Republican Jesse Kelly, who hopes to unseat Democratic Congresswoman Gabrielle Giffords in November, told the press for the first time last week that he supports a new national sales tax of 8.5 cents per dollar on goods and services.
Throughout the primary, Kelly said the country should sharply lower taxes for its wealthiest residents by establishing a 10 percent flat income tax because “if 10 percent is good enough Jesus Christ, it’s good enough for the federal government.”
At a debate in Green Valley, he said he didn’t care how much money a flat tax of 10 percent would raise. He’d set the federal budget to fit within it, whatever it was.
But last week, after once again telling voters that the country could implement a 10 percent flat income tax for all its citizens, he told The Range that he now supports a different plan that has a 10 percent income tax rate for up to $50,000 for individual filers and 25 percent on any remaining income. He bases his plan on a proposal laid out in the Roadmap for America’s Future that been created by Congressman Paul Ryan.
To make those numbers pencil out—and to get rid of the corporate income tax, as Kelly also wants to do—Ryan’s plan calls for creating a new 8.5 percent national sales tax on goods and services. That would come on top of the state and local sales taxes that people now pay.
Asked last week if he’d support the new national sales tax, Kelly said: “Over what we have now? You bet.”
Kelly has been critical of the Giffords’ campaign for running a TV ad saying he supports a new national sales of 23 percent. Kelly has said he supports such a proposal, as long as it eliminates all other federal taxes, but prefers the flat income tax. But last week was the first time he said he would support a 8.5 percent sales tax along with the flat income tax.
Giffords favors keeping the existing tax system and closing the deficit by repealing the Bush tax cuts for the top 2 percent of earners. She’d leave the tax cuts in place for the rest of the country.
“I think long term solutions to the debt are not wacky tax schemes that are going to raise taxes on the working class, the middle class and the lower class while eliminating taxes for corporations and the wealthiest Americans,” Giffords says.
More on the Ryan Roadmap here.
New York Times columnist Paul Krugman on the Roadmap here. Money quote:
The nonpartisan Tax Policy Center has, however, stepped into the breach. Its numbers indicate that the Ryan plan would reduce revenue by almost $4 trillion over the next decade. If you add these revenue losses to the numbers The Post cites, you get a much larger deficit in 2020, roughly $1.3 trillion.
And that’s about the same as the budget office’s estimate of
the 2020 deficit under the Obama administration’s plans. That is, Mr. Ryan may speak about the deficit in apocalyptic terms, but even if you believe that his proposed spending cuts are feasible — which you shouldn’t — the Roadmap wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich.
And I do mean slash. The Tax Policy Center finds that the Ryan plan would cut taxes on the richest 1 percent of the population in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.
Finally, let’s talk about those spending cuts. In its first decade, most of the alleged savings in the Ryan plan come from assuming zero dollar growth in domestic discretionary spending, which includes everything from energy policy to education to the court system. This would amount to a 25 percent cut once you adjust for inflation and population growth. How would such a severe cut be achieved? What specific programs would be slashed? Mr. Ryan doesn’t say.
After 2020, the main alleged saving would come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it, and instead giving seniors vouchers and telling them to buy their own insurance. Does this sound familiar? It should. It’s the same plan Newt Gingrich tried to sell in 1995.
This article appears in Sep 23-29, 2010.
Don’t just take Nintzel’s word for it:
A Roadmap for America’s Future
by Rep. Paul Ryan
The Federal tax code is needlessly complex and burdensome. Taxpayers and their families face, in the next few years, higher taxes, the reinstitution of the marriage penalty, and the Alternative Minimum Tax (AMT), which becomes a larger problem every year. I believe that Washington must put the taxpayers first—not the government. To address these problems, I have introduced legislation, “A Roadmap For America’s Future” which in addition to addressing the challenges facing the future of health care, Medicare and Social Security, it provides a flatter, simpler system for taxpayers to pay their income taxes and levels the playing field for American-made products to compete against foreign competitors making it easier for American manufacturers to keep jobs in the U.S. My legislation would do the following: (1) permanently repeal the individual AMT; (2) provide individuals an alternative tax system that is fair, simple and efficient; and (3) replace the current corporate income tax code with a tax system that levels the playing field for American businesses. For individual taxpayers, taxpayers can choose the new, simplified system or stay with the current tax code or whichever option suits them. Specifically, my bill provides:
•Two income tax rates: 10 percent on taxable income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts.
•That taxable income equals gross income minus a standard deduction and personal exemption. The standard deduction is $25,000 for joint tax filers, $12,500 for single filers. The personal exemption is $3,500. The combination is equivalent to a $39,000 exemption for a family of four. There are no additional credits or itemized deductions.
For businesses, my bill replaces the corporate income tax system that puts American-made products at a competitive disadvantage, and replaces it with a low 8.5 percent Business Consumption Tax (BCT) to level the playing field for American-made products to compete against foreign competitors. Consider the following example: Right now, Case New Holland tractors are at a competitive disadvantage against its foreign competitor, Komatsu, because of the current U.S. tax code. When Komatsu tractor leaves Japan, Japan lifts its tax on the tractor, and it arrives in the U.S. tax free. But when the Case tractor rolls off the assembly line in Racine and is exported to Japan, the U.S. taxes it first and then Japan taxes it again as it arrives as a U.S. import. This hurts American jobs and puts American businesses at a competitive disadvantage. The Roadmap proposal would end these backwards tax policies and put American workers in the position to thrive, instead of struggling to survive, in this period of economic uncertainty.
More on Rep. Paul Ryan’s “A Roadmap for America.”
http://www.youtube.com/watch?v=rWVSKV5ZM-s
“Don’t just take Nintzel’s word for it” That could be like a whole blog.
“The nonpartisan Tax Policy Center “
You need read no further. The Tax Policy Center is a joint venture of the Urban Institute and the Brookings Institution. The Urban Institute is a creation of LBJ and The Brookings Institution is headed by Strobe Tallbot, Deputy Secretary of State under Clinton and considered to be the most liberal member of the administration. If they are nonpartisan then Glen Beck is a Liberal.
“Giffords favors keeping the existing tax system and closing the deficit by repealing the Bush tax cuts for the top 2 percent of earners. She’d leave the tax cuts in place for the rest of the country.”
This won’t even come close to making up for all of the insane deficit spending that the Democrats have unleashed in Washington.
This topic was discussed in a 2009 Wall Street Journal editorial, “The 2% Illusion.” Here is a link: http://online.wsj.com/article/SB1235615510…
Here is a quote from the article:
“But let’s not stop at a 42% top rate; as a thought experiment, let’s go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.”
Sun Dried Curmudgeon: You’re right that it won’t completely close the deficit and I should have been more precise in my language with the word “reduce.” My apologies to the readers.
Why do you say that Democrats have unleashed “insane deficit spending”? Was the deficit spending through the Bush administration “sane”?
Nintz, it was bad, but it was not “insane.”
Actually, the deficit was improving substantially in ’05-’07. Then the economy tanked and Congress and the Bush Administration poured money into the bailout like it was water. This link has a nice graph: http://blog.heritage.org/2009/03/24/bush-d…
Running a deficit in the first year that (a) tripled the deficit of Bush’s last year and (b) almost equals the cumulative deficit from all eight of Bush’s years takes “bad” and elevates it to “insane.” Pointing to previous bad behavior does not excuse even worse behavior, especially when the new Administration campaigned on “hope and change.”
There is an excellent editorial by Steve Moore in the Wall Street Journal this morning that addresses the deficit issue. Among other things, Moore says, “For the sake of comparison, let’s look at the Pelosi-Reid fiscal record over 10 years. In January 2007, the CBO projected a $379 billion surplus over the next decade. Now, after four years under Mrs. Pelosi and Mr. Reid, and two years of Mr. Obama in the White House, the 2007-2016 projection is a deficit of $7.16 trillion.”
Here is a link to the article:
http://online.wsj.com/article/SB1000142405…