Will you replace the income, estate, payroll, and capital gains tax with a 23 percent sales tax

STEPHANOPOULOS: I need to move on now, and the issue is taxes, always important in these caucuses and primaries.


And the Iowa Republican Party has said the most important economic reform Congress can enact to win the fight against poverty is the fair tax.


For our viewers, I want to explain what the fair tax is. It would eliminate the income tax, estate tax, payroll tax and capital gains tax. It would eliminate all those and replace it with a 23 percent sales tax. That's the fair tax.




Mr. Yepsen has a question.


YEPSEN: Governor Huckabee, this issue of tax policy, I see it as a real fault line inside your party -- fair tax, national sales tax, a flat tax, or make adjustments to the existing tax system.


YEPSEN: Where do you come down on this question?




ROMNEY: There are a lot of features that are very attractive about a fair tax. Getting rid of the IRS is something we'd all love. But the truth is, we're going to have to pay taxes.


We are the largest economy in the world. We've added -- during the time Europe added 3 million jobs, we've added about 50 million jobs in this country.


And so completely throwing out our tax system and coming up with an entirely new one is something we have to do very, very carefully.


The president's commission on taxation -- tax reform -- looked at this and said: Not a good idea.


Some of the reasons...


HUCKABEE: They didn't look at that...




ROMNEY: Let me -- hold on, let me complete.


Some of the reasons are the fair tax, for instance, charges a 23 percent tax, plus state sales tax, on a new home, when you purchase a new home. But if you buy an old home, there's no tax. Think what that might do to the construction industry.


We need to thoroughly take it apart before we make a change of that nature.


That's why my view is, get rid of the tax on savings and let middle-income people save their money tax-free.