When I talked to a representative from the Mike Gravel for President campaign earlier this week, one of the subjects that came up was the Fair Tax. I expressed some suspicion, given the Gravel for President campaign’s association with right wing activist Gregory Fossedal, who has been a prominent supporter of the regressive Flat Tax.
Does the campaign of Mike Gravel for President support a regressive system of taxation in the form of what it calls a Fair Tax? Here’s what the Gravel for President campaign told me about their proposal:
You make of this what you will, but I’m still skeptical of it. First, the way that the “prebate” increases with the amount that a person spends seems to actually add to the regressiveness of the sales tax system, not take away from it. A two thousand dollar check to a person living in poverty won’t make up for the dramatic increase in taxes that person will be paying, given that most people below the poverty line do not currently pay income taxes, once deductions are taken into account.
The corporate exemption from income taxes, combined with the corporate vulnerability to sales taxes, seems full of potential disaster. What would stop, under this supposed “fair tax” system, a corporation from buying all its assets overseas, where it wouldn’t have to pay an extra 30 percent, and keeping those assets overseas, thus keeping itself free of all taxation here in the United States? A corporation could ship its products in to the USA to sell them, and even have headquarters in the United States, and not contribute one cent in taxes. The American people would be left with the bill.
The current system, in which corporations move their factories overseas to avoid paying fair wages and income taxes, certainly is unjust. To replace an unjust system with another unjust system, however, makes no sense.
Forget the fair tax. It’s not fair. What we need to do is keep the income tax, re-establish and increase the capital gains tax, increase the estate tax for people inheriting over one million dollars, and find a way to charge American corporations a punitive tax for hiring workers in foreign countries instead of here in the USA.
Bachmann is for this also, wonder who else is?
Yeah, but I’d like to see a flat tax, not necessarily a sales tax. Does he really support the flat income tax? If so, what does “regressive” mean? The flat income tax does not have to be regressive if there are healthy exemptions for taxpayers and dependents. If there’s an exemption for each household near the poverty level or near $15-$20K-25K, then people will not have to pay any income tax on the funds they need to pay for food, clothing, and shelter.
In response to the posting entitled “Mike Gravel and The Fair Tax” there are several errors.
1- The “Prebate” does not increase with the amount people spend. The formula for the prebate depends on the size of the family and the poverty line. Thus if the necessities of life (the poverty line) total $16,500, the size of the prebate would then depend on the size of the household. A household of one would receive about $2,000.00
2- In connection with corporations, we believe that the United States would become a tax haven for foreign investment. As far a corporations moving their assets overseas, they have been doing that for years anyway. The way the system will work is that the Fair Sales Tax would replace the 23-30% imbedded income taxes that are included in the retail and wholesale price of all new products.
3- Their will no longer be a need for citizens and corporations to spend billions of dollars on compliance, record keeping, receipt collection etc. and workers will now take hom almost their gross salary.
Anyone looking at Senator Gravel’s record as a Senator and the platform under which he is running for President will see that he is a progressive, independent thinking democrat and Democrat whose interests are the public’s and the nations.
Elliott Jacobson
Director of Communications
Gravel for President 2008
Under a national sales tax I choose how much I pay in taxes, not the govt. Don’t want to pay high taxes, don’t buy so much crap. The rich will still by their BMW and million dollar homes no matter what the tax rate is. If poor people can afford beer, cigarettes, and lottery tickets, they can afford to pay their fair share in taxes. Plus, when people see it will take a 50-75% tax rate to cover ACTUAL spending by the govt’(including paying off the $7+ trillion national debt)then maybe we will all wake up and demand the politicians stop spending so much of our money. Of couse that means the individual will also have to take responsibility for their own lives, instead of relying on the govt’ for everything.
Yeah, Daniel? And then what will happen? Then, the individual, in order to take more “responsibility”, will have to buy more things to achieve the standard of living that is now enabled by the government, and will have to spend a huge amount more in taxes. Your argument falls apart.
Jclifford – I think you need to do some studying on federal income taxes. The people are ALREADY footing the bill! Corporations paid only 7% of federal tax receipts in 2003, down from 21% in 1962. Personally, I think it might be worth paying that last 7% to get them to cut down on their lobbying and think of all the corporate money wasted, and I mean WASTED, manipulating the tax codes for small business and corporations. Isn’t it time to start promoting education in value creation, rather than tax accounting? You should also be aware of all the embedded income taxes in the cost of the goods we already buy. Many very smart economists have studied the Fair Tax in depth and concluded that prices will end up being very close to current levels. There are many, many positive side effects to the Fair Tax. Think of all the non-citizens who will start paying sales taxes and their share of the burden! Think of the half a trillion or so of dollars that are estimated to be evaded by the wealthy every year and their army of tax accountants. I continue to be dumfounded by people in this country afraid of the Fair Tax. It is a complicated issue, but our current system is about the worst you could possibly imagine. What is wrong with reducing corporate influence on government, eliminating the IRS, making non-US citizens pay their fair share, minimizing the ways people can cheat on their taxes, and simplifying the whole tax collection structure all in one??
Open your minds to the fair tax and all that it is, not just on or two fo the issues……the time has come for this, it just makes too much sense!
Matt, I think you need to do some studying on federal income taxes. For example, Matt, non-citizens already pay income taxes.