Presidential Candidate Mike Gravel (D) on the FairTax p.

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Transcript of April 2007 Interview on YouTube ( http://snipr.com/gravelpart2 )

Interviewer: A national sales tax: Could you explain how this would work? Gravel: Very much. For me, it’s the second most important issue I can address., because it’s so broadly misunderstood in the United States. People disdain their government because they intuitively believe that monies are both raised, and spent, unfairly. The government . . . The most important task of a government is to raise the revenue so that it can operate. Now, when a government raises revenue unfairly, what happens – the People intuitively know this, and they know the money that government raises will not be spent fairly on the People. And, so what people do is . . . they have disdain for the government. They don’t trust the government. And they’re opposed to the taxes because they know that they’re not raised fairly. Now, there’s only really two forms of taxation: One is the income tax, and a sales tax. With the income tax, they’re both progressive. The income tax . . . the more you earn, the more you pay. And the sales tax . . . the more you spend, the more you pay. Now, what happened to the income tax . . . from the First World War, on, when it was first instituted, is that it was corrupted by the wealthy people. They have gamed the system so that they don’t pay their fair share under our system of taxation. FICA withholding from paychecks is MOST REGRESSIVE. The wealthy escape by receiving monies through dividends, or loans – not wages. Stop and think: Today, seventy percent (70%) of Americans pay more tax – or pay most of their taxes – through the Social Security tax and the health tax rather than [through] the balance of the income tax system . . . which means that the most

regressive part of the income tax system – which has been corrupted into great regressiveness – is where most of the Americans, ordinary Americans, are stuck. “Tinkering” (unfairly) adds complexity and expense to an already opaque, intrusive, and unfair income tax system. And, now, you don’t hear any change for reform . . . oh, they’re going to “tinker” with it, make it easier for the IRS to come at you. And it’s always getting worse. The [Internal Revenue] Code is four feet high. I was on the [U.S. Senate] Finance Committee for eight years. And I can tell you that nobody, BUT NOBODY, understands the totality of our tax system. In fact, the cost to our private sector - of meeting the obligations of our present tax structure – is $270 billion a year! That’s half of what we spend in Iraq at this point in time. Now . . . and that’s every year. Think if we could now get a system that was fair - and what’s most important to make it fair? Transparency. You need to know what I’m paying, and I need to know what you’re paying and then we know it’s fair. The only way you can do that is with a sales tax, you can’t do it with the income tax . . . it’s already been corrupted. The FairTax ends up being LESS regressive than the current system, while providing a “cash flow” for every American resident household. Now, a sales tax is progressive. If you buy a car for $5,000, you’re going pay – let’s say 20% for tax, you’re going to pay 20%. If you buy a $100,000 Mercedes, it’s going to be 20% of that. So you can see the progression. Now, we can make it even more progressive because we know that the problem, with respect to taxation, is to deal with the essentials of life.

Presidential Candidate Mike Gravel (D) on the FairTax p. 2
Transcript of April 2007 Interview on YouTube ( http://snipr.com/gravelpart2 )

Right now, the essentials of life are taxed – you know, through your income. And, so what happens is . . . so what we can do is say, “So, what is the cost, to the average American, for food, lodging, clothing, medicine, and transportation.” We take that number, multiply that number by the sales tax, take the resulting number, divide it by twelve, and send a check to every single American who registers for this, annually . . . send them a check, and they now have a cash flow that could be considerable . . . four, five hundred dollars a month. And, of course, the poor would get this – which, of course, they don’t get anything now. So now you have a situation where you have transparency, you have the essentials of life covered. You go get your paycheck and there’s no income tax deductions. So you get your full paycheck – I’m talking just the Federal level now. You get your full paycheck, plus you get a cash flow from the prebates (that you would be paying on the essentials) that then operates to the benefit of the average American and this is all carried by a retail sales tax. Taxing business income has only increased consumer prices and driven jobs offshore. Instituting a FairTax will bring capital, and jobs, back to our shores. Now, what happens as a result of this new form of taxation. Our present income tax has contributed to the “rust belt” across this country and causes us to lose jobs after jobs. Little wonder . . . little wonder that manufacturing went from 60% of GDP down to 10%. Well, what happens with this form of taxation [sales tax]: We become more competitive in the world because we’re not carrying the [corporate] income tax [in the prices] on the products that we produce. In addition to that, since [with the FairTax] we now will have a large economy that has no taxation – no income taxation, investments will come into the country. And that will give us the economic wherewithal to rebuild our

infrastructure, to make education No. 1, to pay for our health care. That’s what can happen if can settle on developing a fair system of taxation, and do away with the corrupting form of taxation that we have today. There are many other benefits, but this is the crux of changing the nature of our economy . . . the crux . . . it’ll make us a savings. Income tax penalizes savings and productivity . . . the very things we need to emerge from “debtor nation” status. FairTax corrects this obvious defect. Right now, today, the United States of America spends more than they earn. Now, how long do you think we can keep that up? And, that’s what’s going on. Our . . . The . . . We’re indebted to the rest of the world. That’s what’s going on. We cannot do that. We . . . Japan, China, these people save. Americans have to save. We do more consumption than anybody else in the world. And we’ve got to change. Otherwise, we are going to – at some point, could be in a month, could be in ten years – we’re going to be in extreme economic difficulty. And, then, it’ll be too late to address the problem. We need to do it in a voluntary fashion, now. And that’s what the FairTax is all about. Interviewer: Well, one of the arguments that I’ve heard against the sales tax proposal is: The wealthy . . . Say a person makes $2 million a year. They spend – even on their expensive houses, and cars, and yachts, and whatever – they spend $500,000 of that in a year. And they’re taxed on that through sales. Whereas, now, they’re taxed on the $2 million of earnings. Could you, um, . . . Gravel: I think that’s a poor analysis. But let me give you an example. They buy a house of . . . a $1.5 million house . . . like Obama, he bought a $1,600,000 house. All of the interest on that mortgage is deductible. So, you go out and buy a house of $50,000 and you can deduct your

Presidential Candidate Mike Gravel (D) on the FairTax p. 3
Transcript of April 2007 Interview on YouTube ( http://snipr.com/gravelpart2 )

interest. Oh, yeah. So, begin to look at the entire picture. Income tax treats companies different from working people. The income tax code powers favored tax treatment to those politically connected (and that ain’t Joe Sixpack). Ah . . . the in . . . Here, I’ll bet you that somebody within the sound of my voice has been to a baseball game, or football game. Well, they go sit in the bleachers. And they pay for their ticket – whether it’s $40, or $50, or $100 – with after-tax money. Look up top, and you’ll see those skyboxes. That’s all tax-deductible. So, the wealthy are in the sky-box, and you’re down there paying your ticket after you’ve paid your taxes. Please, I gotta tell you, do some very careful analysis and you’ll find that the wealthy will pay more taxes with the retail sales taxes than they ever think of doing now. And it’s unfortunate that a lot of people who are of modest income think the wealthy are going to get away with it [under the FairTax]. They’re getting away with it now! And the change needs to take place now. But, you know, all I can do is provide the best logic I can. I’ve got eight years on the [Senate] Finance Committee. I’ve got major professors who buy into – economics professors – who buy into what I’m doing. And so if people could do the analysis, and listen to . . . here, you hear this often, “Let’s tax the corporations.” Well, that’s a canard! Tax the corporations? That’s a hidden sales tax. Because if you raise the taxes on corporations, they have to take that tax, add it to the product they’re producing, and then pass it on to the consumer . . . and who is that? The average American. But you hear all the time, “Let’s just sock it to the corporations.” Like we’re giving you a break. It’s a JOKE! You’re getting screwed, and you’re not even aware of it.

And that’s the sadness of our existing tax structure. Please, please, think it out. Rationalize it out and find out why . . . why, that if my thing is so advantageous to the wealthy . . . why aren’t they contributing to my campaign?! Other FairTax benefits: No more 5th, 4th, and 1st Amendment violations by the gov’t (no income tax returns; working families no longer placed at risk of audit, interest, penalties, levies, liens; end of IRS “political speech” intimidation); pro-environment (encourages recycling – no tax on “used” goods)

Maurice Robert "Mike" Gravel is a former Democratic United States Senator from Alaska, who served two terms from 1969 to 1981, and a former candidate in the 2008 presidential election. On the night of June 29, 1971, Gravel attempted to read the Pentagon Papers on the floor of the Senate as part of his filibuster against the draft, but was thwarted when no quorum could be formed. [54] Gravel instead convened a session of the Buildings and Grounds subcommittee that he chaired.[54] He got New York Congressman John Dow to testify that the war had soaked up funding for public buildings, thus making discussion of the war relevant to the committee.[55] He began reading from the papers with the press in attendance,[54] omitting supporting documents that he felt might compromise national security,[56] and declaring, "It is my constitutional obligation to protect the security of the people by fostering the free flow of information absolutely essential to their democratic decisionmaking."[56] Gravel ended the session by, with no other senators present, establishing unanimous consent[55] towards inserting 4,100 pages of the Papers into the Congressional Record of his subcommittee.[23][50] The following day, the Supreme Court's New York Times Co. v. United States decision ruled in favor of the newspapers[50] and publication in The Times and others resumed.

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