Former Arkansas Governor, Mike Huckabee discussed in-depth a plan that economist Stephen Moore said would put rocket fuel into the economy when in Carroll earlier this week. The Fair Tax was commissioned by Houston businessmen who in 1995 through 1997 hired a group of economists to study the most growth-focused tax benefit plan. Those businessmen expected a flat tax to come out of the study, and it was, of sorts, but one on consumption instead of income.
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Under the current plan, if you have accumulated things or inherited them over your lifetime, at the point of death, the government will tax you up to half of the value on what you are leaving behind. The premise of the Fair Tax may be different, but it is actually quite simple.
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Huckabee said, the government is not entitled to your second-shift paycheck and you would get double the pay in this scenario under the Fair Tax plan. This is really a national sales tax, he said, and one of the biggest benefits is the IRS disappears; even under a flat tax, this won’t happen if it is a flat tax on income. This plan would boost the economy by brining nearly $31 trillion dollars parked in off-shore accounts avoiding income tax back to the U.S. And for manufacturing, it reduces the cost of goods as they are not taxed on production. It also, Huckabee said, helps deal with the illegal immigration issue. A lot of people are making a lot of money by hiring illegals because they don’t have to pay the associated employer taxes, and the underpaid illegals are not taxed on the income so they end up taking home more money than the American worker paid at a higher rate.
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Implementation is simple because sales tax is already collected at the state and local level. Merchants and the states would receive basis points for collection, which is a windfall to them and businesses would only pay tax on retail consumption, not wholesale purchases. A link with more information can be found at www.mikehuckabee.com or by logging on to www.fairtax.org.