Taxes: What Should they Buy?

Fourth in a four-part series on taxes.

“Taxes are theft!” judges one reader of this humble blog, and more than a few libertarians would agree with him. As near as I can tell, this judgment is based on a view of man as a completely autonomous individual, dependent on no one but himself, answerable to no one, and subject to compulsion by no one. Under this view, to the degree that taxes are compelled they cannot be just.

My problem with this view is that it does not describe any man or woman I have actually met. Every person of my acquaintance emerges not from autonomy, but from dependence. We are all called into being by the ready-made community of the family. Most of what we are comes not by an individual “consumer” choice but by gift. Along with the gift of family, there are the gifts of language, nationality, religion, community, city, state, and nation. Our values are socially formed by these gifts of social context and only after that formation do we find ourselves in a position to accept or reject these received values. What “freedom” we have consists mostly in decisions about how to use the gifts we are given; how to re-arrange them and pass them on. Our very being itself turns out to be already a “being-in-community” which mirrors in some fashion that ultimate community of persons that is at the root of all being, namely the Trinity. At their most basic level, humans are social beings, already formed by institutions “outside” themselves.

And since man is a social being he has social obligations; the gift demands a return if it is to survive to the next generation. Hence, each man has obligations which may, in certain circumstances, be compelled of him. Individual goods are themselves the product of social goods and are dependent upon such social goods; if there is a break-down in the social goods, no individual goods will survive. We are all dependent upon each other; the common good precedes any individual good. A philosophy of pure individualism contradicts the social nature of man. Clearly, there are common goods which no individual (or very few) could provide by themselves. The obvious example is the common defense, but there are others, and they are normally supported by taxation.

But if this rule of the common good gives us the ground for legitimate taxation, it also gives us the ground for judging when taxes are illegitimate. For if the legitimate purpose of taxes are to pay for those things necessary for the common good, then taxes are illegitimate when they purchase not the common good, but individual and particular goods. That is, when good money is taken from all to provide goodies for a few, goodies not connected with the common good, then they are illegitimate.

When we examine the actual expenditures of the modern state, we have ample grounds for questioning whether all of this money, or even most of it, goes to the common good, or are just private goods paid for by the commons. And while we should never (in my opinion) proclaim that “All taxes are theft!” we have more than ample grounds for shouting, “Most taxes are theft!” The one-word difference is crucial.

Of course, there can be different judgments on what constitutes the common good. But there can be no doubt that the system of special bills for special friends (“earmarks”) which burden every budget bill are nothing but theft. And even things that fall in the common good can be used in such a way that much of the money goes for other purposes. For example, we certainly do need an army for defense, but does our defense really require troops stationed in more than 130 countries? Certainly there are private contractors on whom the military is dependent, but do we really need the army of parasites and mercenaries provided by Halliburton and Blackwater? I tend to doubt it.

To take another random example, we can note farm subsidies. Now, a secure food supply is in the common good. As someone who likes to eat three or more times a day, I want to see secure and prosperous farmers, as my own security depends on them. Further, I have no objection (and much praise) for a fund which insures the farmer against the vicissitudes of the weather and the market, since the farmer himself cannot control these things. This fund ought to be largely supported and controlled by the farmers themselves, and it is not unjust if this fund receives a contribution from the general taxes, or at least, from those tax-payers who actually eat. But the current system is not an insurance program at all, but a subsidy, and one not so much to the “farmer” as to the giant “agri-businesses” such as Archer-Daniels-Midland and the like.

Further, we can note that not every common good needs to be paid for by general taxes. Take transportation, for example. Certainly it is a common good, and a prosperous people need a good transportation system. However, it turns out that most expenditures for particular forms of transportation constitute a subsidy for private persons. We build highways, but the only ones who can use them are those who can afford the high capital costs and operating expenses of an automobile. And when we invest so much public money in highways, we privilege one group of users over another, and force people to buy a car whether or not they want to, or whether or not it makes economic sense for them to do so. Now, its not that I think the government should get out of the transportation business; there are good arguments for public roads, since every particular route would have to be a monopoly anyway; you could not efficiently have two competing roads operating on the same route. However, these roads should be paid for by user fees (tolls) and not by general taxation. Indeed, subsidizing the roadways turns out to be both contradictory and self-defeating (see Free Markets, Free-ways, and Falling Bridges.)

We can also note areas where the free market has proven itself incompetent. Modern medicine is one of these areas. Indeed, so long as we are talking about a market that is so dependent on licenses and patents, there cannot be, even in principle, a free market at all (see Sicko-phancy!) We did have a free market in medicine, in the 19^th and early 20^th centuries, and it was a disaster. Hence, there is ample justification for a public system of health care. The specific taxes applied to this can certainly be debated. I will not here enter into that debate, but I will merely note that such a system ought to be supported by taxes dedicated to that purpose, such that if the costs rise, the public will have instant feedback via an increase in those specific taxes.

Our other big problem is retirement funds. Now, in days gone by, there were two sources of social security: have a lot of money or have a lot of children. We have made the latter unfashionable and the former damned near impossible (median wages haven't risen in 30 years). As a practical matter, we cannot do away with the system in any near term without causing social chaos (besides, the old folks vote.) Nevertheless, the system itself is not sustainable and in reality constitutes a surtax on labor incomes that is now used to support the general fund. In other words, it is just an additional income tax on one class of workers but not on others (see Social Insecurity.)

Looking over the budget as a whole, it is my unscientific judgment that at least one-third to one-half of the expenditures are for things that are mere subsidies, or that could be moved from the general taxes to special funds and user-fees. Hence taxes could be cut, conservatively speaking, by one-third to one-half, and could be done without harming, and indeed improving, things that really contribute to the common good. However, cutting taxes depends entirely on cutting expenditures. Candidates don't like to talk about cutting expenditures because each cut cuts into a constituency, either one that contributes a lot money or a lot of votes. We are left with vague promises of cutting “waste, fraud, and abuse” only to see all three increase. Or we get nonsense like Huckabee's “revenue neutral” plan, which on inspection turns out to be “all taxes on the rich are theft; everybody else pays 30%.” And all will end up continuing the program of borrowing to pay for “tax cuts” while spending like drunken sailors. Such “cuts” are not cuts at all, since borrowing is not tax-cutting but tax-shifting; taxes are shifted from the current generation to the next one. We are, quite literally, spending our children's money.

It is unfortunate that Ron Paul, the only actual Republican in the race, has taken the “all taxes are theft line.” It is not merely that it prevents him from getting elected (since most sensible people don't believe that), but more importantly it prevents him from speaking about the more important issue, namely, insisting one fiscal discipline. Spending only as much as you take in, and spending it only for the common good. That platform might actually win, if backed with sufficient funds for a credible campaign. But win or lose, it would certainly be a great moment of political education.

Read more...

The Huckabee Bureaucracy

Perhaps nothing government does causes more resentment than the income tax; it is the visible sign of government intrusion into our economic lives. There are many reasons for this resentment, most of them legitimate. When the tax first began, it affected, at most, the upper 2% of the population, and was, therefore, a wealth tax. But over the years, it became largely a tax on (and an attack on) labor. Why labor is something that should be taxed—that is to say, discouraged—is a bit mysterious. But each payday, the worker sees his pay stub filled with deductions to his hard-earned wages. And he suspects, correctly as it turns out, that the rich do not pay anywhere near the same proportion of their disposable income in taxes. Therefore the primary emotion is one of basic unfairness.

It is therefore not surprising that a scheme, no matter how hare-brained, that is labeled a fairtax would hold some initial appeal. The prospect of closing down the hated bureaucracy of the IRS can only fill one with glee; I certainly look forward to that happy day. That appeal will wear thin, I believe, when the new tax replaces the pay-day resentment of deductions with the everyday resentment of a 30% tax each and every time the worker buys something. The “FairTax” folk promise him—today—that his wages will rise by roughly the same amount. However, their assumptions are dubious at best; since there is no precedent for such a massive intervention in the market, no one can say what the effect on wages or prices will be, and hence no one can say what the effect on the market will be. The plain truth of the matter is that the 30% national sales tax represents the largest single government intervention into the free market since the Russian Revolution. And like all such interventions it will require a bureaucracy to administer it. And the bigger the intervention, the bigger the bureaucracy; and since the Huckabee tax is the biggest of interventions, it will require that the Huckabee Bureaucracy be the mother of all bureaucracies. Moreover, the Huckabee bureaucracy will be primarily a police force, just like the IRS, because the system he envisions will be prone to fraud on a massive scale, and will therefore require a massive police force.

The sources of massive fraud in the administration of the National Sales Tax are three. The first concerns the fact that it sets up the largest welfare program ever (the so-called prebate), a program that will require the issuance of a national identity card. How else will they know to whom and where to mail all those monthly checks? Since each identity card entitles it's bearer to “free” money from the government (you and me) in the amount of about $200/month, many people will want more than one. Why not a dozen or so? Why not two dozen? Identity theft is already big business, as is the business of “manufacturing” identities. But with a $2,300/year “prebate” with each phony and stolen identity, there will be millions upon millions of them. The Huckabee National Identity Bureau will have its hands full trying to root out the false ID's. I can't imagine them being able to do that without broad and extensive police powers, and even then the mafia is likely to stay well ahead of the Huckabee Identity Police.

But as bad as the identity fraud will be, there is a bigger source of fraud in the fact that the National Sales Tax sets up a two-tiered pricing system. The same items will be taxed or untaxed depending on who the buyer is. If a businessman or woman is buying the item for ostensibly business purposes, then there is no tax. So, since I am a businessman, when I buy my car, I pay no tax. You, buying the same model car at the same time, will pay 30% more for it. Now the resentment really begins. However, how is the sales clerk to know which one of us is really a businessman? In the bad old days of the IRS, the businessman was the one who filed a schedule C and paid taxes on the profits. But now there is no such thing as the IRS (hooray!), so there will have to be a way to distinguish between the business and non-business buyers. This will require that each businessman get a certificate from the Huckabee Business Certification Bureau. But an immediate problem arises: how do you define a business? There is a sense in which a firm or person is currently defined as a business by paying business taxes. But under the National Sales Tax, it will be the opposite: a businessman is the one who doesn't pay the taxes. Hence, everybody will want to be a businessperson, at least when they are shopping. We can reasonably expect there to be millions and millions of applications for the business certificate. And since one doesn't have to show a profit, or indeed, show anything, there will be lots of people who are businessman only when they shop. Since this alone is enough to wreck the entire revenue system, there will have to be established the Huckabee Business Auditing Bureau to ensure that the businesses are legitimate. Even though this bureau will collect no taxes, it will have, in every other respect, the same task in relation to business as does the dreaded IRS.

Now, each seller will have certain sales that are taxed, and others that are untaxed. There will undoubtedly be any number of dishonest businessmen who will simply lie; they will report as “untaxed” a certain percentage of transactions for which the customers actually did pay the tax, thereby increasing their margins on those sales by an instant 30%. This kind of thing happens already with sales taxes, with some business reporting lower sales than they actually had, and hence pocketing the sales taxes that they collected. However, it is somewhat rare, because both the retailer and his supplier have such extensive reporting requirements for the IRS that the fraud becomes trickier, because one serves as a check on the other. But with no reporting requirements, there is also no check. Hence, to prevent massive fraud, there will have to be extensive reporting of each and every transaction to the Huckabee Sales Auditing Bureau. They will have the immense task of auditing each and every sale to make sure that the taxes are accurately reported and paid.

But the two-tiered pricing system has another distinction, that between “new” and “used” items, since “used” items are not taxed. We pass over the fact that this guarantees the death of the new housing industry, where the tax rate is prohibitive, and go on the difficulty of this distinction generally. Is a re-manufactured toner cartridge new or used? Is a demo car new or used? Normally, buyers and sellers work these things out for themselves without the help of the Federal Government, but now the Huckabee government will have to intervene to protect its tax base. I don't even know what to call this bureau or how it will fulfill its duties; reader suggestions are welcome. But it does suggest an excellent business opportunity. Since I am a businessman, I can buy a new car tax-free. I can drive it for a week and sell it to you at a 10% markup. You will save 20%, I will make 10%, and everyone will be happy. And I will get to drive a new car each week. Since there is no reporting of business expenses, no one will know that my business is buying an awful lot of cars, more than the normal real estate agent might require in the discharge of his duties. To prevent this sort of thing, there will have to be established the Huckabee How-Many-Cars-are-You-Buying Bureau, (yes, I am running out of names for these things).

Of course, the term “used” will acquire a new meaning. Now, something like “Used Appliance Store” means one thing, but under the Huckabee administration, it will mean “30% off Appliance Store.” Such stores will claim that there stock is entirely used, and they will wear out quite a few ball-peen hammers putting dents in their “used” stock. To prevent this rather obvious fraud, there will have to be a Huckabee Product Origins Bureau.

But the simplest way around the taxes is simply not to report the sales, which will be easy since there is no messy income tax to deal with. People will buy goods in Canada and Mexico by the truckload, and sell them off the back of their truck or out of their trunks or living rooms. Drugs, appliances, jewelry—any sufficiently high value item will have an underground and non-taxed market. To deal with this, there will have to be a Huckabee Market Police.

I could go on, and many of you I'm sure will report other problems require other bureaus. The plain truth is that when you intervene in the market to this extent, the police powers of the state expand at the same rate or greater. The Huckabee National Sales Tax is anti-person, anti-family, and anti-business. People, even the most honest person, will be forced to cheat just to make ends meet. The plan encourages criminality and proliferates bureaucracies. The only beneficiaries will be the rich who spend only a small portion of their incomes on consumption, and hence escape most taxes. And the Mafia of course; they will rejoice at the new "business" opportunities. The rest of us will be forced to protect our incomes and families in other ways. Those who cheered to see the IRS closed down, will weep when they see the expansion of government power beyond their worst nightmares.

P.S. If you know someone in Iowa, pass this on.

Read more...

More on the Huckabee Hoax

Its getting harder to heart Huckabee these days, what with his befuddlement on the NIE and the revelation that he intervened to get a serial rapist released from prison, who then promptly went out and raped and murdered a woman. But some who do take Huckabee to heart have taken me to task for criticizing his call for a 30% National Sales Tax. This should be called the “Starship Enterprise Tax” because it will go where no sales tax has gone before: homes, medical services, legal services, food, government purchases—in short, everything. Democrats, in the meantime, have got religion, praying to whatever gods may be that the Republicans will endorse such a whack-o tax plan; they plan a leisurely campaign while every voter mentally adds 30% to each purchase during the election season, each time figuring out just what a Republican victory will cost him at the check-out counter.

Ian, a Fair Tax reporter, posts a long response. Well, actually, it is not a response at all, at least not a response to me; it is the same canned post that he sends to every blogger who dares to question the space cadets at FairTax.org. Nevertheless, let us try to address his major claim. Yes, he concedes that there will be a 30% tax (he calls is 23%, but we agree that whatever you call it, it will still be 30 cents added to every dollar of purchase), but prices will magically go down by 22%. Thus there is hardly any tax at all! And its revenue-neutral! And Progressive! Wow! I'm impressed. But also a bit suspicious. So let's look at these claims, one by one.

The Effect on Prices

Ian tells us Prices after FairTax would look similar to prices before FairTax - not 30% higher. This is because FairTax removes the cost of business income and payroll taxes currently embedded in prices. Ian calculates this cost at 22%, and presumes that it would immediately come off of current prices. I can only assume that Ian does not now reside in a capitalist country, and therefore does not know how prices are set. They are not set by the cost of production, but by the market using supply and demand. The cost of production provides the floor beneath which prices cannot, for any long period of time, fall, but it does not provide the ceiling, or even the average price. The fact that you can make a shirt in Bangladesh for 30 cents direct labor doesn't mean it sells here at some small multiple of 30 cents. Nor would doubling the labor cost to 60 cents double the price, nor would halving the labor cost to 15 cents halve the price. If its market price at Macy's is $30, there won't be any change because they have eliminated payroll taxes. The labor cost has very little to do with the price in such a case, and since we import so many of our goods, this will be the case most of the time. The Arabs will not reduce the price of oil because we have a consumption tax. The cost of housing bears very little relationship to the cost of building the house, and a lot of relationship to the location of that house. A house that in the country might sell for $100,000 will sell for $500,000 dollars in the city center, even if they are the exact same house. This will not change because the company has skipped a few tax accounting steps.

There are some highly elastic goods, in highly competitive markets in which a vast number of firms compete, where prices are very sensitive to costs, so much so that a change in costs leads to a near immediate change in price. But such markets are the exception rather than the rule. Don't look for prices to change much with the national sales tax, other than the fact that they will go up by 30%.

Revenue Neutral​?

No one outside of Planet FairTax believes that 30% will be “revenue neutral.” (Independent analysts place the revenue neutral rate at between 34% and 39.9%, and some even place it at 57%.) The space cadets get their number by ignoring fraud and by taxing government services. Everything that the national, state, and local governments buy will be taxed. But this can only mean that your state and local taxes go up by enough to finance the 30% additional for all government purchases. In other words, they make it “revenue neutral” by building in state and local tax increases—voodoo economics at its best!

Furthermore, they totally ignore the effects of fraud. With the prospect of undercutting all competition by 30%, the opportunities for fraud will be immense; people will find all sorts of ways to sell you things outside of the system, and with a 30% price advantage, there will be no shortage of customers. Indeed, the FairTax people themselves build in an exception that is sure to lead to fraud: used items won't be taxed at all. Used homes, cars, clothing, washing machines, etc., all escape the tax. I can pretty much guarantee that there will be whole new industries manufacturing “used” goods. You can never underestimate the creativity of the American entrepreneur to find a way to get around such a high tax. Indeed, there will have to be a huge new government bureaucracy to play “whack-a-mole” with these schemes, knocking down one only to see it pop up in a dozen other places. All sales taxes presume that the amount of the tax is less then the cost of avoiding the tax, for the most part. People and businesses would rather, for the most part, pay a 6% sales tax then take the trouble to devise schemes to avoid it. But even at the low rates, it happens fairly frequently. When the tax rate rises to 30%, the rewards of tax avoidance go up dramatically, and with it come new and creative ways to avoid the tax. The more likely result of such a tax is not “revenue neutrality,” but wide-spread criminality. Breaking the law will be commonplace, but people will feel it is justified to avoid such an oppressive tax.

In addition to the new whack-a-mole bureaucracy, there will have to be a new wing on the Homeland Security building to track the location of each and every American citizen so that they can receive their prebate check. This bureaucracy will be particularly intrusive, since it will have to verify each citizen and his/her whereabouts, since fraud will be massive. The printing of phony birth certificates and the planting of new new names in public databases will be big business. The Mafia can hardly wait for this law to be passed.

Extremely Regressive

The effect on the rich will be to avoid a lot of taxes that they now must pay. But the FairTax people claim that this will free the poor from taxes. Now, this is actually true, but only for the non-working poor, for whom the prebate will be just another welfare program. But the effects on the working poor will be devastating, because the EITC (Earned Income Tax Credit) will disappear. B. Y. Young at the B-Crat blog computes the effect thusly:

I did some back of the envelope calculations on how this change could impact the poor and for people at the poverty line, people at 2 times the poverty line, and people at 3 times the poverty line, all seemed to better with our current system...even with the prebate. This is based on a family of four without anything but the exemptions for their kids. The EITC helps out the poorest, giving them a $860 advantage with the current system. At 2 times poverty the current system puts $475 more dollars in your pocket at the end of the day. And at 3 times poverty you'd have $940 more in your pocket.

Mike Huckabee might make a great candidate for president—of the Southern Baptist Convention. But alas, as a president of the United States, he seems to be out of his depth. If he cannot do the analysis on such a transparent bit of nonsense, one hesitates to ask what his other intellectual shortcomings might be. We have suffered for seven years with a president who does not seem to understand the world, and particularly the world of business and economics. The results have been disastrous, and we can hardly afford four more years of the same.

Read more...

The "Fair-Tax" Fraud

The “I-heart-Huckabee” folks have indeed taken heart in recent weeks, with their hero’s recent rise in the polls. It seems as if Huckabee now has a realistic chance of becoming the nominee of the party. Part of this is due to the failure of the “major” candidates to catch on with the Republican base. Another part must be due to revelations about Rudy’s love affairs and doubts about Romney’s religion. But a big part has to do with Huckabee’s support of the so-called “Fair Tax.” FairTax.org has organized in Iowa in behalf of Huckabee, and their message has great appeal: repealing the “unfair” income tax and replacing it with a “fair” tax. Now, who can object to replacing the unfair with the fair? It certainly is a winning message. The problem is, it wins only as long as people do not understand the tax. The fair tax propaganda is a network of lies, and lies that are easily exposed. The fair tax people have had a free run up until now, because little public attention has been paid to their proposal. But once this becomes a major issue, a spotlight will be turned on this, one that will send the roaches scurrying for cover. And there are lots of bugs in this proposal. I outline just a few of the major problems.

The Name

The fair tax is not a tax on fairs, or even a tax on affairs (which would at least be interesting, especially for Rudy Guilliani), but a national sales tax. When people give you a “marketing name” for something, rather than a simple descriptive name, you know they are trying to put a sales job on you.

The Tax Rate

The fair tax folk advertise this as a 23% tax; the actual tax is 30%. They get the 23% rate by stating the “tax-inclusive” price. For example, under this proposal, an item that costs $100 would have a $30 tax on it, for a total price of $130. Since 30/130=0.23, they state the rate at 23%. But most people would regard it as a 30% rate, because that’s what it is. Why this rather obvious fraud in stating the rate? Because their own polling data shows that support for the proposal drops dramatically as the rate goes over 23%. As people understand the true tax rate, support for the tax will evaporate.

Everything is Taxed

People are familiar with sales taxes already, but not with a sales tax that covers every single purchase: food, medicine, doctor’s, home sales, car sales, interest on credit card payments—everything. Just think about buying a house, say a $200,000 home, and paying a $60,000 sales tax on it. Do you think that might impact the market somewhat? Or think about needing a medical procedure that costs $10,000 only to get a bill for $13,000. Who is going to pay the extra $3,000? If the patient, he may not be able to afford the operation; if the insurance company, rates will skyrocket. You can apply this to each and every market affected by this tax.

Revenue Neutral?

The 30% rate is supposed to be revenue-neutral. However, The President’s Tax Advisory Council—and every other neutral observer—disagrees. They calculate the revenue neutral rate at 34%, while the Brookings Institute calculates it at 39%. Part of the problem is that the fair tax people do not allow for the possibility of cheating. But a more likely result is that fraud will be massive. With such a high rate—whether 30% or 39%—the incentives to cheat will be irresistible. From people selling from the back of their cars, to off-shore web sites, the average citizen will be given a lot of help in avoiding the tax.

Further, to include the revenue neutral calculation, they include government purchases. Therefore, a tank costing $1 million will now cost $1.3 million. But this means that government budgets must rise by an equivalent amount. So either we increase, for example, the military purchases budget by 30% (in which case, the proposal is no longer “neutral”) or we purchase 30% fewer items (in which case, the proposal is no longer “neutral.”)

Regressive

For people who must convert all of their income into consumption, there is no difference between an income tax and and a universal sales tax—100% of the income is taxed either way. In other words, for people who must spend all of their income to get by, this is equivalent to a 30% income tax—with no deductions—far in excess of what most people now pay. People with excess income avoid the tax by saving rather than purchasing. But people with high incomes already save; those at the top simply cannot convert all of their income to purchasing. That saved portion of their incomes will simply be tax free. Sales taxes are inherently regressive, falling more heavily on those who must spend all of their incomes.

The fair tax people address this problem by proposing to give a “pre-bate” to everybody. The prebate is a monthly check given to each citizen to cover the cost of the tax up to the poverty level. The cost of this prebate will be somewhere between $485 billion and $600 billion, not counting fraud, which will be massive. Can you imagine the market in phony birth certificates? But even this ploy will not make the tax progressive. The false assumption is made that all income is converted to purchase, but it is not. The very rich spend a much lower percentage of their incomes. The real effect is a tax cut for the rich, and a tax increase for everybody else. Indeed, the fair tax people promise the mathematically impossible: they promise lower taxes for everybody and revenue neutrality. At best, they can deliver one or the other, but not both, and possible neither. If you lower the taxes for one, you must raise them for another, or abandon the claim of neutrality. That's simple math.

Dubious Assumptions

Throughout their proposals, the fair tax people advance rosy scenarios about the effects of the tax on wages, interest rates, productivity, etc. However, all of these scenarios are based on dubious assumptions that have weak theoretical foundations and no empirical base at all. Yet, without these assumptions, the whole thing is a dangerous experiment that could bankrupt the country (even more so than it already is). Such radical plans ought to have a better base. This plan has nothing behind it but wishful thinking.

Comparing the Plans

I have merely scratched the surface of the problems with a national sales tax. To look at it in more detail, you can examine their plan at fairtax.org. To see an excellent critique of the plan, check out the Fact Check site. Also, Bruce Bartlett has an excellent analysis at the Wall Street Journal site.

The Democrats Rejoice

The Democrats are holding their fire, hoping against hope that the Republicans will be dumb enough to propose a 30% tax on home purchases, new cars, medicine, and everything else. Those of them who pray are praying, “Please God, let the Republicans nominate a National Sales Tax candidate.” Even the Democratic Party—famous for blowing easy elections—couldn't possible lose under such conditions. The party looks forward to a summer and fall where each time a citizen purchases something, anything, he gets to contemplate the effect of a 30% (39%?) sales tax on that item. The present system, with all of its obvious faults and flaws, will seem to him to be a bargain. Every time a mother buys milk and bread for her family, every time someone checks in with their doctor for a checkup, and every time a family thinks about buying a home, they will have occassion to think about the National Sales Tax. Every checkout counter will be an advertisement for the Democratic candidate, no matter who (or how bad) that candidate happens to be.

As for Huckabee, he is certainly a sincere and genial man, one that people could easily take to heart. I do not think that he is capable of consciously participating in a fraud. But his performance to date leads me to believe that he is simply incapable of evaluating policy proposals on a practical basis. He is, if I may put it this way, a kind of Republican Jimmy Carter—and I mean that as a compliment. Jimmy made such a poor president, but an excellent ex-president. Like Jimmy, he means well, but, also like Jimmy, he has difficulty weighing the pros and cons of things.

My suggestion to the Republican Party is that they simply designate Huckabee as “Honorary ex-President” and get on with the business of finding someone a little bit better at evaluating policy proposals.

Read more...