Abolish the Sales Tax

Apparently, Dennis Hastert wants to abolish the IRS and replace it with either a national sales tax or value added tax. Drudge claims that this may become a centerpiece of the Republican agenda as early as the convention. Atrios wonders if this will actually ever come to pass, but predicts that the media will swoon over the idea if it does. Frankly, I would like to see such as issue introduced, because it changes the nature of the tax debate, and allows openings for liberals and progressives (if they are willing to take them).

There has not been a serious national debate over taxes in decades. Within political discourse, it is a consensus that taxes are bad, except maybe on the rich. I have long believed the problem Democrats and liberals have on the tax issue stems from the way Republicans are able to focus the debate almost entirely on income tax when there are many other potential avenues to discuss the issue that would be both popular and friendly to left-wing argument.

  • Although it would not be an issue of federal policy, one such promising avenue would be a general left-wing call to abolish the sales tax. As both a flat tax and a tax on everyday consumables, sales taxes are highly regressive. While they are a significant form of revenue for local governments, competing local sales, property and business taxes inevitably work to the detriment of lower income communities. Because they need more revenue, poorer communities tend to impose higher sales taxes, which ultimately work to hurt the people in those communities because of the regressive nature of such taxes. Instead, it would be better if states and the federal government filled the gap created by the abolishment of local sales tax in the form of increased monetary aid.

  • Make the federal income tax more progressive. Restore the 39.6% tax bracket of the Clinton years, and maybe even increase it by 2-3%. This could be done while simultaneously making the first 20-30 thousand dollars of income federal tax free, thus maintaining a similar (if not a greater) level of revenue from income taxes while providing tax relief disproportionately to lower income households. According to every recent poll conducted on federal income tax, a plan such as this would be very popular nationwide.

  • Make all income, not just the first $90,000 or so, subject to the Social Security tax. This should be pretty popular. Most people are convinced that the wealthy do not pay enough taxes and that Social Security is in danger of bankruptcy. Considering this, to point out that people making more than $90,000 a year do in fact pay a smaller percentage of their income in Social Security than the middle class will surely be a winner. Further, although it would be more difficult to pass and require a large restructuring of the program (which is never popular), it might even be popular to argue that the Social Security tax should become a progressive rather than a flat tax.

  • Increase taxes on businesses with more than 15 employees, but simultaneously offer significant tax breaks for companies directly based on how well they treat their workers. Large federal tax breaks can be given to companies who allow their workers to unionize, have a low ratio of executive pay to average worker pay, provide all workers with stock ownership in the company, provide good health care, overtime, vacation and family leave benefits, etc. I have never seen any polling on this subject, but providing incentives that empower workers and encourage owners to treat employees well strikes me as a winning issue.
I am not a tax wonk (my father is, so maybe I should ask him), but I remain frustrated that for so long the left has failed to seize the high ground on taxes. There seem to be many possible avenues of attack, more than just rolling back tax cuts on the rich on trying to crack down on corporate tax cheats. Making this into a populist, Democratic issue would be the second most powerful blow the left could strike against the Republican agenda (national security obviously being the biggest potential blow). Hopefully we will start to counterattack, whether Hastert's plan becomes part of the Bush's agenda or not.

Almost Final Presidential Fundraising Demographics

Now that the Q2 totals have been released and the convention season is upon us, the final fundraising totals for this Presidential Election Cycle are nearly known. As of June 30, here are where things stand (in millions of dollars):
	      Total   $2000+ Donors	    $200 > Donors
Bush	     228.74	125.81		59.47
Kerry	     186.59	 69.04		59.71
All Dems      320.12	111.80		109.95
Bush and Kerry's small donor machines are roughly equal, although Dean-fueled Democrats as a whole nearly double Bush's campaign in this area. Bush's strength remains his support among large donors, where he nearly doubles-up Kerry and where he surpasses all Democrats combined. Kerry apparently has around a $12M lead among "mid-range" donors, and Democrats as a whole have around a $42M among the same demographic.

Whatever the flaws and limitations of the Blogosphere and the netroots might be, raising money is certainly not one of them. Kerry has managed to stay almost equal to Bush in spending, and it would not be difficult to trace a large percentage of that success directly to the efforts of the Dean campaign in the first six months of last year.

Wallmart invading VT, & Bernie Sanders? He's paving their way.

Wallmart has invaded DC. For the first time, they are employing lobbyist in order to get their way across the nation.  One of their targets is an invasion of Vermont, which, without a doubt, will turn many of it's villages with vibrant downtown businesses into vacant ghost towns, and strip mall open spaces. Unfortunately, it looks like they've co-opted the one guy you'd think would stand up for Vermont: Burlington Free Press

U.S. Rep. Bernie Sanders has secured $1.2 million in federal transportation funds to smooth traffic flow at the proposed site for a Wal-Mart store in St. Albans.

Hmm ... Is that the same guy?

Is that the Bernie Sanders who scorns "corporate welfare"? If so, why is he offering federal tax money to help the nation's largest corporation set up shop in St. Albans?

Is that the Bernie Sanders who wants to restrict China's ability to export goods to the United States? If so, why he is favoring Wal-Mart, which is the largest U.S. importer of Chinese-made products?

Is that the Bernie Sanders who told a congressional hearing last July that "Wal-Mart has replaced General Motors as the major employer in America, paying people starvation wages rather than living wages"? If so, why is he trying to bring those kind of jobs to Vermont?

St. Albans is like anywhere-america in the burbs, it's void of character or connection to the land. The money is sucked in, and tucked away in some corporation far away. Anyway, they've another 4 megastores planned for the state. Thanks Bernie.

Internet taxation

As the Senate debates the issue of internet taxation, you see a strange mixture of those aligning on each side of the issue. It's not partisan, for the tax-advocates are the likes of George Voinovich, Lamar Alexander, and other Republicans. Too bad the Democrats don't see a winning issue, supporting this ban and putting the Republicans on the defensive over taxes, when it's sitting right in front of them.

Update (from the comments): The Consumer Internet Access Coalition is the place to go to sound off on this issue.

Stock Market Tumbling, Tumbling

The market is down about 2% on the year. Quietly, 'finance guys' are losing confidence in Greenspan and the general handling of Iraq and the economy. From Robert Marcin, value investor:
I continue to disagree with Greenspan's handling of the inflation/leverage issues in the economy. I thought that his remarks today should have been much more forceful about the risk to overleverage, ranging from interest-only, no doc ARM's through hedge funds and the carry trade. Not only should the Fed continue to avoid the "P" word(patience), they should relentlessly stress to the markets that substantial rate hikes are coming soon. Maybe this jawboning will help investors unwind leverage before a panic decline forces it. Apparently, many investors are holding on to the carry trade until the rate hikes begin. This makes a 7 or 8% long bond possible, and that would have a disastrous impact on the real economy.

There's more...


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