Still, announced presidential candidate Herman Cain has made the FairTax idea part of his campaign platform, just as Richard Lugar did sixteen years ago. Perhaps Cain should talk to Steve Forbes, the last unelected presidential candidate to champion the Flat Tax cause, twice. However, that is another story.
10 years ago in January, 2001, the Congressional Budget Office forecast surpluses totaling $5.6 trillion by 2011. Balanced for the first time in decades at that time, the U.S. budget has since plunged from surplus to debt. A third of that $12.7 trillion plunge can be accounted for by three policies for which no one in office claims responsibility: the 2001 and 2003 Bush tax cuts, the wars in Afghanistan and Iraq funding and the 2009 Obama stimulus bill. Expressed as a percentage of the economy, except for a period after WWII, those three policies contribute to the national debt being larger than at any time in U.S. history.
So while everyone is blaming everyone else for a crisis in which they are complicit, politicians like to drag out the tax code and beat it like a populist’s piñata. It worked for President Obama.
"We've got a tax code that's making things worse,” candidate Obama said, October 22, 2007. “This isn't an accident. Special interests in Washington have carved out a trillion dollars worth of corporate tax loopholes at a time when income inequality is larger than any time since before the Great Depression." But candidate Obama was talking about a fair tax system, not the FairTax bills being put forth in Congress.
The central idea of the FairTax is that it would eliminate complexity in the tax code. The idea is long on rhetoric: what you earn is what you keep, no more withholding taxes, no more income tax. However, it is short on reality. For example, taxpayers would still pay the FICA Social Security tax, which is already a larger burden than income tax for most people. Somebody would have to enforce the new tax law, so the plan would not eliminate the IRS altogether. The FairTax would not help the poor, who pay no income taxes under current tax code. That is all before special interests hire lobbyists to propose exemptions. Tax attorneys, tax accountants and tax preparation companies be damned. Not.