Republican presidential candidates Mike Huckabee and Ben Carson proposed simple-sounding tax plans during Thursday’s debate in Cleveland. How do their proposals square with the facts?
The Claim: Huckabee, a 59-year-old former Arkansas governor, said he could get rid of the Internal Revenue Service by implementing a “fair tax.” Carson outlined a system in which everyone would pay about 10 percent of their income, with no breaks.
“Everybody gets treated the same way,” said Carson, 63, a retired neurosurgeon. “You get rid of the deductions. You get rid of the loopholes.”
The Facts: Huckabee is referring to the Fair Tax, a proposal that would replace most federal taxes with a single national retail sales tax that could be collected by the states -- and allow the IRS to be eliminated.
That’s theoretically possible, but the idea has potential drawbacks. First, states would need to administer the tax, which would require audits. Second, the tax is collected in one fell swoop at the retail level, which makes it relatively easy to avoid by paying cash.
The tax plan includes a payment to cover basic expenses. A government agency would need to administer that, which means collecting information about family size and addresses.
Carson said he based his plan on the Biblical duty to tithe, or pay 10 percent, regardless of income.
That would be a radical shift from the current federal tax system, in which higher-income people pay a greater share of their income in taxes, as a recognition that basic living expenses impose a burden on lower-income households.
According to Congressional Budget Office estimates, the lowest 20 percent of U.S. households by income pay about 2.9 percent of their income in all federal taxes, while the top 1 percent pay 33.3 percent.
If everyone paid 10 percent, it would increase the budget deficit because the current tax system raises about 18 percent of gross domestic product.