Landsburg on Huckabee
The economist Steven Landsburg, who often cuts through nonsense to reach good empirical conclusions, has written an article praising Huckabee's national sales tax. Landsburg is missing the basic point, though. He focuses strictly on the mathematical difference between paying tax immediately on income versus paying it later when you consume, and makes the completely nonsensical assumption that everyone always spends everything they earn. He thus considers the national sales tax to be equivalent to "unlimited IRAs", and says that we could accomplish the same purpose by simply allowing unlimited IRAs.

Landsburg is missing a couple of vital points.

1. When consumption is the target of tax, people will not only save more, they will borrow less. This will take the air out of our constant bubbles (stocks bought on margin, real estate bought on no-principal loans) which will dramatically improve the soundness of our economy, but will knock most of our bubble-boosting elites out of their jobs. Undoubtedly the elites understand this point even if they're not telling the proletariat about it, which accounts for their hissing anger and contempt.

2. Shifting tax to point-of-sale means that the pre-tax prices of products made in America will be lower, because the personal and corporate income tax will be factored out of the price. Huckabee has pointed this out, but I don't think he's mentioned the best consequence of this change. Products from other countries will not have a reduced pre-tax price. So the 'fair tax' will effectively impose a 20% tariff on products from China, which will also dramatically improve the soundness of our economy. Retailers will start to look for locally made products instead of instantly looking to China, which will return some types of manufacturing to America. Again our elites (including Romney and Giuliani) are more loyal to China than to America, so they understand and hate this consequence.
  ¶ 7:49 AM