed the news that still-undeclared Republican Fred Thompson "has signaled his willingness to support the FairTax" in a letter to Mr. Linbeck. But in the letter, the former Tennessee senator stops short of an endorsement, saying the principles are "a good place to start." Similarly, Arizona Sen. John McCain is listed as a "yes," though adviser Douglas Holtz-Eakin says the senator’s stock reply is, "If it comes to my desk, I’ll sign it. But I don’t think it will get there."
