KTVA reports on the harmful effect Treadwell’s proposal would have
FOR IMMEDIATE RELEASE: 08/01/2024
ANCHORAGE — Mead Treadwell is standing by his controversial support for a 30% national sales tax that would increase the cost of nearly everything for Alaskans, who already face a high cost of living.
To KTVA Channel 11 News Treadwell claimed the tax would be beneficial for everyone involved,“You keep your money if you’re investing, it if you’re are spending it you pay something based on consumption.”
In reality, Treadwell’s scheme would raise taxes 30% on all goods and eliminate the home mortgage tax deduction used by 30 million Americans, crushing homebuyers in Alaska.
According to Kyle Hampton, director of the UAA Center for Economic Education, such a tax would have grave implications for the economy. Hampton says that such a tax would “ result in the poor paying a higher percentage of their income in taxes in ways that they are not currently,” and would decrease consumer consumption of goods and services across the country.
Republicans, Democrats, and tax experts alike have criticized the scheme. Former President George W. Bush’s administration rejected the proposal and said it would create “the largest entitlement program in history” because of the extreme poverty it would create among lower income Americans.
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Read the full article on KTVA:
Paying more for what we consume is a tough sell, but 75 House Republicans and nine Republican senators are backing a bill that would implement a national sales tax.
If signed into law, the Fair Tax Act 2013 sets the sales tax rate at 23 percent in 2015 and repeals the income and employment tax. It also prohibits the funding of the Internal Revenue Service after 2017. The bill was assigned to a congressional committee on Jan. 23, 2013 and has not moved since.
Kyle Hampton, director of the University of Alaska Anchorage’s Center for Economic Education, says eliminating the federal income tax and replacing it with a sales tax will hurt the wallets of low-income earners.
“A sales tax would eliminate much of that progressivity, it would result in the poor paying a higher percentage of their income in taxes in ways that they are not currently,” said Hampton, who expects manufactures and retailers to be less than impressed by the idea.
“The tax will be split between producer and consumer,” Hampton said.
Exactly what kind of price increases goods and services will see is up for debate.
“The national sales tax would raise the price of everything by approximately 30 percent,” said Zack Fields, with the Alaska Democratic Party. “You would pay more for groceries at Costco, you would pay more for snowmachines, pickup trucks, even medical care and credit card payments.”
Fields said the 23 percent tax rate is misleading, and that it would actually be closer to 30 percent.
“And you’re actually eliminating the home mortgage tax deduction and that would raise costs for folks who are paying a mortgage by somewhere between $4,500 to $5,000 a year,” Fields said.
Republican Senate candidate Mead Treadwell said the current tax system doesn’t encourage investment and he’d like to see it changed.
“It’s 70,000 pages long, the tax code, it takes 70,000,000,000 American hours to comply with and there is a much simpler way to catch revenue,” Treadwell said.
Treadwell said the Fair Tax Act would encourage more savings.
“You keep your money if you’re investing it if your are spending it you pay something based on consumption,” he said. “I’m not wedded to any 23.”
Kyle Hampton said a national sales tax could decrease spending and harm business. He said the tax would likely be split between the consumer and the producer.
“If they attempted to pass on all of the costs on to the consumer they would not be successful in doing so, they would see a significant decrease in the number of goods consumers are buying,” Hampton said.
The Fair Tax Act of 2013 allows for a monthly sales tax rebate for families meeting certain income requirements. There are also exemptions from the tax for property or services purchased for business.
