New Mexico senator introduces flat-tax bill

[Judi Lynn]

Source: Associated Press

New Mexico senator introduces flat-tax bill

By VIK JOLLY
Associated Press
January 28, 2015 Updated 7 minutes ago

SANTA FE, N.M. — A New Mexico lawmaker wants to do away with most taxes and replace them with up to a 2 percent flat tax on most things people buy.

Sen. William Sharer, R-Farmington, introduced legislation Wednesday that calls for a 1 percent tax on gross receipts for the state and 0.5 percent for counties and cities.

He first floated the idea of a flat tax for the state two years ago. At the time, a University of New Mexico analysis found the flat tax would bring in $1.7 billion more for the general fund than the $3.9 billion generated from all taxes combined, he said.

Sharer said New Mexico has a chance to lead the nation in adopting a flat tax.

"Let's make it fair and honest instead of the sick and twisted system that it is today," Sharer told reporters at a news conference.


Read more: http://www.theolympian.com/2015/01/28/3550085_new-mexico-senator-introduces.html?rh=1#storylink=cpy

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Sen. William Sharer [/center]

[A Random Person]

1. Hopefully New Mexico legislators won't buy this claptrap...

and start taxing the 1%'ers...

There are plenty... just stop being scared and sucking up for political dollars and do the RIGHT THING for once!

Use your brains, people.

[blkmusclmachine]

2. Bankrupt the state???

[Cryptoad]

3. Flat Tax = Lower taxes for the Rich,,,,,,,,,dog whistle?

[happyslug]

4. How is the State going to pick up the tax on rent????

This tax will be a tax on everything, including Groceries, when you buy a home, and when you pay rent. Thus if you are paying $1000 a month in rent, you also have to send $20 in taxes for that rent. How is the state going to collect this tax on rent? Low income people will not pay it, their landlords do not have to for it is on the rent PAID not the rent collected.

States get around this problem with the Sales Tax by insisting that anyone selling items subject to the Sales Tax collect the sales tax and send it to the State. If you own a house and renting it out, how can the state find out it is just not abandoned? If the states says it will assume all homes are occupied, what about a home that is NOT occupied, the Landlord has to pay the tax even if no rent is collected?

Yes, this is a mess and it can ONLY WORK if Real estate (including rent payments) transactions are included. Home sold is not a big problem, 2% of the amount it is sold for, that can be rolled into the mortgage payment (like other closing costs). The problem is rent for most landlords own one or two homes, thats it. Yes you have landlords that own hundreds and thousands of homes, but they are much rarer then the person renting out his old home for he or she can not find a buyer.

The last time I checked a 2% tax would NOT be enough to replace both the existing sales tax and any income tax. The number I have read is closer to 5-10%. I would like to read the study he cites, for I suspect my problems are addressed and the report say it will ignore the collection issue, and if you ignore the collection issue 2% may be workable, providing Education is paid from other taxes.

The problem is in the details and we may never see the details for this State Senator has received what he wanted with this proposals, his name was mentioned all through the media even here on DU.

[forest444]

5. The right will never give up on this, will they?

And the worst part is that many of the people who would be hurt, are the ones who'll tell you "sounds fair to me!"

The last time I heard someone cheerlead the flat VAT canard, I simply reminded them of this: that the federal VAT rate alone would have to be, even by optimistic projections, at least 23% to make up for lost federal income tax monies. That, of course, excludes state and local sales taxes, which besides, would surely rise - especially if flat-taxers also succeed in eliminating state income taxes (as the case above suggests).

Since personal savings rates have been in single digits since the Reagan years, the sticker shock would quickly lead to a severe consumer-led recession - to be promptly followed by a veritable four horsemen of declining business spending and job creation, as well as massive retail bankruptcies and of course a stock market crash. Depressed consumer confidence would all but assure that said downturn would be quite deep before we saw any light at the end of the tunnel at all.

In short, plenty of pain - and yet some would indeed gain: the leisure class, who would receive a near-total cut in their federal taxes since despite their lifestyle, usually consume but a small percentage of their income (think 10% or less).

Once rescinded, moreover, the income tax structure would be almost impossible to reinstate no matter how much public opinion regretted it; the wealthy, once they're accustomed to a virtually tax-less existence, will be loath to ever allow it to return.

Buying off puppets like the good State Senator above to make sure of that, would be the easy part.

[jmowreader]

7. "Near-total cut"? Read the Fair Tax website

It is FAR worse than you think. This 23-percent federal sales tax is to be levied on new goods only.

The problem is, seriously rich people don't often buy new things. They buy things with a history - why buy a new house in Los Angeles when you can buy one that belonged to a famous actor, or a new house in Boston when you can get one that belonged to someone who's in the history books? The same thing goes for cars, boats, furs, furniture...in fact, the only things they buy new are either (1) relatively inexpensive, like clothing ("relative" being the key term here: they might pay a thousand for a shirt or $5000 for a dress but that's a damn sight cheaper than $100,000 for a car or $5 million for a plane), or things that absolutely can't be bought used, like food and cleaning supplies. Since under this law they can't be taxed on the expensive things they buy, the entire tax burden will devolve to you and I.

[forest444]

8. Worse than the worst-case scenario

I should have guessed as much.

Thanks for pointing that out, jmowreader. The Fair Tax, like so many proposals spoon-fed to some of these easily-bribed lawmakers, gets worse the deeper you dig doesn't it!?

[jmowreader]

9. The Fair Tax would destroy the economy

Forget what "the rich" would do because there are relatively few of them.

This tax would destroy the automotive industry: if a used car is tax free and a new car has a huge tax on it, most people would choose the used one.

It would also make used cars more expensive.

Since no one would be buying new homes, the homebuilding industry would collapse. Same thing with any durable good.

I could go on and on, but you get the idea: this tax would destroy the market for new goods of all descriptions.

[another_liberal]

6. The best way to get rich people to donate big time to your reelection campaigns . . .

Is to propose giving them a huge tax break (call it a "flat-tax" if you want, it's still a tax cut for the wealthy).

[JohnnyRingo]

10. The wealthy don't use more toilet paper than we do.

That's this reason simplified, that flat taxes target the working poor while easing the burden on the rich.

While the average working person spends 95% or more of their income each year, and would be taxed on every penny, the wealthy would only be taxed only on a single digit percentage. A loophole allows company owned cars, business attire, and "home office supplies" to be exempt from sales taxes.

[chuckie29]

11. Lets use the Monopoly game model

Lets tax people/corporations on their wealth and what they own, not income. Then a fairly low flat tax would be just fine. What is magic about basing taxes on income? Or on what you spend (sales tax)? Many states have property taxes. This wouldn't be that different, it would just include all of that cash sitting in off shore accounts that you own. Or stocks.

[dembotoz]

12. flat tax for those on a flat earth

[Judi Lynn]

13. Excellent! n/t