How to eliminate income tax

Gov. Huckabee is running for the US Republican Presidential nomination. He won”t get it but he has a good idea. His idea is to eliminate all personal and corporate income taxes. He correctly points out that corporate income tax is really just a tax on the consumer because companies just treat tax as a cost of production and pass it along in the price charged to consumers. That”s not new but it”s not often spoken of – in fact it”s completely ignored by Canadian politicians who are deathly afraid of suggesting we reduce let alone eliminate corporate taxes.

But Huckabee also would eliminate personal income taxes as well. He points out that all the offshore capital now safely out of the reach of the tax authorities would come back into the economy. Even better, the deterrent income tax poses to increased productivity would be gone and the economy freed to run at full production.

So how does the government pay for itself? With a tax on consumption. His proposal is a 23% sales tax. It sounds bad but its better than an income tax. With no income tax the black market economy would service and end up paying the sales tax. A monthly “prebate” would compensate (in advance) poor individuals for the tax they would end up paying for living essentials. This would make it progressive as the poor would be exempt and those who can afford to spend a lot would pay a lot.

It also has the advantage of being open and immediate – in your face – so there would be continuous pressure on government to keep it at an absolute minimum.

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