Text 12899, 174 rader
Skriven 2005-05-26 05:24:00 av Jeff Binkley (1:226/600)
     Kommentar till en text av John Massey
Ärende: FAIR TAX
================
JM>The Fairfax proposal is a comprehensive plan to replace federal
JM>income and payroll taxes, including personal, gift, estate, capital
JM>gains, alternative minimum, Social Security/Medicare,
JM>self-employment, and corporate taxes. The FairTax proposal integrates
JM>such features as a progressive national retail sales tax,
JM>dollar-for-dollar revenue replacement, and a rebate to ensure that no
JM>American pays such federal taxes up to the poverty level. Included in
JM>the FairTax plan is the repeal of the 16th Amendment to the 
Constitution
JM>. The FairTax allows Americans to keep 100 percent of their paychecks
JM>(minus any state income taxes), ends corporate taxes and compliance
JM>costs hidden in the retail cost of goods and services, and fully
JM>funds the federal government while fulfilling the promise of Social
JM>Security and Medicare.


JM>Anybody care to show how this is not a good thing?

Here is what Steve Forbes said in front of Congress recently.  I will be 
seeing him a week from Monday.  I'll get an update from him on this 
issue (as well as tease him about appearing on the Apprentice <g>):

http://www.forbes.com/forbes/2005/0606/031.html

Fact and Comment 
Steve Forbes, 06.06.05, 12:00 AM ET 

On May 11, I testified before the President's Advisory Panel on Federal 
Tax Reform. This body, headed by former U.S. senators Connie Mack (R-
Fla.) and John Breaux (D-La.), will render its recommendations by July 
31. To help prod the debate for real change, I have written a book, Flat
Tax Revolution: Using a Postcard to Abolish the IRS, which will be 
published by Regnery on the Fourth of July. 

Mr. Chairman: Two basic issues need to be addressed in any discussion on
federal tax reform: the complexity of the tax code itself and the burden
imposed on the economy by unnecessarily high tax rates. 

There isn't a human being alive who knows what's contained in the 
federal tax code. To put it in perspective: Abraham Lincoln's Gettysburg
Address, which defined the American nation, is 272 words in length. Our 
Declaration of Independence is some 1,300 words. The Bible, which spans 
several thousand years of human history, is 773,000 words. But the 
federal tax code, with all of its attendant rules and regulations, is 9 
million words and rising. 

Since 1986, when the last serious attempt at tax simplification was 
made, the code has been amended 14,000 times. Its length has grown by 3 
million words--an avalanche of personal and business deductions, 
exemptions, preferences, loopholes, credits and exclusions spread out 
over six formal tax brackets (and an infinite number of other brackets 
as deductions are phased out when taxpayers reachcertain income 
thresholds). And then there's the abomination known as the alternative 
minimum tax--an Orwellian name for a levy if ever there was one. A more 
accurate name would be the compulsory maximum tax. 

A typical taxpayer filing the regular Form 1040 and reporting income 
from work, dividends and capital gains will spend an estimated 26 hours 
and 48 minutes each year completing his return. Seventeen years ago it 
took only 17 hours and 7 minutes. That's a 57% increase in just the past
17 years. 

Billions of hours of lost productivity--the equivalent of3.3 million 
full-time jobs--are squandered on tax compliance. At last count, 
Americans spent a staggering 6.6 billion hours preparing their tax 
forms. Not surprisingly, a recent AP poll that found that seven in ten 
people believe federal taxes are too complicated. 

It's bad enough that taxpayers are thoroughly confused by the system, 
but even seasoned tax professionals are frequently confounded by the 
code's jumble of regulations. And the code is made all the more 
confusing with its contorted phaseouts, clawbacks and AMT. 

Why the Tax Code Beast Must Be Killed 

Twenty years ago President Ronald Reagan signed the Tax Reform Act of 
1986, which swept away numerous tax loopholes and instituted a two-
bracket system. Because of the reform the tax shelter industry suffered 
a heavy loss. But within only a few years it returned with a vengeance. 
By the 1990s the code had once more become a rule-encrusted thicket, 
giving rise to a proliferation of what are referred to as "abusive" tax 
shelters, convoluted entities and transactions created for the sole 
purpose of avoiding taxes. Since 1993 the government has lost $85 
billion in tax revenue because of these abusive tax shelters. 

A flat tax would eliminate the possibility of clever minds setting up 
complicated tax-avoidance schemes. The code would be too transparent, 
too simple to hide tax liabilities. A flat tax is the only way to end 
the clutter, confusion and distortions of the current system. Clamoring 
for smarter tax software, better-trained IRS staff and targeted tax cuts
won't solve our tax problems. 

Simple and Fair 

A flat-tax form could be printed on a single sheet of paper or in a 
postcard format. Exemptions for individuals and children would be 
expanded so that a family of four would pay no federal income taxes on 
its first $46,165 of income. Anything over $46,165 would be taxed at a 
fair and flat rate of 17%. Millions of people would be off the federal 
income-tax rolls. 

There would be no tax on Social Security benefits. No tax on personal 
savings. No capital gains taxes. And small businesses and family farms 
wouldn't have to worry about being wiped out by the death tax--no 
taxation without respiration. 

Business taxation would be equally simple: a 17% rate on profits; 
deductions for salaries and the costs of materials and services 
necessary to produce the company's goods and/or services; and immediate 
expensing of investments--no more depreciation schedules. If there was a
loss, you would carry it forward to apply against future profits. 

Taxpayers would have a choice. They could opt for the new flat tax or 
they could file under the old system. This type of dual system is being 
used successfully in Hong Kong. People would be able to see for 
themselves which system is better--the flat tax or the old system. Given
the choice, most people would opt for a simpler system. 

Stronger Economy, More Federal Revenue 

The low tax rate would set off an economic boom by letting people keep 
more of what they earn and by lowering barriers to risk taking. Every 
time the tax burden on the American people has been reduced, better-
paying jobs and new businesses were created, incomes rose, and the 
standard of living improved. But those weren't the only benefits: Lower 
taxes also drove government revenues up, not down. 

When President John F. Kennedy enacted across-the-board tax reductions, 
including dropping the top tax rate from 91% to 70%, the economy boomed.
Federal receipts mushroomed. Something very similar happened as a result
of the Reagan tax reductions and again from the tax-rate reductions 
enacted two years ago on capital gains, dividends and personal income. 

This brings us to the absurdity of static analysis, which assumes that 
changes in tax rates have little or no impact on our behavior. Think of 
it this way: If people's incomes were taxed at 100% on Mondays and a 
zero percentage rate on Tuesdays, how many people do you think would 
show up for work on Monday? Washington's static analysts, mired in their
rigid, wrongheaded theories, would swear up and down that attendance 
would be the same on Mondays as it would be on Tuesdays. 

When Congress increased the capital gains tax levy in 1986, the so-
called experts at the Joint Committee on Taxation estimated that this 
tax increase would increase capital gains revenues. Wrong. Tax receipts 
plummeted. 

By contrast, when President Clinton agreed with congressional 
Republicans in 1997 to cut the capital gains tax rate from 28% to 20%, 
critics wrung their hands, predicting revenues would drop and deficits 
would increase. In fact, revenues from capital gains increased 
dramatically. 

As a result of static analysis, revenue loss from tax cuts tends to be 
overstated, which makes it harder to enact tax cuts. 

To conclude, Mr. Chairman, the monstrosity of the tax code we have today
has created a problem of monstrous proportions. And like every big 
problem, it requires a big solution. Fiddling around the margins of the 
tax code won't do the trick. A simpler, fairer flat tax will. 

We already know flat taxes work because they've been enacted in Hong 
Kong, Russia, Lithuania, Latvia, Estonia, Ukraine, Slovakia, Romania, 
Serbia and Georgia. Other nations are actively considering their own 
versions of a flat tax. What are we waiting for--especially now, when 
the rest of the world, including India and China, is determined to catch
up with us? 

I want to thank this committee for allowing me to testify today, and I 
want to applaud you for your courage in taking on this very important 
issue.


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