Huckabee's Economic Stimulus Plan:
Expand the "Hope Now" program - the government's voluntary alliance with sub-prime lenders to help troubled borrowers.
Huckabee's Long-term Economic Platform:
Huckabee first suggests many tax cuts, and then finally eliminating the income tax in favor of a sales tax. (See Fair Tax
Here are the details:
- Extend expiring tax cuts from Bush's first term.
Make college tuition deductible.
Increase defense spending by $200 billion to 6% of GDP.
Build homeland security fence along Mexican border.
End dependence on foreign oil within 10 years. Increase use of wind power.
Eliminate marriage penalty and death tax, and make tax cuts.
Ultimately eliminate all taxes except for sales tax. Rebate tax on all purchases made below poverty line, so the poor pay no taxes.
Give President line-item veto.
(Source: MikeHuckabee.com, A Fair Deal for All Americans, January 14, 2008)
Impact on the Economy:
Extending the Bush tax cuts
would have no impact until 2010, when they expire. Making tax cuts while increasing defense spending would increase the budget deficit
. This would weaken the economy by putting downward pressure on the dollar and increasing inflation
The Beacon Hill Institute calculated that the Fair Tax would collect $2.6 trillion in revenue, which is more than the income tax that it would replace. It also projects a boost to GDP of 7.9% in year 1 on up to 10.3% year 25, among other benefits to the economy.
On the other hand, William Gale of the Brookings Institute calculated that the Fair Tax rate of 23% would translate to a 30% sales tax, states would have to abolish their income tax, adding another 10% to the sales tax, leading to an effective tax rate of 40% or more. Enforcement would be difficult, unless an agency like the IRS were kept intact, raising costs. His calculations show that taxes would rise for 90% of all households.
Without being able to closely examine the calculations and assumptions of each study, it is difficult to determine how the Fair Tax will affect the economy. If the Fair Tax act is ever passed, implementation would need to be slow and consistently evaluated.