Did I hear it right---Gravel is for 'Fair Tax'

[trumad]

Gravel huffs and puffs and talks about following the money? LOL

The Fair Tax is a incredibly stupid tax policy.

[rurallib]

1. think that is what I heard, also.

[SharonAnn]

21. Did they address the fact that FICA taxes would still apply and no mortgage deduction?

People who hear this "Fair Tax" idea don't know what the impact really would be.

Here's a scenario:
1. Wage-earners still pay FICA taxes and Medicare taxes
2. Most deductions for middle-class are eliminated (mortgage deduction, etc)
3. All state and local taxes still would apply (no Federal deduction for state and local income and property taxes)
4. Wealthy would immediately lobby for special deductions that would shelter their purchases.

Result:
1. Low income and middle-income see their tax burden raised to significantly over 50%.
2. Upper income people see their tax burden reduced to a fraction of the Fair Tax percentage because so much of what they purchase is excluded from the Fair Tax.

[trumad]

24. Bingo

[babylonsister]

2. Tax people on what they spend, not what they make, and they'll spend

less? I thought it was sorta cool, but that's me. Let's see, Hummer vs. Toyota?

[trumad]

5. progressive taxation--- you like that?

[LSdemocrat]

7. The problem is that the wealthy and ultra-wealthy spend lower percentages of their income

So it ultimately will lead to even lower effective tax rates on the wealthy

[sicksicksick_N_tired]

22. How? Don't they spend money on superfluous shit like extra homes and big cars and pricey diamonds,.

,...and shit like that?

:shrug:

I mean, if his proposition excludes the basics of food, clothing, shelter, healthcare and sustenance,...I would think taxing the unnecessary consumption would be a good thing.

Explain more particularly how it would be bad, please.

[TreasonousBastard]

27. It's called discretionary spending and back in the early 80's...

new "luxury taxes" were put on things like certain jewelry, expensive boats and such...

Well, the rich just stopped buying stuff-- it seems the old boat will do quite well, and if you wanted a bigger one, just buy used, or buy it in Italy. US boatbuilders wewe going bankrupt by the end of the year.

Funny how some wealthy assholes will gladly spend 5 million bucks on a boat but will cancel the deal if an extra 10 grand in tax is put on the ticket.

Wanna bet things like airplanes would be excluded from the new sales taxes?

Nope-- trying to balance the budget on sales taxes, or even VATs, is regressive.

[sicksicksick_N_tired]

39. So, include "consumption" of income.

Naturally, I do see the dangers of such a tax structure but, shit,...look at what we have.

I'm just trying to explore the possibilities of a different approach to taxation, that's all.

I am thinking, we may be able to structure a system from a "needs-based" theory better than what is in place, now, that, quite frankly, serves 'wants'.

Why not explore the possiblities? A firm floor could be established so that no American in need is taxed and no American providing a basic quality of life would suffer, either.

What I am saying is: the tax system in place is regressive.

[TreasonousBastard]

50. Gotta run a lot of numbers, but...

first problem is understanding that most rich folks don't have a problem with paying taxes, they just have a problem with the amounts-- they have set limits on what they will pay and if you try to hose them they will pack up and take their money to Bermuda.

So, first, some of the breaks they are getting are ridiculous and even they know that. Inheritance taxes, or income taxes on the heirs should stay around. Attempts to avoid all taxation on unearned income and capital gains should be stopped in their tracks. "Income" should be redefined.

Maybe transaction fees can be raised. Hedge funds managers, for instance, make humongous money and pay almost no taxes. Any attempt to hit them with an income tax will be immediately countered by legions of tax lawyers finding loopholes, but could they be hit with an inescapable tax on their deals?

Fair and equitable taxation will always be a problem simply because those who should be taxed more have more ways of getting out of taxes.

[jmowreader]

55. Used airplanes would be, yes.

If you go to fairtax.org, the very first line in the FAQ proves it won't work: "Sales of used goods are not subject to taxation."

Okay, so let me get this straight: If I spend $200,000 on a new Cessna with a propeller on the front of it and a 1200-mile range, and the tax rate is 15 percent, I owe $30,000 sales tax to the government. But if I spend $35 million on a 2001 Gulfstream jet that can fly anywhere in the Northern Hemisphere without stopping for fuel, I don't owe a nickel in sales tax? Who would buy a new airplane under those circumstances? People don't do anything really abusive to Gulfstreams anyway (as opposed to people who buy King Airs and run 'em in Flying Doctor service or fly cocaine in them), and LOTS of people will take your old one in and fix it up for you.

So yeah, airplanes would be excluded from the new sales tax--because no one would buy a taxable one.

[TreasonousBastard]

56. That's pretty much what happened to boatyards...

when the guy who wanted to go from a Viking 48 to 52 just bought a used one. The guy with real money always had his custom built in Italy for millions, and maybe had it fly a Greek or Bahamian flag so never paid tax here.

Most jets are bought or leased as shares, so any sales tax would be buried in there somewhere. But, while Cessna may hurt in tis prop business, you don't think for a minute someone's gonna either give up his new 80 million G-5 or pay 15% sales tax on it, do you?

Sales taxes really won't work unless they are transaction taxes for all goods and services, new or used.

[jmowreader]

59. What I think will actually happen

I believe that all new high-end products will be sold on open-ended leases and not as outright purchases.

A lease is a form of rental contract, so obviously you can't pay sales tax because you're not buying the item.

When the contract ends and ownership transfers, the item will be used and therefore nontaxable.

Now here's the big catch: when the Republicans finally figure out the reason the country's going broke is that everyone's doing the lease-purchase thing on everything that costs more than $100, they won't be able to fix the problem because it will be declared a "new tax"--not closing a loophole, but a new tax.

Sales taxes really won't work. Forget the "unless" line--unless you have some other form of taxation to fall back on (example here is the State of Washington and its high property taxes), you can't NOT tax income.

[tridim]

9. It's a stupid plan because it gives the rich another massive tax break..

while punishing the poor because they spend all of their income on things like food, rent and clothing.

[ProdigalJunkMail]

52. you haven't read the bill, have you? n/t

[aquart]

10. No words.

[sicksicksick_N_tired]

11. I'm confused about how that would be a BAD taxation policy compared to what we have.

Maybe, someone will explain it to me.

[trumad]

14. see post 7 and 9

[stillcool]

28. I'm not really sure..

but the 1%'ers reinvest their earnings..acquiring more assets...and live off of the interest. They form foundations for 'philanthropic' issues, further reducing their taxes, while at the same time providing necessary propaganda for continuing their strangle-hold on the various industries they call their own.

[cosmik debris]

15. The roots of that idea are in the broadcast of Rush Limbaugh

He is excessively proud of the idea that if you want less of some behavior, all you have to do is tax that behavior. Of course that was debunked by the argument that a tax on toilet paper would not make people wipe their butts less. In fact a tax on toilet paper would only hurt the people who are struggling to buy toilet paper in the first place.

[Donnachaidh]

34. so we should triple tax oxycontin and viagra?

Rush would be seriously upset if we took away his toys. :sarcasm:

[babylonsister]

31. All I was saying is that I'm really cheap, handle the money, and there's

more money coming in than going out, all in the effort to have a retirement and an occasional vacation. We are far from rich, and I guess I can't even fathom having so much money that it doesn't matter what anyone spends.

[Cerridwen]

3. Yup.

S'why I don't understand some people's "love affair" with him.

[cosmik debris]

4. In the last debate he advocated sales taxes.

He calls them progressives sales taxes, but that is an oxymoron.

[hfojvt]

16. He's the oxymoron who doesn't understand the meaning of progressive

At least when it comes to taxes. On his website he claims it is progressive because under it, the rich pay more than the poor. By that definition a person making $10,000 could pay $9,000 in taxes and if the person making $10,000,000 paid $9500 in taxes, that would be 'progressive' according to Gravel.

Mike, in order to be progressive the tax rate needs to go up as income goes up. Not the tax payment, the tax rate.

Why are we talking about him anyway. Is he polling ahead of Kucinich? This should not be in LBN, we discussed in months ago.

[cosmik debris]

19. Amen n/t

[sicksicksick_N_tired]

6. He said to change the tax to a consumption rather than income tax.

I'm trying to imagine that. My impression is,...DAYUM, this country would be in a HUGE SURPLUS if taxation were based upon consumption (excluding basic needs of food, clothing, shelter) rather than income.

I have to chew on that proposition.

btw what does 'fair tax' mean to you? :shrug:

[trumad]

12. It means

The dude wants a consumption tax, as the primary mode of raising revenue. That's a really stupid idea.

[sicksicksick_N_tired]

17. Why? If basic needs are excluded and consumption (wants) included,...

,...why would that be a stupid idea?

[papau]

43. Those extra homes are "investments" and investments are tax free - indeed just about all the income

of the rich is, under a consumption tax, "tax free" since 90% of their income is investment income (that's from IRS stats and those stats understate the percentage that is investment income because the number comes from the 1040 page 1 and that shows investment income after it is reduced to get to "taxable investment income".

It is really amazing what a small percentage of your money you spend on consumption when you take down 10 million a year.

Hell of a big shift in the tax burden from the rich to the wage earner "middle class".

You can exclude whatever you want as a "basic need" - but in the end the middle class has to pay what the rich will have stopped paying.

[Swamp Rat]

8. Hmm, poor folks pay the same tax as the wealthy for food, water, clothing, gas, utilities, etc.

Doesn't sound fair at all to me.

[sicksicksick_N_tired]

13. No. Basic needs would NOT be taxed. Only "wants" would be taxed.

I think.

[Swamp Rat]

23. What is a "want?"

I heard him on the radio say that all consumers item should be taxed.

We have people in this country that consider basic healthcare is a "want," let alone toothpaste, contact lens cleaner, soap, Tums, etc.

Who determines a "want" in this scheme of things?

[sicksicksick_N_tired]

25. True. But, we could certainly arrive at an agreement about what are "needs" and "wants".

Why don't we start with the obvious "wants": gas-guzzling and/or expensive cars, plastic surgeries, jewelry, vacation homes, $650 boots, yaughts, airplanes,...you know,...stuff like that.

[Swamp Rat]

26. Sure, you and I could arrive at an equitable agreement,

but WE won't be the ones to decide this. I am so jaded I hardly trust anyone anymore. :(

[Telly Savalas]

30. Y'know an easy way of deciding the "wants" and "needs"?

Let the people make the decision themselves by taxing their income and letting them decide what their priorities are.

Moreover this has the advantage of taxing the high income needed to buy a Lexus SUV at a greater rate than that needed to buy a used Honda Civic. This gradation allows for more progressivity.

Additionally, it taxes income which wouldn't be spent, but rather plopped into a hedge fund. The so-called "fair tax" automatically dictates that the wealthy should get a tax break for this.

[sicksicksick_N_tired]

35. Wouldn't "hedge funds" be consumption, too?

:shrug:

[Telly Savalas]

36. No. That's saving.

A consumption tax leaves it's hands off money that's invested.

[sicksicksick_N_tired]

40. So, change the definition. You know how easy that is,...BushCO proved it.

*grin*

I'm just thinking out loud about how a completely different approach to taxation could change,...well,...everything.

Hey, here's an idea: take a %15 top-off "hedge funds" over $100,000 for civil security and tithing healthcare rather than taxing the poor person making minimum wage.

[papau]

44. That is an asset tax - which I favor - but it is less likely than getting the rich to pay

taxes on investment income at the same rate that is paid on wage income.

The dividend income breaks and capital gains breaks and tax free bond breaks are the backbone of this country - haven't you heard! :-)

[Donnachaidh]

32. I didn't hear him say *basic needs* wouldn't be taxed.

Where exactly did you hear this?

Personally, I think Gravel is so desperate for attention he's taking the repuke flat tax meme and trying to give it a new coat of paint, and push it as his idea.

[Radical Activist]

18. Yes. He advocates the most regressive tax that hurts the poor the most.

The same tax favored by Wall Street and Chambers of Commerce everywhere.

[Nimrod2005]

20. Yes he does.....nt

[Cerridwen]

29. Hi, trumad. If I may be so bold...I found a link discussing the pros and cons

of consumption taxes since so many here can't see the downside.

Just how fair is the 'FairTax'?

It appears to be somewhat "fair and balanced" - no really. LOL

[trumad]

33. Yeah---Neal Boortz loves it... that should tell you somethin right there.

[Cerridwen]

37. Definitely. ....n/t

[TahitiNut]

38. As soon as there's a sales tax on the sale or trade of corporate stock, I'll believe they're honest.

Buy a car and pay sales tax. Buy a car COMPANY and pay none.
Buy clothing and pay sales tax. Buy a clothing COMPANY (with cheap labor in the Philipines) and pay none.

It's BULLSHIT.

[sicksicksick_N_tired]

41. Yup. Let us define, "consumption". Is hoarding money, "consumption".

Contrary to others' beliefs, I think Gravel is thinking beyond the simplistic terms of taxing what we need to survive. As a matter of fact, I seriously doubt that is his line of thinking, AT ALL.

[AndreaCG]

42. Hey, this time at least he stayed on topic most of the time

Last debate every question had a fair tax answer no matter how inappropriate

[JanMichael]

45. Email him this link:

http://www.psnw.com/~bashford/taxation.html

Even the dullest can generally work their way through this site.

Even here on DU.

Here's a sample:


An example of why sales tax is regressive.

If progressive taxes soak the rich, and regressive taxes soak the poor, why do we almost never hear the term, "soak the poor"? Perhaps that is a "loaded" question?

Let's imagine two frugal traveling salesmen. They each have to buy a new car every four years to (say) keep up appearances, and they need reliable transportation.
(One guy makes 20K, the other 300K)
Run the numbers on a the RATE of total income each pays on on 5% sales tax.

Poor Boy buys a $20,000 car pays $1000 or 5.0% of his income.
Rich Boy buys a $60,000 car pays $3000 or 1.0% of his income.

Poor Boy has 5 times the tax bite, or rate of tax on a car. Rich Boy hardly feels sales taxes.

Then run the numbers on a $30 pair of Levis, and the tax rate discrepancy triples.
Sales tax is NOT a flat tax.

[wuushew]

46. The current tax code also implements social policy

goodbye hybrid credit, education deductions, EIC etc.

[B Calm]

47. Malloy's interview with Gravel was very informative. Gravel's

a fucking idiot.

[leftofthedial]

48. yes

he's a tax wacko

[SoCalDem]

49. "fair" tax is like "clear skies" & "Healthy forests"..

BS, through and through

[krispos42]

51. Flat tax (pauses to don Nomex suit)

My idea...

Top income tax bracket used to be in the 70% range. So...

Individuals: 75% over all adjusted gross income over $75,000
Married: 75% over all adjust gross income of %125,000

Slam the rich, discourage the 12% annual inflation of corporate white-collar salaries and bonuses.

The poor and lower part of the middle class would pay no federal income taxes, just the FICA and SSA and whatever. The upper middle class stays about the same. The wealthy get slammed pretty hard. This reverses the last quarter-century of tax policy, where the wealthy got all the easy money and the poor and middle-class were slammed.


(edit: typo in subject line)

[Flubadubya]

53. That's a libertarian for you...

doesn't matter if they fall to the right or left, the all seem to love the flat tax BS.

[wuushew]

54. kick

:kick:

[Sanctified]

57. The only benefit to a fair tax is people who currently pay no taxes on income earned

would have to pay taxes. Basically individuals who make a living illegally would have to start paying taxes. I have looked over the fair tax and can say it's not the solution we need but it is probably 10 times better than what we have, I for one would not mind seeing the abolishment of the IRS just one dealing with those assholes and you would be thankful for a national sales tax.

[Alexander]

58. Yes, Gravel will never get my vote for anything.

I see DU has its share of "fair tax"-ers.

I wonder if there's a Flat Earth contingent here?