Editore"s Note
Tilting at Windmills

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January 10, 2008
By: Kevin Drum

MIRROR, MIRROR, ON THE WALL, WHO'S THE BIGGEST PANDERER OF ALL?....Mike Huckabee currently has the loopiest tax proposal on the table, a 30% national sales tax that he supports because he read a book about it once and thought it sounded kinda neat. It's unworkable, hugely regressive, wouldn't raise half the money Huckabee thinks it would, and would create an underground economy so massive it would make the old Soviet Union look efficient.

But it would cut taxes on the rich, which means it's perfect for the modern Republican Party. So how do you top it? Rudy Giuliani, never a man to let himself be upstaged in a panderfest, provided his answer yesterday (numbers added to original Reuters dispatch for easy reference):

Republican presidential hopeful Rudy Giuliani has proposed what he called a multitrillion-dollar tax cut that would (1) lower the corporate tax rate from 35 percent to 25 percent....(2) reduce the capital gains tax from 15 percent to 10 percent....(3) preserve the 2001 and 2003 tax cuts enacted by President George W. Bush....(4) eliminate the estate tax....(5) give taxpayers the option of choosing a simplified tax form with three tax brackets with a maximum bracket of 30 percent....(6) index the alternative minimum tax to inflation and eventually repeal it.

Take that, Huckabee! You say your plan is big? Well, according to an expert that Townhall blogger Matt Lewis talked to, "This plan would be huge." How huge? "It would be 4% of GDP. By comparison, GWB tax cut was 1.3% of GDP. Reagan's was 1.9% of GDP."

Twice the size of Reagan's! Three times the size of Bush's! And deficits? No worries. These babies will pay for themselves!

Oh, and just in case you haven't figured this out yet, all six of Giuliani's tax cuts are aimed at people who already have lots and lots of money. But you knew that, right?

Kevin Drum 8:21 PM Permalink | Trackbacks | Comments (93)

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Comments

Umm.. I suppose you mean 40%?

Posted by: zoof on January 10, 2008 at 8:42 PM | PERMALINK

(numbers added to original Reuters dispatch for easy reference):

Guess all that technical writing you used to do has finally paid off...

Posted by: elmo on January 10, 2008 at 8:49 PM | PERMALINK

If God were a tax-cutter, this would be His Plan.

GIULIANI IS GOD!

Posted by: lampwick on January 10, 2008 at 8:53 PM | PERMALINK

If rich people have to pay any taxes, the terrorists have won! 9-11 Uber Alles!!

Posted by: Gore/Edwards 08 on January 10, 2008 at 8:56 PM | PERMALINK

Somebody's listening to the things that Giuliani says? I find that remarkable.

Posted by: Winslow on January 10, 2008 at 8:58 PM | PERMALINK

[Trolling deleted]

Posted by: Al on January 10, 2008 at 8:59 PM | PERMALINK

who's guiliani?

Posted by: mudwall jackson on January 10, 2008 at 9:00 PM | PERMALINK

How can we afford to double the size of Gitmo, build a 40 ft high 3000 mile long fence on our southern border and invade random countries around the world on these cheap-ass revenue programs?

Posted by: CParis on January 10, 2008 at 9:03 PM | PERMALINK

Kevin, what do you think of this analysis:
http://www.slate.com/id/2181833/

A lot of economists, myself included, think that there's a lot to be said for unlimited IRAs. Any conceivable tax system discourages work, which is unfortunate but unavoidable. But the current system also discourages saving, which is avoidable. A liberalized IRA policy—or, equivalently, a sales tax—eliminates that problem. The downside is that when IRAs grow, there's less income to tax, so tax rates must be higher—which increases the disincentive to work. But for the past decade or so, the macroeconomics journals have been rife with papers arguing—on highly technical grounds—that the terms of that tradeoff are well worthwhile.

Posted by: bob on January 10, 2008 at 9:03 PM | PERMALINK

@bob
"think that there's a lot to be said for unlimited IRAs"
Sure they do --- especially when coupled with a repealed estate tax! Pay no tax while you're alive, pay no tax when you pass the wealth on. Two generations and you've created a state that makes Brazil's gini coefficient look flat.

@Al
"Tax cuts could even be self-financing."
And if you cut taxes even more, they're even more self-financing?
So if you cut them to ZERO, they're still self-financing?
If you don't believe the claim that zero taxes equals greater federal income than right now, then obviously there is a point somewhere between a taxation rate of zero and a taxation rate of 100% that is optimal in terms of federal revenue.

Please tell us, Al, what that number is, so we can actually have a useful discussion. If you're not prepared to answer the question (with actual justification) then I assume we can all take it that, once again, you're talking out your ass?

Posted by: Maynard Handley on January 10, 2008 at 9:13 PM | PERMALINK

" ... all six of Giuliani's tax cuts are aimed at people who already have lots and lots of money"


Nobody else pays a significant amount of Federal tax, so any Federal tax cut would work this way.

The Bush tax cuts were (just ) net progressive but there is little room left for that today.

Kevin will carefully avoid mentioning these facts of course. But reality-based people can look them up!


Posted by: am on January 10, 2008 at 9:13 PM | PERMALINK

Maynard Handley: So if you cut them to ZERO, they're still self-financing?

Zero? What are you, a friggin' Leftist Socialist pinko? The top tax bracket should be negative, so we can reward those people that make America great!

Posted by: alex on January 10, 2008 at 9:16 PM | PERMALINK

"Nobody else pays a significant amount of Federal tax, so any Federal tax cut would work this way."

Not true. Nothing's stopping Rudy from eliminating the enormous and highly regressive FICA tax, for example. Well, nothing except the fact that rich people wouldn't benefit.

Posted by: chaboard on January 10, 2008 at 9:24 PM | PERMALINK

You see, if we cut the tax rate down to 1%, it will bring in quadrillions in revenue! In fact, if we cut it to 0.5%, it will bring in more money than has ever been printed in our country's history!

Posted by: Conservatroll on January 10, 2008 at 9:43 PM | PERMALINK

"Liberal Democrat Brad DeLong", my dear Al, has written one piece after another on his blog ( http://econ161.berkeley.edu/movable_type/ ) explaining in detail why the GOP candidates are all lying through their teeth when they say that their tax cuts would pay for themselves, or come even remotely near doing so (in which respect he's in total agreement with virtually all actual Republican economists, whom he frequently quotes on the subject). His own opinion (stated a few days ago) is that this ceases to happen once the top tax rate drops below about 50%.

Posted by: Bruce Moomaw on January 10, 2008 at 9:45 PM | PERMALINK

"Tax cuts could even be self-financing."
And if you cut taxes even more, they're even more self-financing?
So if you cut them to ZERO, they're still self-financing?

It's long been established fact that as tax rates drop, revenue increases. The Laffer curve shows us clearly that as taxes approach zero, revenue approaches infinity. It's so simple even Al can understand it.

Posted by: Thumb on January 10, 2008 at 9:46 PM | PERMALINK

What happens if Huck reads another book? I'm worried.

Posted by: bart on January 10, 2008 at 9:53 PM | PERMALINK

Don't forget that these are guys who have risen up through the ranks of the Republican party. They have been taken seriously.

Any wonder we are so in debt?

Posted by: little ole jim on January 10, 2008 at 10:05 PM | PERMALINK

So, if tax cuts either pay for themselves or actually raise more revenue than the amount cut, we should have the biggest surplus in history right now, no? After all that Bush has cut? I guess that's just some more good news that the media isn't reporting. Forget that recession talk.

The theory behind supply-side economics basically posits that lowering taxes on rich people and corporations leads to more jobs and growth. And it seems logical by just looking at the supply-and-demand curve from econ 101. The only problem is that people aren't that predictable and don't invest and spend like we want them to. Hence, tax subsidies from the treasury to the CEO checkbook. For all the talk about how pro-business the GOP is, they don't really seem to understand how the people on the top of that system usually get there-greed. But let's give them more money for them to create jobs so that they'll be able to write themselves bigger bonuses.

I wish there were some way to structure the economy such that we could easily encourage job creation and productivity. That would be awesome! Alas, the economy is a very complicated thing, with literally millions of different factors in play. The GOP formula of old_revenue - taxes

Posted by: Lev on January 10, 2008 at 10:09 PM | PERMALINK

Rudy will always have a job waiting for him at The Onion; they can use ideas-men like him.

Posted by: lampwick on January 10, 2008 at 10:10 PM | PERMALINK

What happens if Huck reads another book? I'm worried.

Huck reads the Bible and believes every word is true.

Then, he reads the FairTax book and believes every word.

It seems like the guy has a real thing for print media. Someone ought to send him a copy of The Origin of Species. He'll be an evolution believer in no time.

Posted by: Nix on January 10, 2008 at 10:13 PM | PERMALINK

That's nothing. In addition to a 150% tax rebate, Fred Thompson will personally give oral pleasure to anyone in the top 1/2 percent.

Posted by: B on January 10, 2008 at 10:14 PM | PERMALINK

Fred Thompson will personally give oral pleasure to anyone in the top 1/2 percent.

That sound you hear is the top 1/2 divesting themselves of assets as we speak.

You know, this is very surprising for Rudy. He always seemed like a grounded, well-adjusted guy. So responsible and trustworthy. It seems like he's desperate, but I have no idea why that should be. The folks on the teevee tell me he's going to be our next President.

Posted by: Jim Halpert on January 10, 2008 at 10:16 PM | PERMALINK

Fuck it, I have to tip my hat to Ron Paul. I've never tipped my hat to a raciest bastard before...(cracks beer and downs it)... and here is to never having to do that shit again!

Knock 'em on their ass Ron!

Posted by: elmo on January 10, 2008 at 10:17 PM | PERMALINK

What happens when the people who are supposed to buy all this crap don't have the money to? Like, if you create hundreds of thousands more jobs, to make more and more crap, but you pay everyone just above minimum wage, and then tax em into the grave. Who's gonna buy all this crap that supposedly is gonna generate all this revenue? What happens when the demand side runs out of money? infact, what happens when they are all run into ruinous debt, and forced to actually stop and pay all the stuff they owe? Well, I know personally, from having to pay back $18,000 in credit card debt (with monthly compounded intrest, the bill will end up being more like $28,000) from not being properly insured when our 2nd child came along. Even with credit counseling, the card companies were only willing to drop their rates from the 30% punishment down to 15%. 4 and a half years of not being able to afford crap. But that's just me. My question is, what do we do when it's everyone? How far are we really from a permanent wage-slave class?

Posted by: Aaron on January 10, 2008 at 10:21 PM | PERMALINK

[An IP search reveals a commenter who has never made a substantive comment, or made a single post that doesn't qualify as trolling. All comments from this IP address - regardless of choice of handle - have been deleted from the database]

Posted by: karl on January 10, 2008 at 10:21 PM | PERMALINK

I wish these fucking GOP criminals would stop looking for new ways to steal from my children and grandchildren! That's all they are doing. And dipshits like Al want to aid and abet these criminals.

Of course, Bad Teeth Huckabee has been proven a liar time and time again, including lying about having a theology degree, the freakin’ backwoods moron.

Posted by: The Conservative Deflator on January 10, 2008 at 10:27 PM | PERMALINK

karl, you pompuss-shit bag. Name one Retardican who practices "individual responsibility"?

Posted by: elmo on January 10, 2008 at 10:29 PM | PERMALINK

elmo: Name one Retardican who practices "individual responsibility"?

Abraham Lincoln (and, no, I can't think of a more recent example).

Posted by: alex on January 10, 2008 at 10:34 PM | PERMALINK

I am a conservative.

I think no government would solve all problems and we would have a perfect society, if it wasn't for those mean old democrats. We could strip those nasty old forests to nothing, pollute to our hearts content and still not have to pay anyone more then minimum wage to do it.

I also think everyone should be held responsible for their actions. If you became an addict of any type you should be left to die from it. If you happen to become pregnant and your husband/boyfriend leaves you, you should starve to death and your infant should too. If a person eats bad food because that is what is cheapest, they should die from it for not going to school and getting an education. All the non-collagegraduates should work 65 hours a week for minimum wage until the age of 75, or until they die.

Corporations are always ethical and quite willing to take care of everyone in all situations. Let's give the job of government to them.

Posted by: Aaron on January 10, 2008 at 10:34 PM | PERMALINK

Dammit alex, you're right! And there may be a few more exceptions, but not many, starting from the Revolution till now...

Posted by: elmo on January 10, 2008 at 10:43 PM | PERMALINK

Bravo Aaron! Bravo!

Posted by: elmo on January 10, 2008 at 10:48 PM | PERMALINK

Rudy's a wimp. If he were a real man, he'd just end taxes altogether. Just think of what we could do with all that extra revenue!

Posted by: Mark on January 10, 2008 at 11:03 PM | PERMALINK

[An IP search reveals a commenter who has never made a substantive comment, or made a single post that doesn't qualify as trolling. All comments from this IP address - regardless of choice of handle - have been deleted from the database]

Posted by: karl on January 10, 2008 at 11:07 PM | PERMALINK

Rudi, is throwing his hail mary pass with this one.

The fair-tax is mislabeled as regressive, when it is in fact flat. Essentially (ignoring the difficulties of collecting it), everyone keeps 100% of income, then whenever they buy anything -the price is higher. I.E. it is a devaluation of the money. When the rich eventually spend their money (its just numbers otherwsie) buys proportionately less because of the tax. Now I'm not a fanboy for it, but this is simple mathematics.

And of course Laffer was a charlatan. It is possible that a tax cut, with an offsetting spending cut would effect the rate of economic growth. If the private funds freed up was more effective then government investment eventually the growth of the economy would return the lost revenue. The problem is this would take decades at least. And since some of the government investment, in stuff like education has a pretty good rate of return, it by no means obvious that the private sector would do better.
In any case, this is NOT what we are offered, Republicans offer tax cuts funded by overseas borrowing. That way they can wait until Democrats get into office before the country begins to pay back the cuts plus interest!

Posted by: bigTom on January 10, 2008 at 11:18 PM | PERMALINK

I am a liberal.

"I like to trot out the poor onstage to talk about how much I care about them, but I am really all about providing hand outs to a middle class who doesn't need them in order to buy votes."
You've never met a poor man till now. I don't get any hand outs, so please, shut your piehole. Thank you. Also, I work more per week then your entire family. Seriously, shut your face on that subject. I've never met a rich man who contributed enough to society to justify what he has. Come to think of it, I've never met a rich man, they don't associate with riffraff like me.

"I think that what Mother Theresa called the "War Against the Child" should continue; even a baby has a beating heart and can feel pain, we should still be able to kill it."
Of course, while the blastocyst is in the womb, we should of course treat it with all respect. Once it's born however, if it's parents are poor, we should underfund it's schools, take away it's healthcare and then send it off to war to die at 18.

"I like to pretend that it is 1960 and that I have "courage" for championing Civil Rights that everyone agrees with."
You like to pretend that nearly half of all conservatives aren't what the Civil Rights movement had to fight against in the first place.

"I like to bash Bush for Iraq, but it is okay if Hillary voted for Iraq because I think we should have a woman President and Hillary is a woman (thus, she should be President)."
I shouldn't answer this, I really shouldn't. But... You like to pretend that George Bush destroyed two countries, spent ours into crippling debt, and sent hundreds of thousands of americans into harms way FOR NO APPRECIABLE RETURN. On top of that he still failed to get Osama anyway.

"I hate Christianity and worship Diversity."
Yeah, I hate anyone who stomps on the constitution and preaches hate. BTW, most liberals don't confuse worship with religious dogma. We do have a pretty decent respect for tolerance, personal rights, presonal freedoms and the precepts our country were founded on.

"I think every foreigner has just as much a right to live in this country as Americans do."
Perhaps not, we do however tend to believe that every foreigner has a right to live in general though. You won't catch a real liberal invading a country on accident. Oops! WMD where?

"I think that, even though Social Security and Medicare are headed toward bankruptcy, we should add more government programs."
I think that SS and Medicare wouldn't be headed towards bankruptcy if the top 1% would pay their fair share, and also if feckless presidents wouldn't spend all the money on useless wars and torture for NO APPRECIABLE RETURN!

"I think that everyone is to blame for the existence of poverty except for the poor people themselves. It is never one's own fault if one is poor."
Tell ya what, try being poor for five years. Get back to me.

"I think children should be read stories about homosexual princes in their third grade class, but they shouldn't learn about Adam and Eve."
What the fuck are you babbling about?

"I think that I am smarter than every other American, and resent the people who aren't as smart as me are more successful and beloved than me. People like President Bush."
Uh, here let me re-write that for you. I think I am smarter, more successful and beloved then President Bush. Ok, there ya go.

While we are on the subject, you are a despicable ignorant toad, kkkarl. Have a nice day.

Posted by: Aaron on January 10, 2008 at 11:28 PM | PERMALINK

Speaking of Rudy, don't you think this is a little ironic? America's Mayor, Mr. 9/11, where are you?

Bomb scare shortens Rudy Giuliani's visit

Republican presidential candidate Rudy Giuliani's visit here Wednesday was sidetracked by a bomb threat.

Harris Corp. headquarters in Melbourne received the telephone threat at 1:27 p.m., shortly before the former New York City mayor and his campaign team flew into Melbourne International Airport on a charter jet.

Giuliani was scheduled to tour Harris headquarters and speak with employees. But his visit to Harris was canceled because of the scare. Instead, Giuliani stayed at the airport, where he eventually delivered a speech amid heightened security that included metal detectors and a bomb-sniffing dog.

(snip)

Harris is Brevard County's largest private employer with about 7,000 local employees. The company is a developer of communications equipment and information technology, and gets much of its business through federal government contracts, including some for defense and national security purposes.

During the bomb search, Giuliani retreated to the offices of FIT Aviation, Florida Tech's flight school at the airport. After about a 90-minute wait, he came out to FIT Aviation's nearby hangar to deliver his speech.

The delay caused him to cancel a visit to FLORIDA TODAY, where he was scheduled to meet with the newspaper's editorial board.

http://www.floridatoday.com/apps/pbcs.dll/article?AID=/20080110/NEWS01/801100344

Posted by: pol on January 10, 2008 at 11:29 PM | PERMALINK

I am a karl-retardican.

I love war, but never will fight in one.

I like to trot out the poor onstage to talk about how much I care about them, but I am really all about sucking them dry.

I think that what Mother Theresa called the "War Against the Child" should continue; Fuck food stamps.

I like to pretend I have "courage" for putting a "support the troops" sticker on my car.

I like to praise Bush for being just like me.

I hate Christianity and worship the Devil because Jesus was a Liberal.

I think every foreigner has just as much a right to eat shit and die as Iraqis do.

I think that, even though Social Security and Medicare work, we should pretend they don't.

I think that everyone is to blame for the existence of taxes except for the rich people. No poor person has ever helped a rich man get rich.

I think children should be read stories about supply side economics in their third grade class, but they shouldn't learn about civil liberties.

I think that I am smarter than every other American, even though I don't read. Someone told me I was smart because I say what they want. People like President Bush.

Posted by: elmo on January 10, 2008 at 11:31 PM | PERMALINK

Rudy will also give a $100,000 earned-income credit to any Pennsylvanian redhead who has at some point in her life vivisected a dog.

Posted by: lampwick on January 10, 2008 at 11:32 PM | PERMALINK

Very very nice elmo. The sad part is that he is so ignorant, he doesn't even get how badly he was just verbally dissected.

Posted by: Aaron on January 10, 2008 at 11:36 PM | PERMALINK

We should properly judge liberalism (as before) by big government spending rather than by tax policy. Then it's easy to see that the Republican party is now the liberal party, and Democrats more conservative.

Tax-and-spend is after all limited to how much you can squeeze from the taxpayer, while borrow-and-spend has no limit as all spending can be paid for by increasing revenue through tax breaks for the rich and the subsequent economic growth.

Posted by: Luther on January 10, 2008 at 11:47 PM | PERMALINK

Thanks Aaron. And karl, if you really want to get down and dirty, come visit me at my blog, coward...

http://blindintexas.blogspot.com/

Posted by: elmo on January 10, 2008 at 11:48 PM | PERMALINK

It's a desperate ploy by a candidate with no future in the race.

Huckabee's plan is beguiling. The only money ever taxed would be the money that was spent. That's a boost for thrifty people.

Whatever the actual merits or real tax total collected, I do not see the U.S. today as a nation in which the thrifty voters can outvote their spendthrift opponents. Besides, I do not think that Congress would pass a tax bill that rescinded their right to exempt their favorite constituents: there would be exemptions for certain purchases, such as housing in the U.S., food grown in the U.S., drugs manufactured in the U.S., cars and fishing tackle boxes made in the U.S., etc.

Posted by: MatthewRmarler on January 10, 2008 at 11:58 PM | PERMALINK

cars and fishing tackle boxes made in the U.S., etc.

ROFLMAO!(I don't think you were trying to be funny, but it was funny to me)

Posted by: elmo on January 11, 2008 at 12:16 AM | PERMALINK

"I think that I am smarter than every other American, and resent the people who aren't as smart as me are more successful and beloved than me. People like Britney Spears."

There, fixed that for ya.

Posted by: Mnemosyne on January 11, 2008 at 12:29 AM | PERMALINK

Slate, via Bob at 9:03 Any conceivable tax system discourages work...

We keep hearing this crap, and yet people keep wasting their time and money going to school to learn lawyering and engineering and things like that instead of going for those desirable low-bracket jobs at BurgerMeister. What a bunch of morons.

Posted by: thersties on January 11, 2008 at 12:57 AM | PERMALINK

Giuliani will give us bigger tax breaks! More wars! And ponies! Ponies for everyone!

Posted by: idlemind on January 11, 2008 at 1:00 AM | PERMALINK

As Al and Giuliani know, there's a well-known economic theorem that states that as the tax rate approaches zero, revenues approach infinity. Thus if you simply eliminate all taxation, you take in all the revenue in existence. Goodbye deficits! The Giuliani theory of special nine-eleventivity also applies to war and spacetime -- if you're continually at war with everybody, peace is total because there's nothing to differentiate war from not-war any longer, thereby also making 9/11 not just six years ago, but now and across all possible futures as war accelerates to infinity.

Posted by: jonas on January 11, 2008 at 3:19 AM | PERMALINK

I like the Huckabee plan and the Giuliani plan is great but I waiting for a proposal that actually gives me money (preferably from Democrats)

Posted by: Jack O'Profiteer on January 11, 2008 at 5:23 AM | PERMALINK

Giuliani will give us bigger tax breaks! More wars! And ponies! Ponies for everyone!

Ah, but will he give us bigger ponies? I think this leaves an opening here for a breakthrough moment for someone, perhaps Alan Keyes.

Posted by: Davis X. Machina on January 11, 2008 at 6:32 AM | PERMALINK

Kevi: "Oh, and just in case you haven't figured this out yet, all six of Giuliani's tax cuts are aimed at people who already have lots and lots of money."

It's all due to September 11th, Kevin. I just know it. Those people you're commiserating with would be forced to hire extra accountants just to handle the excess funds. Damn you, Osama bin Laden and al Qa'eda! Have you no heart?

Posted by: Donald from Hawaii, Channeling Al on January 11, 2008 at 6:42 AM | PERMALINK

GIULIANI IS GOD! --Lampwick

God is a cross-dresser?

Posted by: DrBB on January 11, 2008 at 8:10 AM | PERMALINK

Re Giuliani bomb scare story: The tairists know he's their #1 enemy in the fight to Conquer America, so a course they go after 'im.

But seriously, the weird part to me is this:
The delay caused him to cancel a visit to FLORIDA TODAY, where he was scheduled to meet with the newspaper's editorial board.

Is this routine? Candidates meeting with media editorial boards? Aren't these entities supposed to maintain at least the illusion of impartiality? Do they invite all the candidates to drop by? Curious.

Posted by: DrBB on January 11, 2008 at 8:22 AM | PERMALINK

Republicans debate ways to help the economy,they do not know of what to do nor do they know of what they are talking about, typical republican BS just dance around the problems and they may go away after all that is what Bush has been doing for eight years, except for his Iraq war now he knows how tp swindle money for that big problem but that is all.

Posted by: Al on January 11, 2008 at 8:30 AM | PERMALINK

Of course the more money they have the more votes they can buy...

Posted by: Dancer on January 11, 2008 at 8:38 AM | PERMALINK

In today's NYTimes, David Brooks declares supply-economics is dead. Apparently a lot of Republicans have given up on telling us that these tax cuts will pay for themselves. There is absolutely NO EVIDENCE for this - both Reagan's and Bush's tax cuts ballooned the deficit. Here's a quote from Jonathan Chait"
"Even very conservative economists who have worked for the Bush administration — including Greg Mankiw, a former chairman of the Council of Economic Advisers under President Bush who is now an adviser to Mr. Romney — have publicly stated that today’s tax revenues would be even higher were it not for the Bush tax cuts." NYTimes 10/9/07
The highest estimate for how much revenues tax cuts replace is only 50%, in specific circumstances. It is time we drove a stake through the heart of this dangerous idea.

Posted by: BernieO on January 11, 2008 at 9:04 AM | PERMALINK

Huckabee's plan is beguiling. The only money ever taxed would be the money that was spent. That's a boost for thrifty people.

You betcha. Huck just needs to get in a room with a bunch of retirees, and explain it all to them. See, when you were making income we mainly taxed that, but now that you're not working, we're going to stop taxing income and tax the piss out of your expenditures. Sound fair? Good!

Of course, retirees aren't a major voting block or anything, so it's pretty irrelevant. Right?

Posted by: ericblair on January 11, 2008 at 9:14 AM | PERMALINK

Is this routine? Candidates meeting with media editorial boards? Aren't these entities supposed to maintain at least the illusion of impartiality? Do they invite all the candidates to drop by? Curious

Yes. It is routine for candidates at nearly every level of government to do this. These meetings and the discussions held in them are a major influence on a newspaper's decision to endorse (or not endorse) a candidate. Smart federal candidates also schedule informal talks with syndicated political columnists.

Posted by: Pat on January 11, 2008 at 9:38 AM | PERMALINK

In biology there is a hypothesis called the handicap principle that asserts any signal must be costly if it is to advertise a trait to an individual with multiple and potentially conflicting goals. Think of a male peacock displaying to a peahen. The peacock’s tail makes it more vulnerable to predators, but he sends the message to the female that he is fit in every other way because he is able to survive in spite of his impressive plumage.

There is something strutting, wild and gaudy (and just plain stupid) about these unrealistic tax proposals that makes me think of the handicap principle. It is almost as if they are displaying themselves as uber-conservatives with credentials and largesse to burn.


Tax cuts- big, ostentatious, and rude- are the new government handouts.

Posted by: bellumregio on January 11, 2008 at 10:01 AM | PERMALINK

Ericblair:

Right, and then he needs to explain to the financial sector, developers, and the middle class why he thinks it would be helpful to take away the mortgage interest deduction and tax people 30% or more on new home purchases and mortgage interest. Just the shot in the arm the housing market needs, yessiree!

Posted by: The Fabulous Mr. Toad on January 11, 2008 at 10:04 AM | PERMALINK

I believe under Huckabee's plan everyone would get the equivalent of a standard deduction that would basically balance out the tax lower income people wind up paying.

FWIW, I am a very conservative democrat, and while I am mainly a democrat because I believe that the market is not the answer for every problem, and that there are some things only the government can do, I really wish sometimes that our candidates would wax a little less poetic about government. I wouldn't hurt to every now and then talk about shrinking the size of government.

Posted by: Blue Moon on January 11, 2008 at 10:59 AM | PERMALINK

Remember, states rely heavily on sales taxes. 46 states have them and they average 5.25%. That makes Huckabee's plan result in a 35.25% sales tax. Also, the states that tax income rely heavily on the structure of the federal income tax -- your federal taxable income is the basis, is adjusted in a few ways, and becomes your state taxable income. If there's no federal income tax, this is likely to screw up the collection of state income taxes as well. If the states find it difficult to rely on sales and income taxes, that may push them to increase property taxes, which are largely devoted to schools and local government purposes now.

In short, this is a disaster lurking at the local level.

Posted by: David in NY on January 11, 2008 at 11:15 AM | PERMALINK

This reminds me of the Simpson's episode where Homer campaigned to be garbage commissioner by promising the moon.

Unlike most politicians he actually followed through when he got the job, blowing the year's budget in a month. He then had to actually raise revenue by accepting other town's garbage and putting it in an old mine, until that filled up. Then they moved the town of Springfield.

Posted by: Tripp on January 11, 2008 at 11:16 AM | PERMALINK

Hmmmm, would the sales tax apply to *every* purchase?

What about leveraged buyouts of companies? What about the purchase of stock? Wall Street would love that. NOT.

Posted by: Tripp on January 11, 2008 at 11:18 AM | PERMALINK

Oh, and how does that "deduction" for the sales tax work? You mean you still have to file a yearly return? How do you calculate your deduction? Do you have to show how much tax you paid during the year? Save all those sales slips? Is your deduction based on your income (just wages?, interest?, capital gains too?)? So you would have to file a return like an income tax return to get the "deduction"?

A nightmare, I say.

Posted by: David in NY on January 11, 2008 at 11:19 AM | PERMALINK


A tax rate of 100% produces a huge amount of revenue.
A tax rate of 0% produces none.

Even the prima facie example from the Laffer people is bogus.


Posted by: Jeffrey Davis on January 11, 2008 at 11:28 AM | PERMALINK

Blue Moon WTF you do no service to the name. Wake up and smell the coffee. What exactly is "big government"? We have 300 million people here. We neeed a lot of services and rules to deal with them and the multi-national corporations that would run roughshod over a weak small government. Granted it goes without saying that we could cut some wasteful areas out of gov't.

Posted by: Gandalf on January 11, 2008 at 11:30 AM | PERMALINK

Under Huckabee's plan, I would pay very little tax.

My wife, on the other hand, could single-handedly finance a National Health Care plan, the Iraq war, and a thousand bridges to nowhere.

Posted by: Brautigan on January 11, 2008 at 11:34 AM | PERMALINK

Right, and then he[Huckabee] needs to explain to the financial sector, developers, and the middle class why he thinks it would be helpful to take away the mortgage interest deduction and tax people 30% or more on new home purchases and mortgage interest. Just the shot in the arm the housing market needs, yessiree! -The Fabulous Mr. Toad

Actually, it would "help" the housing market immensely. You wouldn't be taxed on the sale of an *existing* home, just a newly built one. That would seriously put the brakes on housing starts. The current oversupply in housing would probably be corrected far more quickly as a result. I doubt if Huckabee would like the spectacle of hordes of unemployed construction workers with pitchforks, however.

Posted by: Doc at the Radar Station on January 11, 2008 at 11:43 AM | PERMALINK

"You wouldn't be taxed on the sale of an *existing* home, just a newly built one."

Why?

Posted by: David in NY on January 11, 2008 at 11:49 AM | PERMALINK

hordes of unemployed construction workers with pitchforks

Nail guns!

Posted by: thersites on January 11, 2008 at 11:54 AM | PERMALINK

Gandalf:

Look at all the pork. Look at all the Agency of Useless Reports and Whitepapers. Bridges to nowhere, Robert Byrd State Highways, Center for Goosemilk Research, Farm Subsidies.

If you want Nationalized Healthcare, all that crap has to go.

Posted by: Blue Moon on January 11, 2008 at 12:01 PM | PERMALINK

A tax rate of 100% produces a huge amount of revenue.

100% tax rate actually would provide little-to-no revenue because no one would bother working to make taxable income if the government just takes it all away.

The endpoints of the Laffer curve are pretty well established. What the rest of it looks like and exactly where we might be on it is not so well known.

Posted by: AJ on January 11, 2008 at 12:13 PM | PERMALINK

So every sales transaction is not taxed? What happened to this being simple.

I'm not even talking about the European Value Added Tax, where every step is taxed, I'm talking about the final sale of good to the new end-user.

eTrades fees would be 9 bucks a transaction plus 30% of what you are buying.

Yeah, sure, a 30% tax on transactions won't slow down the movement of capital, not one bit!

Oh, wait, you mean you'll only tax the things everyone really has to buy - food, fuel, clothing, that sort of thing? Why that's not regressive, oh no. Bah!

Posted by: Tripp on January 11, 2008 at 12:18 PM | PERMALINK

Blue Moon,

Oh, you meant the skyrocketing pork that happened under Bush? Well, yeah, that has to go.

Posted by: Tripp on January 11, 2008 at 12:19 PM | PERMALINK

Lev wrote:

The theory behind supply-side economics basically posits that lowering taxes on rich people and corporations leads to more jobs and growth. And it seems logical by just looking at the supply-and-demand curve from econ 101. The only problem is that people aren't that predictable and don't invest and spend like we want them to.

Actually, it's much simpler than that.

Investment is not EVER driven by the personal fortunes of CEO -- NEVER. Why on earth would it be? CEOS have all the authority of ownership, but none of the accountability. Accountability presumably lies with shareholders who have very little direct control over investment decisions (or even compensation for the corporate elites).

Investment is driven by actual customer demand for a companies products and services, or, anticipated demand. That's what strategic planning is all about -- where do I invest in order to increase demand, which will lead to increased profit. Of course, many CEOs pay someone else to give them advice and then take the hit if it doesn't work out. Ultimately, demand is driven by the great unwashed masses of everyday schlubs who buy things. Let them take home more money and you'll see increased demand on a huge scale -- everyone wins. When a CEO takes home more money the only people that win are manufacturers of luxury products. A guy that makes 200 times the average employee doesn't buy 200 times the stuff, he just buys stuff that is 200 times more expensive.

Why can't the American public understand that CEOs don't "own" anything but politicians? Small business owners are the real heroes in our economy. They employ the most people. But do they don't reap the benefits of having a well paid army of lobbyists and an elite class that will do anything to preserve privilege and avoid accountability for actual performance. And... any skilled or unskilled laborer is also a hero. They are entrepreneurs marketing their services on the open market. But who champions their efforts to organize and leverage their collective strength? Who tries to reduce their taxes?

Idiocracy here we come.

Posted by: lobbygow on January 11, 2008 at 12:37 PM | PERMALINK

Doc, good point about the housing market. Your comment also points to a way that the national retail sales tax would create huge evasion and enforcement problems. Instead of buying new homes, people would just renovate old ones. Of course, what counts as a renovation? Obviously you don't have to keep the roof. Do you have to keep the walls? The foundation? Surely not -- lots of people change the footprint of a home when they renovate. Somebody's going to have to make regulations about all this so we'll know when we are liable for a 30% tax on a home purchase and when we aren't. And then somebody's going to have to inspect the renovated homes to make sure they aren't actually new homes on old sites under the regulations.

Sounds like we'll need a federal agency to do all that. But what to call it? Let's see . . . it deals with revenue . . . internal revenue . . . EUREKA! I've GOT it! Oh, wait . . .

Posted by: The Fabulous Mr. Toad on January 11, 2008 at 12:50 PM | PERMALINK

Instead of buying new homes, people would just renovate old ones.

They do that now for various permitting and zoning reasons: in some places you can get away with knocking the whole house down except for one wall and building the "new" one. All the renovations would be taxable, probably, except you're probably paying everyone under the table (oops, another problem).

Oh, wait, you mean you'll only tax the things everyone really has to buy - food, fuel, clothing, that sort of thing? Why that's not regressive, oh no. Bah!

You can ask the Canucks how much fun it is when the government bows to political pressure and reality and starts making exceptions. One donut? Taxable. Pack of a dozen donuts at the grocery store? Not taxable! Yup, this sure gets rid of all that pesky bureaucracy and nonsensical tax rules!

Posted by: ericblair on January 11, 2008 at 1:04 PM | PERMALINK

Instead of buying new homes, people would just renovate old ones.

What about the cost of goods and services needed to rennovate the old home? Taxed at 30% at every step?

Posted by: AJ on January 11, 2008 at 1:42 PM | PERMALINK

AJ, hm, yeah, you're right (except for those cash payments to laborers that would never be logged). But you still wouldn't pay any tax on the portion of the transaction that went toward the purchase of the home you tore down, so it would still be cheaper, methinks.

Posted by: The Fabulous Mr. Toad on January 11, 2008 at 2:02 PM | PERMALINK


b: Fred Thompson will personally give oral pleasure to anyone in the top 1/2 percent.

remember...

dems -get- bj's

gop -give- bj's

Posted by: mr. irony on January 11, 2008 at 2:03 PM | PERMALINK

AJ, good point. BUT.... You could *demolish* McMansions that aren't occupied and then sell all of the lumber, drywall, plumbing, etc., to the people that are renovating smaller single story homes downtown. You could turn a lot of those into 4 story condos if needed. Then you can solve the following problems:

1) Reverse the exurban sprawl.
2) Turn the development areas back into switchgrass ethanol farms.
3) People would move downtown into the renovated condos that were built up with recycled used building materials from the McMansions.
4) These people would now be closer to work and would use less fuel leaving more money for them to boost the economy.
5) Unemployed construction workers will have jobs moving all of the recycled materials and reinstalling them.

Why, it's pure Huckster genius!

Posted by: Doc at the Radar Station on January 11, 2008 at 2:03 PM | PERMALINK


mem: .."People like Britney Spears."


"I think we should just trust our president in every decision he makes and should just support that, you know, and be faithful in what happens."
- Britney Spears on CNN - 9/3/2003

Posted by: mr. irony on January 11, 2008 at 2:07 PM | PERMALINK

Kevin,

In case you haven't noticed, the WSJ and pretty much the entire conservative intellectual establishment is adamantly opposed to Mr. Huckabee's "Fair Tax" proposal. This must be hard for you to understand, since by your lights conservatives automatically favor anything that benefits the "rich." Oh well, cognitive dissonance is a bitch, isn't it.

Posted by: DBL on January 11, 2008 at 2:13 PM | PERMALINK

100% tax rate actually would provide little-to-no revenue because no one would bother working to make taxable income if the government just takes it all away.

You're moving the goalposts. If I tax income at 100% this year, I get everything that's available. Something > 0. Next year? Who knows? Next year would call for something else.

Basically, the "intellectual" foundation of the Laffer Curve is based on a shell game trick. The whole thing is based on the idea that there are two rates to get the same revenue. There may be, but the foundational example doesn't and you can't actually calculate what the two rates might be. The shell game explanation just uses 0 and 100% to plant the notion that the curve is a Bell Shaped Curve.

Posted by: Jeffrey Davis on January 11, 2008 at 2:18 PM | PERMALINK

In case you haven't noticed, the WSJ and pretty much the entire conservative intellectual establishment is adamantly opposed to Mr. Huckabee's "Fair Tax" proposal.

The WSJ and the conservative intellectual establishment are adamantly opposed to Mr. Huckabee, period. Nobody with an IQ above a cucumber believes this plan has any possible chance of passing, so they might as well dump on it, too. We all are, and having a good ol' time.

Posted by: ericblair on January 11, 2008 at 2:20 PM | PERMALINK

Rich conservatives have lots of good reasons to be opposed to the so-called FairTax(tm). First, they've already made a load of money and been taxed on it once, and now they don't want to be taxed again when they spend it. Second, they don't trust big changes in the tax system, especially not from an avowed economic populist who raised taxes in Arkansas. They want to be able to plan. Third, they can see as well as the Presidential Advisory Committee that the FairTax(tm) is not revenue-neutral, and that it probably will have to be tweaked later to make up for that. But the tax burden on the middle class would already have increased, so guess who'd get whacked next?

Posted by: The Fabulous Mr. Toad on January 11, 2008 at 2:59 PM | PERMALINK

Doc, that's brilliant! I knew there was a silver lining there somewhere. And people won't want to buy cars or gasoline, either, so maybe the New Urbanist movement would be an unintended beneficiary of Huck's plan.

Posted by: The Fabulous Mr. Toad on January 11, 2008 at 3:01 PM | PERMALINK

DBL,

since by your lights conservatives automatically favor anything that benefits the "rich."

Hmmmm, in 2000 conservatives elected Bush and in 2004 re-elected him. What has he ever done that did not benefit the "rich?" Name one single thing!

Your words mean nothing compared to your actions.

Posted by: Tripp on January 11, 2008 at 3:04 PM | PERMALINK

The Fabulous Mr. Toad, Snark aside, it almost seems kinda catchy in a way. I wonder if you could just eliminate the mortgage interest deduction and just slap a nice fat 30% Federal Excise tax on *new* houses and accomplish the same thing. Take the new housing FET money and pipe that revenue stream into our new Energy Manhattan Project™. Hmmm.

Posted by: Doc at the Radar Station on January 11, 2008 at 3:24 PM | PERMALINK

YAHOO!!! He's got my vote.
That tax plan hits me right where I live. I wonder how I take the money and run cause in bit the US Gov is going to come looking for some revenue and they won't be nicey nice about their tactics. Jackboots anyone?

Posted by: dilbert dogbert on January 11, 2008 at 8:04 PM | PERMALINK

"Huckabee's plan is beguiling."

Only if you're wholly ignorant of economics and of human nature. If you're not, then Huckabee's plan is simply insane. Sheesh, Matthew, can't you even try to make sense anymore?

Posted by: PaulB on January 12, 2008 at 1:49 PM | PERMALINK

By the way, supporters of Huckabee's plan don't use the 30% figure, even though that's what it is; they use 23%.

As for Rudy's plan, I'll take it seriously when he can tell me what he's going to cut to pay for those tax cuts. Strange how no Republican candidate ever seems to get around to that.

On a related topic, when did "Republican" and "conservative" come to equal "tax cuts and nothing but tax cuts, forever and ever, amen"? I thought it used to mean fiscal responsibility, meaning that we carefully choose what we pay for and then we actually pay for it. When did that change?

Posted by: PaulB on January 12, 2008 at 2:15 PM | PERMALINK




 

 

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