As Mike Huckabee continues to ride momentum from his win in Iowa on Thursday, his tax plan is getting closer scrutiny from the media. Here's a rundown of some of the feature articles on his tax plan, the FairTax, that have run in newspapers over the past month or so.
News Articles:
Huckabee's Tax Plan Appeals, But Is It Fair? - New York Times
Fair Tax? Flat Tax? Candidates Tout Novel Plans - Christian Science Monitor
In Spotlight, 'FairTaxers' Push Cause - Boston Globe
Hitting Huckabee's Tax Plan from the Right & Left - National Journal online
Huckabee Tax Plan Raises Eyebrows - Reuters
Criticism Aside, 'FairTax' Boosts Huckabee Campaign - Washington Post
FairTax Part of Huckabee's Rise, But Idea Does Not Lack Critics - Investor's Business Daily
Huckabee Whips Up Debate with FairTax Plan - NPR
The Fairest Tax of Them All? Proposal Replaces Income Tax With Consumption Tax? - Globe Gazette
Huckabee Campaigning for 23% Sales Tax - Los Angeles Times
Putting the TaxMan Out of Business - Concord Monitor
Editorial Page:
FairTax Facts - Wall Street Journal editorial by Leo Linbeck (pro-FairTax)
What's Foul About the FairTax - Boston Globe editorial by Bruce Bartlett (anti-FairTax)
Un-FairTax - Washington Post editorial (anti-FairTax)
Huckabee's Flat Tax is a Fair Tax - editorial in The Fergus Daily Journal (pro-FairTax)
In what appears to be a growing trend, one state senator in Pennsylvania is seeking to impose a tax on adult entertainment services, arguing that such a tax would "remediate the harm they are doing in communities." More from the Pittsburgh Tribune-Review:
On the heels of a new Allegheny County levy on poured drinks, a McCandless state senator is pitching another sin tax -- this one on strip clubs, escort services and pornography sellers.
Republican Sen. Jane Orie said Friday that she will ask the Senate to approve a resolution asking the Legislative Budget and Finance Committee to study the possibility of a 10 percent excise tax on adult-oriented businesses. She said a tax would "remediate the harm they are doing in communities."
This year Texas has enacted a $5 admission fee -- which some are calling a "pole tax" -- on strip clubs. And the Utah Supreme Court is preparing to hear arguments over the constitutionality of its 10 percent tax on nude-dancing establishments and escort services.
First, it is worth noting that calling the Texas law a "pole tax" is pretty funny. But these proposals are typically terrible tax policy. Can Orie really justify a 10 percent excise tax as the optimal Pigouvian tax? Not likely.
If adult entertainment is so harmful, maybe it should be banned. But wait ... there are First Amendment issues. Most legal experts would agree that a tax on adult entertainment, like an outright ban, would be an infringement on freedom of speech.
Unfortunately, many don't see such a link when it comes to other selective taxes like those on cigarettes. If you asked someone who supports higher cigarette taxes whether they favor banning cigarettes, they typically say no, arguing that such a policy would be an unfair restriction on individual freedom and have serious black market effects. But these same people have no problem imposing huge taxes on cigarettes that are far in excess of any optimal Pigouvian tax, which is also an infringement of liberty and has serious black market effects.
The NY Times reports that the New York City Council is threatening to take away the property tax exemption for the World's Most Famous Arena, Madison Square Garden (MSG). This comes at a time when the Garden's biggest tenant is involved in scandal after scandal, not including the way the team is performing on the court, which could also be called a scandal.
While this move to take away a property tax exemption for the Garden is a step in the right direction in terms of public finance, the timing makes you realize that special tax provisions are always dependent upon the mercy of government officials. Government officials can giveth and taketh away tax credits, often for reasons that are arbitrary and in many cases downright ridiculous. To some degree, this may be one of them. While one city council member says the Knicks' performance on the court is not the main reason for this action, the Times quote suggests it could be playing some role:
“I’m not going to be so flippant as to say that the fact the Knicks have absolutely stunk up the basketball court is a reason to get rid of their tax exemption,” said Councilman Lewis A. Fidler, one of the proposal’s sponsors. “But I think certainly the manner in which they’ve conducted their business otherwise has certainly left people feeling less than warm and fuzzy for them.”
He added, “It has perhaps created an environment in which people are willing to pile on.”
I'm pretty confident that if the Knicks were 29-3 and in first place in the Atlantic Division (aka Celtics) instead of 8-24 and in the basement of the Atlantic Division, this issue would have likely not been brought up.
Last year, France enacted a "solidarity" tax on airline ticket sales originating from France, ranging from 1 euro ($1.47) for short flights up to 40 euros ($58.67) for longer international flights. The money raised, according to Daily Tax Report's Lawrence J. Speer, goes to "a new international financing facility dedicated to funding health projects in poor countries, particularly for drugs against pandemics like AIDS, malaria, and tuberculosis."
Whether this is the best way to fund such programs is debatable, but a big problem has emerged. The tax was expected to raise 205 million euros ($300 million) or more a year, but in 2007 only brought in 160 million euros ($235 million), a 22 percent shortfall.
So audits are on their way as politicians blame airlines for not collecting enough revenue for the tax. The French report, available here (in French), also recognized that instead of the tax sweeping the globe, only two other countries (Chile and Gabon) have adopted it.
In Lake Tahoe, property owners were heard today by the Nevada Supreme Court over their property taxes. Some 300 of the landowners won in the lower court after they convinced a judge that their property had been overassessed for tax purposes.
Rather than order a reassessment, though, the judge ordered the taxes rolled back two years to the 2002-03 level. The local government, for equity reasons, extended the rollback to all taxpayers, but argued that correct remedy is re-appraising the property, not simply rolling back the taxes.
Deputy Attorney General Karen Dickerson said the court has the power to roll back assessments "only to the extent of excess valuation." She said what Griffin's order did was to give "a windfall to a group of property owners at Incline Village" by rolling the taxes back two full reassessment cycles.
Deputy Attorney General Dennis Belcourt argued a two-year rollback is unconstitutional under Nevada's constitution because revaluation must be done annually.
"Neither the tax commission or the court can exempt taxpayers from annual revaluation." And he said a two-year rollback creates an "unconstitutional under-valuation" for those Incline residents.
More on property taxes here.
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