The Role of the FairTax in Huckabee’s Win

Time Magazine’s campaign blog had an interesting article today analyzing the role of the grassroots organization of the FairTax in Mike Huckabee’s big victory on Thursday in Iowa. The article also provides a nice brief historical context for the FairTax, and is rather favorable of it. Here’s a portion:

Mike Huckabee’s victory in Iowa Thursday was a big victory also for the “Fair Tax,” the radical revamping of the federal tax code that he endorses. And while Huckabee’s Iowa win may be a one-off, one gets the feeling that the Fair Tax campaign will be with us for a while. The resurgent John McCain is mildly supportive of it as well. And the legions of Fair Tax fanatics aren’t going anywhere.

The Fair Tax is a proposal to abolish the Internal Revenue Service, throw out all existing federal taxes and replace them with a 30% nationwide retail sales tax that would, it is hoped, raise about as much as income taxes, payroll taxes, excise taxes and the lot do now. You’ll hear a lot of the Fair Taxers saying it’s a 23% tax, which it is, if you think of it like an income tax. (No use getting bogged down in that here; I’ll explain at the bottom of the post.)

Anyway, on the occasion of Huckabee triumph, I called up Leo Linbeck Jr., the Houston businessman who together with two friends launched the Fair Tax movement just over a decade ago. I’m not sure what I expected from the conversation–maybe a little gloating over the Iowa results, I guess. What I got was two hours of mostly fascinating discourse, ranging from tax theory to feudal nature of modern Washington D.C. to the ideas of philosopher/theologian Michael Novak.

The Fair Tax got started like this, Linbeck told me: Three old rich men in Houston talked over lunch in 1995 about what they could do to leave the country better off before they died. They hit on reforming the tax system, and in particular simplifying it, as a worthy goal. “I’ve been a beneficiary of the complexity of the tax code,” is how Linbeck puts it.

While the Tax Foundation does not officially endorse the FairTax, it is nice to see tax reform on the agenda in the 2008 presidential election, regardless of who the candidates are and what tax reforms they are proposing.

For a less sympathetic view of the FairTax compared to this Time Magazine blog, here is a recent podcast we conducted with one of its biggest critics, Bruce Bartlett. Also, last year, we conducted a podcast with its leading academic supporter, Laurence Kotlikoff.l