Even the Fair Tax is More Progressive Than the Current Republican Line

Weigel
Reporting on Politics and Policy.
Aug. 24 2011 9:16 AM

Even the Fair Tax is More Progressive Than the Current Republican Line

Greg Sargent has set a series of honey traps for the Rick Perry campaign, trying to suss out whether Perry stands by his Fed Up! suggestion that the 16th Amendment should be scrapped, making room for a national consumption tax. Perry certainly seems to be walking back the earlier position. The irony: The earlier position was more progressive. Right now, as I wrote on Monday, Perry is calling for a broader tax base and labelling it an outrage that some people don't have to pay income taxes. The Fair Tax is structured in a way that would keep poor people from paying taxes.

The FairTax actually eliminates and reimburses all federal taxes for those below the poverty line. This is accomplished through the universal prebate and by eliminating the highly regressive FICA payroll tax. Today, low and moderate income Americans pay far more in FICA taxes than income taxes. Those spending at twice the poverty level pay a FairTax of only 11.5 percent -- a rate much lower than the income and payroll tax burden they bear today. Meanwhile, the wealthy pay the 23 percent retail sales tax on their retail purchases.
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That's one of the most politically attractive aspects of the plan, one that always gets lost when Democrats attack it. But where are the Republicans pointing this out? Nowhere: They're more interested in broadening the base. Take Herman Cain, who as a radio host was one of the Fair Tax's most prominent boosters. I asked his campaign whether he, like Perry, wanted more people to pay the income tax.

"Mr. Cain believes that is important to broaden the tax base to include more taxpayers," said his spokeswoman, Ellen Carmichael.

David Weigel is a reporter for Bloomberg Politics

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