New Tax Hike Fears Emerge Amid Jobs Crunch

NEIL CAVUTO, HOST OF “YOUR WORLD”: Job worries are mounting, but if that is the case, should you be looking at taxes and increasing?

Democratic Congressman Chaka Fattah of Pennsylvania says, with these kind of hikes, yeah, you should.

Congressman, good to have you back

REP. CHAKA FATTAH D-PA.: Well, it’s good to be back.

You know, we’re going to have a July Fourth celebration. And I think we should have an independence day from being the world’s largest panhandler. We should pay our bills. We’re the wealthiest country in the world. We can clearly afford to pay our bills.

And so I’m happy to see that the president, Democrats, Republican leaders are getting together. We’re going to have a package of both spending cuts and revenue raising, and finally put the fiscal ship of the country headed in the right direction.

CAVUTO: So, you’re – you’re confident you’re going to get that, because the last time I checked, they’re $1 trillion apart. But you think we will close that gap?

FATTAH: Well, I know that people expect that we won’t get there. But I can promise you we’re going to get a deal. We’re going to get this worked out.

And I think America needs to -- in order to lead the world, we need to be at first -- be responsible and pay our debts, pay our bills. We’re going to raise the debt limit. The Ryan budget raised it to $16 trillion. I think that’s going to be the number in the final deal. And I think that it’s going to be like past deals with Ronald Reagan and George Bush. There’s going to be some -- there’s going to be a balance.

CAVUTO: All right. So, you think we will get there.

But where was this great resolve of yours, Congressman, about being serious about our debt and addressing our deficits a year ago, when I talked to you?

FATTAH: Well, I introduced Debt Free America then, which was to set up consumption tax totally dedicated to paying off our debt. And as I mentioned to you back then, I believe that we need to be leading the world. We have to be economically strong. We have to pay our bills.

CAVUTO: No, you’re right about that.

FATTAH: And so if we want to...

CAVUTO: And this consumption tax cut, you were ahead of a lot of folks, in that, at least there, it wasn’t just relying on the wealthy.

Now there’s talk about raising fees and other provisions that will hit a lot more than the wealthy, obviously, if they were come to pass. Is that all to the good, or what?

FATTAH: Well, look, when we wave the flag on the Fourth of July, we want to be proud of our country. I think that I’m not in the discussions, but the leadership...

CAVUTO: How are hike in fees -- no, wait. How are hike in fees, and getting rid of tax allowances and the like, and adding more to my airline ticket, how’s that going to make me wave my flag more proudly?

FATTAH: Well, here’s what’s going to make you more proud, is to not to have be the world’s panhandler. We, as a country, we want the -- we have the greatest military in the world. We have to pay for it. We want to have a great education system in higher education and K-12; we have to pay for it. There’s no free lunch, even at Fox. You have got a great network. I am sure there are some paychecks that have to go out. There are some bills that have to be paid.

CAVUTO: Well, no, I just found out other anchors here are paid, Congressman. I’m still ticked off. But I digress. I do want your sense, though, of the issue that always divides Republicans and Democrats. I think you’re quite right that we’ve got to get our financial act together. But I have always thought, Congressman -- and you and I might disagree on this subject – we’ve never had a problem with the amount of money coming in, but we’ve had a big problem with how much money goes out.

So why not address that problem first? And then, if you have knocked blood out of the proverbial stone and there is no more blood to be had, then, then raise taxes. I don’t think you’ve even gotten to that point.

FATTAH: Well, I think you’re going to be happy with this package.

I there’s going to be more spending cuts than revenues raise. In the past, it has been 1-1. As you know, the president’s commission, Simpson -Bowles, basically put forth a 3-1 package, $3 in spending cuts for every $1 in revenue. But either way, you cut it.

CAVUTO: But the income tax hikes, the hikes in the income tax rates; they’re apparently, from the White House, out, right, Congressman? They’re not happening? So, all of these fees removing subsidies and the like, they’re in, right?

FATTAH: If I had my way, we’d do away with the income tax altogether. I want us to go to a consumption tax.

Every one of our economic competitors use a consumption tax. You have reported on your show, which is the truth, is that this is a consumption- based economy we’re in. More than 75 percent of our economic activity is in consumption. We’re the only industrialized country in the world that doesn’t use a consumption tax.

And I think that’s why we are the greatest debtor nation, when, in fact, just in our lifetime, we used to be the world’s largest creditor nation. So, we need to think anew about tax policy. And we have...

CAVUTO: So, you would swap out of the income taxes to that.

What happens, though, and the idea that has been kicked around on the Hill, as you know Congressman, is on top of the income tax. In other words, do what some European countries, though certainly not all, as you point out, and have what they call a value-added tax, but an income tax as well.

What do you think of both of them?

FATTAH: Well, my legislative proposal gets rid of the income tax and puts in place what I call a transaction fee. And it is not a VAT. It’s an American form of a consumption tax, just going at individual transactions for a small fee.

And I think we could get rid of the income tax today -- let’s take a few years and get out of debt first. But, in the same vote, we also abolish the income tax, so that it’s all in one, and we get to a point where our children can know that, as they celebrate our Independence Day, that we truly are an independent, self-sufficient nation.

CAVUTO: All right, Congressman, good having you on again.

FATTAH: Thank you.

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