Rudy and the FairTax

Republican Presidential candidate Rudy Giuliani, while in Greensboro today, took time to assail the FairTax plan advocated by fellow Presidential candidate Gov. Mike Huckabee based on his assertion that the FairTax would hurt homeownership.

"I think there are several tax deductions that are vital to our
economy," Giuliani said. "This would not be a good time – I don’t know
if there would ever be a good time to do this – to advocate ending the
home mortgage deduction. The home mortgage deduction is considered by
many critical to the ability of people to buy a home and keep their
home."

Frankly, I’m quite disappointed in the former Mayor.  The FairTax, while not perfect, ends many of the problems of the current tax system — namely, the tax code deciding "winners and losers" in our society. Deductions create non-market forces that persuade people to do things out of what influences their wallet, not necessarily out of their own best interest.  How many people purchased houses just for the tax break, only to see them not be able to afford that home and have it foreclosed?  How is that "helpful to the economy"?

If you believe that people should all be treated the same under the tax code for say, being married versus single, then why should renters versus home owners be treated any different?

The government should not bribe me into making lifestyle choices.  I should be assessed a tax rate as low and fair as possible regardless of any personal choices I make.  It is not the proper role of government to incentivize me to do or don’t do something based on what it think is in my best interest.  Oh yes, thank you central planners in Washington for telling me how I can keep more of my money if I cave to your demands.

It is these exemptions, exceptions, tax credits and loopholes that are at the root of the corruption of influence of special interest in our political system.  As long as companies, individuals and special interest groups can influence the tax code to decide winners and losers, we all lose.

As James Madison wrote in Federalist #10, "There are two methods of curing the mischiefs of faction: the one, by
removing its causes; the other, by controlling its effects."

Eliminating the ability of factions to benefit itself and harm its competitors through the tax code will do just that.  Mayor Giuliani speaks often about removing the government influence of imbalance in education, but advocates keeping some of those same imbalances in the tax code?  Give me a break.

**Full disclosure – I have contributed money (not much, though) to Giuliani’s Presidential campaign, and worked for two years as a staff member in Washington, D.C. for Rep. John Linder (R-GA), the primary sponsor of H.R. 25, The FairTax bill.