Candidate: Never Mind Taxes

Upstart candidate Boaz ItsHaky is back this year to run against U.S. Rep. Rosa DeLauro for the second time, now as an Independent. He’s offering a new solution to the nation’s economic woes: an ​“income tax holiday.”

ItsHaky (pictured) said he’d like to see all taxes — income, property, city, state, and federal — suspended for a period of six months or a year. It would put money back in the pocket of consumers and kick the economy into gear, he said.

ItsHaky presented that idea on Friday afternoon at the Bella Vista retirement community in Fair Haven Heights, where he made an appearance as part of his quest for signatures to appear on the ballot In November for U.S. representative for Connecticut’s Third Congressional District, which includes New Haven and 24 surrounding towns. That seat is currently occupied by 19-year incumbent U.S. Rep. Rosa DeLauro, against whom ItsHaky ran two years ago, when he was a Republican.

ItsHaky, a Bethany acupuncturist who has never held public office, appeared with a slate of state and federal candidates from a new organization, the Independent Party. His tax idea is loosely based on a plan offered by Warren Mosler, a millionaire financial analyst, banker, and race car entrepreneur who’s the party’s candidate for the U.S. Senate seat now occupied by Sen. Chris Dodd, who is retiring at the end of this year. Mosler later cautioned that ItsHaky’s idea was not exactly what he, Mosler, had in mind.

Other Independent candidates at the Friday event included Chester First Selectman and gubernatorial candidate Tom Marsh and Waterbury Alderman and candidate for Lt. Governor Cicero Booker.

Those candidates, including Mosler, have already secured their spots on the ballot in November. ItsHaky is still working to gather the signatures he needs before the deadline on Wednesday.

Wearing a tie-less white shirt, sports coat, jeans, and sneakers, ItsHaky stepped in front of a group of 20 seniors to explain why he’s thrown in his lot with the Independents. He began by saying that he’s originally from Israel. He arrived in the U.S. in 1989. ​“It would be an understatement to say I am in love with this country,” he said.

After 9/11, when ItsHaky was in acupuncture school in New York, he was inspired to run for office. He initially planned to begin his political career as an independent candidate, but was soon convinced that he would need to join one of the two major parties in order to have any real influence. After running for State Senate and then for a U.S. Representative seat in 2008, ItsHaky became disillusioned with the Republican Party. ​“They are more concerned with their political gains than with the people themselves,” he said. ​“I have no desire for power. I have a pure desire for public service.”

The number-one issue in this election is the economy, ItsHaky said. The government response, the stimulus package, has not gotten to the people who need it, he said. ​“Where is this money? It stayed on the top.”

His cure? A payroll tax holiday for anyone making less than $1 million a year and for businesses employing 1,000 people or fewer. The wealthy citizens of Connecticut will continue to support the state through taxes, and the federal government can kick in some extra money, ItsHaky said.

After his comments to the seniors, ItsHaky filled in the details of his plan. ​“It’s a way to think outside the box,” he said. For six months or a year, people would pay no property taxes, no income taxes, no state taxes, ​“No nothing,” he said. ​“It stimulates immediately at the Main Street level. … It will force the government, because of limited resources, to be more efficient.”

But won’t the government collapse without the revenue it depends on?

“The federal government never runs out of money,” ItsHaky said. ​“Taxing is not what drives this country.”

ItsHaky said his thinking has been influenced by conversations with Mosler (pictured), the Independent candidate for U.S. Senate. Mosler said the payroll tax holiday idea is his, but not the whole package suggested by ItsHaky.

Mosler’s plan is to have an indefinite suspension of the Federal Insurance Contributions Act (FICA) payroll tax only, not all taxes across the board, he said. The FICA tax is a ​“highly regressive, punishing tax” that disproportionately affects poorer people, Mosler said.

“Taxes don’t function to raise revenue for the federal government,” Mosler said. ​“For the federal government, the purpose of taxes is to regulate the economy.” Money works differently at the federal level from the way it does at the state or local level, he said. Because the federal government is issuing the money, the money means something different to the federal government than it does to the user. It’s like subway tokens, which are worthless to the subway operator, but valuable to the subway rider, he said.

When the federal government collects taxes, it’s simply changing numbers in a computer, the way a bowling alley changes your score when you knock pins down, Mosler said. ​“How many points does a bowling alley have?”

The reason the federal government levies taxes is to check inflation, Mosler said. He explained through and analogy: Imagine the national economy as a big department store, with a Gross Domestic Product, the value of all goods and services bought and sold, of $16 trillion. If there are no taxes, the people in the U.S. go in the department store and buy $16 trillion dollars of stuff. But if the government wants to buy things, it needs to take money from the people. If it just printed money and bought, say, $4 trillion of stuff, then prices would go up 25 percent in the store. ​“So the government takes four trillion from us,” Mosler said.

Taxes serve as a regulation of the system, to check inflation and to make sure people have enough money to keep the economy functioning properly, Mosler said. What the economy needs now is lower taxes to feed the economy ​“from the bottom up.” Then people will go back to buying things, he said.

It’s a fundamental misunderstanding to think that the federal government needs tax dollars to spend money, Mosler said. It’s one of ​“Seven Deadly Innocent Frauds of Economic Policy,” outlined in his new book by that name.

But states do need tax revenue to spend money, Mosler said. Hence, he didn’t back ItsHaky’s idea to extend the tax holiday to state taxes: ​“The state of Connecticut can’t do that because they will bounce checks.”

ItsHaky is not the only Independent candidate influenced by Mosler’s theories. His ideas have taken root in the small slate of Independent candidates. Booker, the candidate for lieutenant governor, called Mosler an ​“economic genius” and gubernatorial candidate Marsh praised his theories as well.

Mosler, who’s originally from Manchester, told the seniors at Bella Vista that he moved back to Connecticut in March to run for U.S. Senate. He has an investment firm and owns a small bank in Florida, where he lived before moving to St. Croix. He said his net worth is between $65 million and $255 million.

He’s also the founder of Mosler Automotive. That company built the MT-900 race car, which can reach 60 miles per hour in less than three seconds and gets 30 miles per gallon on the highway, Mosler said. He said he built the car just to prove it was possible to make fuel-efficient high-performance vehicle. He said he’s shown the technology to major car companies, but they weren’t interested.

“Nobody seems to care,” he said.