Composition of Gravel, part 1:

Updates on the post are below:

For those of you that got here via Google and aren't going to find what you're looking for, click here.

Now, on to business.

One of Gravel's key campaign issues is actually typically proposed by Republicans, which explains its swank name, "The Fair Tax."

Here's the basic premise. We eliminate the income tax and the IRS altogether. What we replace it with is a 23% federal sales tax on all products, including food and other current tax-exempt items.

Yes, sales taxes are regressive. To negate this fact, the first $20,000 (Update: Gravel's actual number is $16,000, which lowers the prebate a fair amount) is tax free. But since sales tax is paid at the point of purchase, not annually, instead of an annual refund, one would have to create a "prebate." The prebate could be paid in any variety of fashions, but the easiest would be monthly or annual checks.

Here's the problem, though. For the sake of this argument, let's create 15 people, with the following assumptions:

A) Anyone making less than $50,000 is living hand-to-mouth, or spending everything they take in. This is probably a stretch, but certainly people who make over $50k save more (by percentage) than people who make less.
B) People making more than $50k do not spend 10% of their income (with one exception)

Let's see what happens:

Income	Expenses	Fair Tax	Prebate	Fair Tax Paid	% Paid	Current Tax	% Paid
$7550	$7550	$1736.50	$4600	-$2863.50	-37.9%	$755	10%
$12000	$12000	$2760	$4600	-$1840	-15.3%	$1423	11.9%
$16000	$16000	$3680	$4600	-$920	-5.8%	$2023	12.6%
$20000	$20000	$4600	$4600	$0	0%	$2623	13.1%
$30650	$30650	$7049.50	$4600	$2449.50	8%	$4220	13.8%
$40000	$40000	$9200	$4600	$4600	11.5%	$6558	16.4%
$50000	$45000	$10350	$4600	$5750	11.5%	$9058	18.1%
$74200	$66780	$15359.4	$4600	$10759.40	14.5%	$15108	20.4%
$100000	$90000	$20700	$4600	$16100	16.1%	$22332	22.3%
$154800	$139320	$32043.60	$4600	$27443.60	17.7%	$37676	24.3%
$200000	$180000	$41400	$4600	$36800	18.4%	$52592	26.3%
$336550	$302895	$69665.85	$4600	$65065.85	19.3%	$97653	29%
$500000	$450000	$103500	$4600	$98900	19.8%	$154861	31%
$1000000	$450000	$103500	$4600	$98900	9.9%	$329861	33%
$1000000	$900000	$207000	$4600	$202400	20.2%	$329861	33%

So, this tax plan has some merits. It's simple, for one. And it promotes saving money over consumption, which could very well save the environment. But I'm hoping you'll notice the problem.

Everyone is paying less. Overall, 40.6% less. I'm not sure how we'd cut government spending 40.6%, especially if we're going to pay for universal health care, properly funding education and fixing the environment.

Two parts remain:
Part 2: National Initiative
Part 3: Candidacy

I may post Part 2 tomorrow, if State Convention ends early enough.

KL

UPDATE: I received two corrections on this post from Elliott, Gravel's Communications Director.

The first was the correction from $20,000 tax free to $16,000. This makes the plan come a little closer to balancing, but still significantly short.

The second was an assumption: It is assumed that the removal of the income tax would cause 10% economic growth. Since I'm paying $7.50 an hour to sit in an internet cafe and work on this post, I'm not tremendously eager to go through and re-calculate all my numbers to see if that would fill a 40% gap. I'm doubtful, though. And furthermore, even if the Fair Tax did create 10% economic growth, it certainly wouldn't happen overnight, meaning the government under the new tax structure would either have to borrow resources on a massive scale or dramatically cut spending while waiting for the economy to catch up. Neither of those concepts are something I'm comfortable with.