Columns » Ernest Dumas

Boozman's unfair tax



Both Sen. Blanche Lincoln and Rep. John Boozman illustrated the wisdom of my advice a while back about how they should comport themselves in their race for the Senate, which was that Lincoln try to tell people what Boozman stood for and that he take the Fifth Amendment and stay home.

Voters know little more about Boozman than that he is a Republican and he is not Lincoln, which is enough to get him elected easily if he doesn't screw up too badly, as his brother did in the same race in 1998 and as he himself is prone to do.

Boozman took the advice last week and said he wasn't going to appear with Lincoln any more than the three times he had agreed to, which was too many. The week before he had demonstrated why that is smart. Lincoln made a good stab at illuminating Boozman's philosophy, if it can be called that, and at giving people a peek at what he might do if he is their senator. She observed that he was a sponsor in the House of Representatives of the so-called Fair Tax, the 15-year-old plan to shift a huge part of the tax burden in the United States from corporations and the rich to the middle class.

Confronted with his undeniable sponsorship of the foolish bill, Boozman said he merely sponsored it, which didn't necessarily mean he wanted it to become law. He thought it was unfair that he should be blamed for something he sponsored when it was not yet a law. Boozman's most famous supporter and the most famous backer of the Fair Tax is former Gov. Mike Huckabee, whose daughter is Boozman's campaign manager.

You will remember Huckabee's explanation in 2008 of why he liked the Fair Tax so much. Instead of companies like BP and Goldman Sachs having to pay taxes on their profits, America's pimps, prostitutes and drug dealers would collect a hefty sales tax from their clients and remit it to the government to help pay for Social Security and Medicare. It was a perfect illustration of how realistic the big sales tax plan is. Is there a crack dealer in America who would collect and remit a sales tax on his consignment?

The Fair Tax is not a pointless sideshow. It reveals as well as anything a senator's real constituency — to whom he or she thinks the government owes its greatest obligation, the privileged or the rest of us. Lincoln's own record on that is not stellar but she can at least say it is better than Boozman's. She has not favored giving Wall Street a share of Social Security or insurance companies a pipeline into the Medicare trust fund.

Boozman's bill would repeal corporate and individual income taxes, taxes on giant inheritances, payroll taxes and self-employment taxes and replace them with a 30 to 35 percent national sales tax on every commodity or service that anyone buys. Thirty percent is a conservative estimate because it assumes that the tax would not create a massive black market or cause tax evasion on a giant scale. If those things happened the tax rate would have to be adjusted upward until it produced the same amount of federal revenues that all the abolished taxes now produce.

The Boozman bill specifies a sales tax rate of "only" 23 percent but it cleverly describes the tax rate as being on the "tax-inclusive" price of a commodity or service. That is not how anyone looks at the sales tax, although Lincoln knows so little about the proposal that she refers to it as a 23 percent tax.

The authors came up with a way to write the legislation to make the tax rate look as low as possible, though 23 percent looks pretty horrible. They calculated that it would take 23 percent of retail commerce in 1995 to pay all the government's bills that year and give everyone regular checks to compensate them for the amount of taxes they would be paying on poverty-level living expenses. If you calculate it the way we calculate Arkansas's 6 percent state sales tax — a percentage of the retail pre-tax price — it would be 30 percent. Independent analysis puts the real tax rate at 34 percent, and that assumes the tax could be collected universally. The federal government would depend on state revenue departments to collect the taxes and remit them to Washington.

As the authors claim, a national sales tax would have some economic advantages over the current crazy quilt of taxes. But fairness is not one of them, unless you are a corporation or make more than $500,000 a year.

That's what Congressman Boozman would try to do if he's in the rarefied company of 100. If it's not, he ought to explain what he meant by sponsoring the bill and supporting the Social Security and Medicare privatization schemes. If it was just to curry favor with the big interests, Senator Lincoln at least could be philosophical about it. She's done more than a little of that herself.

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