All four Republicans seeking to oust Democratic Congresswoman Gabrielle Giffords said at a debate last week that they’d raise taxes on most Americans or balloon the deficit in order to provide the nation’s highest earners with big tax breaks.
They didn’t come out and say that directly.
But all four of the GOP candidates—Jonathan Paton, Jesse Kelly, Brian Miller and Andy Goss—embraced policies that would scrap the progressive tax structure that now requires the country’s highest earners to pay the majority of the taxes.
While many Americans believe that they pay too much in federal income taxes, nearly half of them pay nothing at all, according to a recent analysis by The Associated Press.
The AP study showed that because of various tax credits (including new ones that were passed by Democrats as part of the stimulus plan that the four Republicans running in CD8 opposed), roughly 47 percent of Americans will pay no federal income taxes for 2009. In fact, a family of four with an income as high as $50,000 can escape a federal income-tax bill.
As a result of the progressive system, the top 10 percent of earners—with an average household income of $366,400—paid nearly three-fourths of all the federal income taxes collected in 2006, according to the AP analysis.
In other words, most Americans get a pretty good deal out of the income tax. Granted, they pay plenty of other taxes. They pay Social Security taxes. They pay Medicare taxes. And most pay far more in sales taxes than they pay in income taxes.
But Paton said it was wrong that so many people don’t pay more in federal income taxes.
“I think that’s one of the reasons we need a flat tax, because you want to have an even chance for everybody as much as possible,” Paton said.
He added that the present system takes too much away from the highest earners.
“There’s a very small number of people paying the majority of the taxes,” he said. “We need to find ways in the country where we can actually create and generate wealth, and we can do that by lowering taxes for everybody. It should be low and flat for everybody.”
But it’s not mathematically possible to lower taxes on the highest earners without increasing them on the lower earners, unless you want to balloon the deficit—and Paton has been sharply critical of the growth of the deficit under both GOP and Democratic administrations.
After the debate, Paton admitted he hadn’t yet worked out details on how a flat tax would work.
There is a flat-tax proposal introduced in every session of Congress by Sen. Arlen Specter of Pennsylvania. That bill would establish a standard 20 percent tax on all income, with one large standard deduction; most tax credits and deductions would be eliminated. It would also eliminate taxes on investment income.
An analysis of his proposal by Citizens for Tax Justice shows that the top 5 percent of earners would see lower taxes, including an average cut of nearly $210,000 in 2011 for the top 1 percent of earners.
But the bottom 95 percent of taxpayers would see their taxes go up under the proposal, with an average increase of $2,887 in 2011.
Those numbers do not dissuade the CD8 candidates from embracing a flat tax.
“I don’t like the soak-the-rich sentiment,” Goss said. “I don’t think because you are rich, you should be taxed any more or any less than anyone else. Everybody pays the same.”
Goss, who railed against taxes and government throughout the debate, said he wanted a flat tax that would lower taxes for everyone.
“I think I’m taxed too much, and I want a tax cut,” Goss said. “I think I deserve that.”
Goss said after the debate that he believed a massive tax cut for the wealthiest Americans would cause such an economic boom that overall tax revenues would skyrocket.
Miller said he would support a flat tax, but that he would prefer to abolish the Internal Revenue Service and replace income taxes with a national sales tax.
That plan—dubbed the “fair tax” by supporters—would impose a 30 percent sales on all purchases, including homes. Citizens would be issued “prebates,” designed to decrease the regressive nature of the tax, that would vary based on household size.
But even that 30 percent figure would come on top of local taxes, which would drive the sales tax up to nearly 40 percent in many areas of the country. And since states would likely have to abolish their own income taxes—because they are often based on federal tax returns—it would mean that local sales taxes would have to be increased, leading to a sales tax of nearly 50 percent on goods.
Until a national sales tax can be implemented, Miller proposes freezing government spending at the current levels while eliminating corporate income taxes and capital-gains taxes, and cutting personal income taxes by 15 percent “so that we can grow our economy … like only people in a free economy can do. And once we hit 2016, we make sure there’s a balanced budget.”
Miller has not done an analysis of what his proposal would cost in tax revenue, but he says government spending should be sharply curtailed. Among his targets: Scrapping the entire welfare system and working toward eliminating Medicare and Social Security.
Like Paton, Kelly complained that the highest earners pay too much in taxes.
“We continue to squeeze the productive in favor of the unproductive,” Kelly said. “Government has gone from taxing people in order to fund itself to taxing people in order to redistribute wealth. … We cannot continue to punish success, because everybody knows that when you tax something, you get less of it.”
After the debate, Kelly delivered what essentially amounted to a faith-based economic policy.
“If 10 percent was good enough for Jesus Christ,” Kelly said, “it’s good enough for the United States of America.”
This article appears in Apr 15-21, 2010.
I think that people who run for office on a “lower taxes/smaller government” platform are pandering to the naive, under-informed voter who will hopefully think, “Yeah, this guy is going to put money in my pocket.” It’s a cheap, easy way to nearly buy a vote, though of course it never turns out that way. Let’s hear about these candidates’ creative ideas for a better future instead of vague idealistic promises that won’t benefit anyone, like the article suggests, except the top 5 – 10 % of the income bracket. Oh, sorry, I mean Republican campaign donors.
It’ll be interesting to see what the RNC manages to get in AZ this November for their money, which, as it happens, they’re having some trouble raising. Paton’s Bee-like Q1 numbers don’t paint an encouraging picture, if he’s indeed the frontrunner come primary time. But if he isn’t, we might see the RNC run away from AZ-08 altogether. I’m hearing they’re planning for a Goddard gubernatorial win, and they could easily end up planning for a Giffords win pretty soon here if one of these four doesn’t quickly start looking like a serious contender.
Jim,
Your definition of the fair tax is way off base. I am sure that you didn’t misrepresent it on purpose, did you? I mean, why didn’t you mention that all payroll taxes go away and all corporate taxes go away. All of them! Imagine, folks get to take home their entire paycheck!
The billions of dollars of hidden taxes that we don’t even know we are paying disappear with the fair tax. No more corporate taxes that spike the cost of every item we purchase. Now, if the elected ones decide to raise our taxes, we know it immediately. They can no longer hide.
The Fair Tax people are the ones who misrepresent the amount of the tax–they say it’s 23 percent instead of 30 percent. I am not among those who believe the numbers pencil out, and I do believe it would be a massive shift of taxes from higher earners to lower earners. Also, I believe that a sales tax of 50 percent on every item–including homes!–would be a significant drag on the retail economy, although I would think that the black market would flourish, along with second-hand sales.
Randy,
It isn’t all that complicated slick.
We’ve had the fair tax, and people like you, figured out well before your condescending post.
Check this out Randy, exxon-mobile reported record profits in 2009; record as in larger than anyone ever in the history of us or anyone else. $45,000,000,000.00. This in the middle of the second great republican deppression. You care to guess how much they paid in taxes? How much they contributed to the society that enabled them to prosper to such an extent?
Zero.
How’s that for hiding. Pretty good I’d say, in fact, if it isn’t criminal; I know its despicable.
We should return to pre-1980 corporate tax structure, as well as a 74% rate for the wealthiest individuals, to keep them from having all that extra money available to turn our financial sector into a giant casino. It wouldn’t be a bad thing for them to be that wealthy inherently, but it turns out that they not only lack any morals, but apparently they are also so stupid and greedy that they just can’t help but ruin themselves financially. Which, who cares, right? But, here’s the catch, they are so stupid, and so greedy, that they drag the rest of us down with them, and the whole damn country as well, and very nearly the whole damn world; and there are countries in the world today who would argue with the very nearly part. It sucks that there’s always a catch, doesn’t it Randy?
Randy, you’ve got bugs in your head. You should get that checked out, really.
Robert Alexander Dumas
Randy,
Disappearing taxes on corporations would not result in lower prices. There’s no prior evidence to support that. If anything, a tax break for corporations would only be seen as a profit increase by their own people. This money would continue to be outsourced and put into investments in other countries, not our own country, simply because these corporations do not have to. This is not necessarily evil, but it is a fact, in most cases.
Taxes keep some of that money here in the States, for the benefit of its citizens.
Jim: Thanks, once again, for an article that should awaken the “average voter-citizen” as we deal with these troubling times. I am talking about the positions of congressional candidates who are seeking to unseat Rep. Gabrielle Giffords; Republicans all; but the party label hardly tells the story, since each one is mainly interested only in getting elected, so the campaign statements are merely devices to attract attention to otherwise lackluster office-seekers. They all need to consult the words of wisdom of Warren Buffet, one of the world’s wealthiest men, who says that he pays less, percentage-wise, in income tax than does his secretary; given all of the breaks that tax laws provide the “smarter” taxpayers with the larger incomes, and the very people who can hire the “smart” tax advisers to take advantages of the tax breaks that a U.S. Congress consistently appeases the upper classes with tax laws that favor the wealthy. They can assuage the average voters into thinking that a truly fair tax structure is a “redistribution of wealth”, a very naughty thing in a “free society”; even Socialistic. Thus, idiotic movements, e.g., “tea partiers”, who wouldn’t know what the real tea party effort was if it bit them in the ankle. Regressive taxes, such as property and sales taxes, which are better for the rich, keep on “keeping on”; and the so-called flat rate tax is a blatant continuation of this system. Of course, to save our schools we must vote for the 1% sale tax hike this year, awful as it is; but, again it is because the reactionary “Maricopa” legislature, in contrast to a genuine “Arizona” legislature, would not forthrightly face the real challenges and options to fixing our state tax system. Jim, keep up the good work.
John Biggers
I they vote against amnesty for illegals I’ll vote for them.
You all must understand that the real position of the Republican Party is that if rich people aren’t getting richer, then it can’t be good for the country.
You have to wonder what country they are living in and who is paying for their campaigns.
As for all the tea baggers and no taxes folks–well they are both stupid and greedy
Randy: All corporate taxes go away? The U.S. has corporate taxes? Really?
As for Al K, just wanted to know — that initial K — short for KKK? Nice to know the xenophobic morons are still out there whacking away in Arizona!
Robert Alexander Dumbass (I know its juvenile, but appropriate):
Way to stick it to Big Oil! What you didn’t bother to google, however, is Exxon’s profit margin, that is, how much out of every dollar of sales a company actually keeps in earnings. A quick search will tell you about 6-8%, or 6-8 cents to every dollar. TAX THEM MORE! EVIL CORPORATION!!
Sure you can tax the rich too. Guess who’s rich? My boss. Your boss. Your boss’s boss. How are they going to pay your salary when they can’t afford to pay themselves or support their company? How are you going to “earn” a wage when the company you work for goes under because you thought it was greedy?
Taxation should not be used as a form of punishment to change peoples’ ways. Eventually business will fail or move out of the country, jobs will go away, and we’ll all be left holding our hands out hoping for “change”.
making everyone poor doesn’t work,
Ooh, name calling, capital letters, and exclamation points. Very strong arguments.
My father is fond of saying that “when you are engaged in a political discussion and you lob a rock into a pack of curs, it is easy to tell which one you struck, because that will be the one yelping while running away with its tail between its legs”.
Twice in U.S. history we have dropped the marginal tax rate on the wealthy below 50%, and each time it has led shortly to depressions caused by bubble economies. I stand by my previous points.
From 1950 to 1980 we enjoyed huge growth and wealth creation. Corporations accounted for 30% of federal revenues, while they only contribute 7.5% presently. The wealthy, responsibly declined to pay themselves obscene amounts as salaries (admittedly to avoid taxes), and instead put the money back into their companies to grow them; creating more jobs…more wealth… more stability. Today these obscene salaries are viewed as play money, and lacking a moral compass, or a sense of societal responsibility, they turned our financial sector into a casino. I’d be interested to hear your defense of the Goldman-Sachs fraud indictment today.
Don’t google any of this, you need more help than that, read some books. Start with Michel Lewis’ new one titled “The Big Short”.
You are arguing against your own best interests and those of your country. It would be funny, if it weren’t so very sad.
Robert Alexander Dumas
Mr. Dumas,
Did you hear today of GE’s tax structure? They paid nothing in federal taxes! Oh, but this was Obama’s buddies, not one of those evil oil companies that keep your car in gasoline. But in the mean time, just keep paying those hidden taxes that you have no control over. I mean if only corporations paid all the taxes, we would off the hook completely, right?
Randy,
G.E.’s billionaire former and longtime CEO Jack Welch is directly responsible for permanently sending hundreds of thousands of American jobs to India; and indirectly responsible for additional millions of permanently outsourced American jobs as other companies emulated G.E.
I believe Jack should be indicted for treason, given a fair trial, and then executed for the misery he has wrought on our country. Then the corporation should be broken up.
Why do you think that for the first time in our history, 2000-2010, we have a decade with net job loss?
Randy, why do you think they so carefully decided to call it a “fair” tax? It is because it would be difficult to market it as an “unfair tax”, or as a “tax yourself more so we can get out of even more of our taxes tax”.
You are being lied to, and used. This is a class war and they are playing for keeps Randy.
Man up and think for yourself.
And get that book I suggested, its a really good place to start and a fun read, it’ll be the best $18 you ever spent.
Robert Alexander Dumas
Thank you for the article because you convinced me. I give these guys credit and they got my vote, any of them. Any fifth grader knows that idea of “tax the rich” is unfair and not all “rich” are evil (Steve Jobs -Apple CEO), although some of them are (George Soros -Obama’s daddy).
I say get rid of the personal income tax. When you have roughly half the country paying a tax and the other half either not paying, or actually getting money out of it, too much resentment is created. (By the way, any one of these four guys looks great compared to how Grijalva presented himself on the KNST interview on April 15th. Ye gads, that was unbelieveable.) Yeah, I know, they aren’t running against him, they are running against the health care coquette. Anyhow, abolish the personal income tax.
Jim,
“roughly 47 percent of Americans will pay no federal income taxes for 2009. In fact, a family of four with an income as high as $50,000 can escape a federal income-tax bill.”
Actually, a $50,000 income has already had $9,032 tax taken from it in FICA (payroll) tax. This is an inescapable 18% tax (or is it 15.3%?) on $50,000 income earned.
There is no misrepresentation of 23% vs 30%. The FairTax books and FairTax.org clearly explain the reasons (calculating inclusive vs exclusive: our income tax is calculated inclusively, so they calculate the FairTax the same, although you may do it exclusively for both if you wish – you just may not be too happy with your current exclusively-calculated federal income tax rate) for both of those figures and make no effort to obfuscate.
While the 23% – or 30% if you prefer – tax is imposed at the retail level, you neglected to mention that all existing embedded (or production) taxes are removed, so the price level of all currently taxed goods and services remains virtually unchanged.
Claiming it to be regressive is non-sense unless you start from the premise that some people ought to be discriminated against by the government and forced under threat of violence to pay for others. So much for equal protection. Furthermore, no tax system could better be constructed to hurt and slow the progress of the poor than what we have now. Today, the few profit at the expense of the many.
http://www.fairtax.org/site/PageServer?pagename=about_fairtax_four#regressive
We’ve talked, Jim. I know you to be a smart man. Please don’t misrepresent what the FairTax plan is. If you don’t understand it, that’s fine … neither do my opponents. If you do understand it and still don’t like it, that’s fine, too. But, please provide accurate criticism.
Finally, for those not familiar with the FairTax, I only ask that you learn what it is from the source: Americans For Fair Taxation (www.FairTax.org or The FairTax Book or The FairTax: Answering the Critics). Once you have learned what it actually is, then please read all the criticism you can find. That is what I’ve done. My conclusion is that the FairTax plan is the best federal tax plan I’ve seen, and will support it should I have the honor of being the next Congressman from AZ-8.
vr
Brian Miller
Jim, I think your the “Moron” … to perpetuate this “Tax System” we now have in place is about as stupid as it comes! Where is the equality in it? There isn’t any. Personally, I would love to see a “Flat Tax” be put in place. Even the “Fair Tax” would be better than what we have now. We have people getting tax returns they really don’t deserve. If you pay taxes maybe you should get a tax return; however, if you haven’t paid taxes … you shouldn’t get a penny back from our government. Since when did we turn into a “Entitlement” society. As far as I’m concerned, I am the only person entitled to the fruits of my labor.