Monday, December 24, 2007

Mike Huckabee's Risky Scheme

Those of who have long since grown weary of the 2008 Presidential Election need not wait much longer for some kind of resolution. The primary seasons kicks into high gear with the Iowa caucus on 3 January. I for one am eager to get moving and put an end to largely meaningless poll numbers and theoretical analysis, all of which boils down to, at best, little more than a gigantic guessing game. We will not get a break from exhaustive coverage, but at least we'll have the benefit of concrete details rather than 100% speculation.

The current darling of the GOP, Mike Huckabee, has co-opted a libertarian idea and instituted it as one of his campaign proposals. Like many libertarian ideas, this one almost makes sense until you closely evaluate it. I for one am no fan of the IRS either, but I would propose far more modest reform. Sales taxes of any sort are deeply regressive levies that punish the poor at the expense of the rich. Far fairer taxes are those on property or on corporations.

Not stated by this article, but often cited as justification for why it should be implemented, this scheme seeks to find a way to tax undocumented workers at the same rates as American citizens. Often paid in cash, under the table, illegal immigrants evade paying their share of income tax. However, I do not believe this is the proper way to go about it. I instantly grow nervous when anyone proposes sweeping tax reform this radical, because I'm immediately reminded of destructive taxation policies which have been implemented in the past. The first that springs to mind is the sort which was instituted by the UK. Foolish policies such as these nearly forced the country to go broke. The Beatles sang about them in the song "Taxman".

Let me tell you how it will be
There's one for you, nineteen for me.

American readers might not understand that under the pre-decimal pound system, a pound was equal to 20 shillings. Thus, it stood that the wealthiest members of British society were paying 19 shillings out of every twenty in tax alone. Or to put it another way, 95% of all their income was paid in tax.

Lest it seem that I have some kind of wholesale sympathy for the super rich, rest assured I do not. However, knowing what I know about the whole premise of the capitalist system, I recognize that punitively punishing those at the top for the benefit of those not as well off usually fails. The strategy involved in the UK plan attempted to motivate the rich to spend more in an effort to avoid paying the lion's share of their income in tax, thus thrusting more capital into the system. A desire to preserve wealth, more often that not, creates tax refugees who put their money in other places where tax is lower. This same premise has resulted in massive outsourcing of American jobs to other countries.

The fairest plans keep taxes at tolerable levels for both the rich and poor. So long as an unequal distribution of wealth forms the basis for the capitalist system of which we are a part, so also will our tax policies need to be modified to affect each socio-economic level in a different way. This will lend some degree of complication to the tax structure, but neither should it be as unnecessarily complex as is today. In that, at least, I do agree with Huckabee.

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