Landsburg on Huckabee

The great Steven Landsburg is a professor of SLandsbu Economics at the University of Rochester. He has written many good books like The Armchair Economist: Economics in Everyday Life and his latest hit More Sex is Safer Sex. I have seen him speak and someone special got my book signed by him.

Enough bio and now what you want Landsburg on Huckabee, which is actually a view on his tax plan. The infamous FairTax that has been under attack lately from many sides.

Professor Landsburg asks why? Which is something I have been asking myself.

For those of you who do not know what the FairTax plan is Landsburg explains:

"Basically, Huckabee’s plan is to eliminate the income tax and replace it with a national sales tax. To a first approximation, that’s not such a radical change. As long as you spend what you earn, a sales tax feels just like an income tax. If you earn $1,000 a week and spend $1,000 a week, it doesn’t matter whether I take 20 percent of your income or 20 percent of your spending."

He continues that in the long run we spend what they earn. This is because well everyone dies and the tax on income or spending isn’t going to effect what you left behind.

Landsburg brings up a very good point that an income tax discourages work and savings. With the FairTax you can save as much as you want and you can work as much as you want without being taxed for it.

…And because we spend all of what we earn…

"And the underlying issue becomes a lot clearer once you realize that a sales tax is a modified income tax. The right question is: Is the proposed modification a good one? The answer, according to a growing consensus among macroeconomists, is: Yes."

(Again, I am going to put this as important information whenever the FairTax is mentioned.)

One of the strongest reasons for a sales tax over an income tax is because it is taken out in front of your eyes. People forget that we broke away from England because of taxes. If they raise the income tax some people hardly notice, but if your state or locality raises the sales tax by one percent people go crazy.

Transparency

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Published in: on January 23, 2008 at 2:44 am  Leave a Comment  

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