Text 12900, 172 rader
Skriven 2005-05-26 07:03:18 av John Massey (1:123/789.0)
Kommentar till text 12899 av Jeff Binkley (1:226/600)
Ärende: FAIR TAX
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JB> Here is what Steve Forbes said in front of Congress recently. I will be
JB> seeing him a week from Monday. I'll get an update from him on this
JB> issue (as well as tease him about appearing on the Apprentice <g>):
JB> http://www.forbes.com/forbes/2005/0606/031.html
JB> Fact and Comment
JB> Steve Forbes, 06.06.05, 12:00 AM ET
JB> On May 11, I testified before the President's Advisory Panel on Federal
JB> Tax Reform. This body, headed by former U.S. senators Connie Mack (R-
JB> Fla.) and John Breaux (D-La.), will render its recommendations by July
JB> 31. To help prod the debate for real change, I have written a book, Flat
JB> Tax Revolution: Using a Postcard to Abolish the IRS, which will be
JB> published by Regnery on the Fourth of July.
The main problem with the Flat Tax plan is that it does not do away with
the 16 amendmentr and the IRS. The Flat tax plan also has provisions to keep
some deductions like home mortage deductions, which could easely be expanded
to other things as Congress Critters try to buy votes.
Ask Steve what he thinks of the Fair Tax plan and why he perfers the Flat
Tax Plan over it.
That would be interesting to me.
JB> Mr. Chairman: Two basic issues need to be addressed in any discussion on
JB> federal tax reform: the complexity of the tax code itself and the burden
JB> imposed on the economy by unnecessarily high tax rates.
JB> There isn't a human being alive who knows what's contained in the
JB> federal tax code. To put it in perspective: Abraham Lincoln's Gettysburg
JB> Address, which defined the American nation, is 272 words in length. Our
JB> Declaration of Independence is some 1,300 words. The Bible, which spans
JB> several thousand years of human history, is 773,000 words. But the
JB> federal tax code, with all of its attendant rules and regulations, is 9
JB> million words and rising.
JB> Since 1986, when the last serious attempt at tax simplification was
JB> made, the code has been amended 14,000 times. Its length has grown by 3
JB> million words--an avalanche of personal and business deductions,
JB> exemptions, preferences, loopholes, credits and exclusions spread out
JB> over six formal tax brackets (and an infinite number of other brackets
JB> as deductions are phased out when taxpayers reachcertain income
JB> thresholds). And then there's the abomination known as the alternative
JB> minimum tax--an Orwellian name for a levy if ever there was one. A more
JB> accurate name would be the compulsory maximum tax.
JB> A typical taxpayer filing the regular Form 1040 and reporting income
JB> from work, dividends and capital gains will spend an estimated 26 hours
JB> and 48 minutes each year completing his return. Seventeen years ago it
JB> took only 17 hours and 7 minutes. That's a 57% increase in just the past
JB> 17 years.
JB> Billions of hours of lost productivity--the equivalent of3.3 million
JB> full-time jobs--are squandered on tax compliance. At last count,
JB> Americans spent a staggering 6.6 billion hours preparing their tax
JB> forms. Not surprisingly, a recent AP poll that found that seven in ten
JB> people believe federal taxes are too complicated.
JB> It's bad enough that taxpayers are thoroughly confused by the system,
JB> but even seasoned tax professionals are frequently confounded by the
JB> code's jumble of regulations. And the code is made all the more
JB> confusing with its contorted phaseouts, clawbacks and AMT.
JB> Why the Tax Code Beast Must Be Killed
JB> Twenty years ago President Ronald Reagan signed the Tax Reform Act of
JB> 1986, which swept away numerous tax loopholes and instituted a two-
JB> bracket system. Because of the reform the tax shelter industry suffered
JB> a heavy loss. But within only a few years it returned with a vengeance.
JB> By the 1990s the code had once more become a rule-encrusted thicket,
JB> giving rise to a proliferation of what are referred to as "abusive" tax
JB> shelters, convoluted entities and transactions created for the sole
JB> purpose of avoiding taxes. Since 1993 the government has lost $85
JB> billion in tax revenue because of these abusive tax shelters.
JB> A flat tax would eliminate the possibility of clever minds setting up
JB> complicated tax-avoidance schemes. The code would be too transparent,
JB> too simple to hide tax liabilities. A flat tax is the only way to end
JB> the clutter, confusion and distortions of the current system. Clamoring
JB> for smarter tax software, better-trained IRS staff and targeted tax cuts
JB> won't solve our tax problems.
JB> Simple and Fair
JB> A flat-tax form could be printed on a single sheet of paper or in a
JB> postcard format. Exemptions for individuals and children would be
JB> expanded so that a family of four would pay no federal income taxes on
JB> its first $46,165 of income. Anything over $46,165 would be taxed at a
JB> fair and flat rate of 17%. Millions of people would be off the federal
JB> income-tax rolls.
JB> There would be no tax on Social Security benefits. No tax on personal
JB> savings. No capital gains taxes. And small businesses and family farms
JB> wouldn't have to worry about being wiped out by the death tax--no
JB> taxation without respiration.
JB> Business taxation would be equally simple: a 17% rate on profits;
JB> deductions for salaries and the costs of materials and services
JB> necessary to produce the company's goods and/or services; and immediate
JB> expensing of investments--no more depreciation schedules. If there was a
JB> loss, you would carry it forward to apply against future profits.
JB> Taxpayers would have a choice. They could opt for the new flat tax or
JB> they could file under the old system. This type of dual system is being
JB> used successfully in Hong Kong. People would be able to see for
JB> themselves which system is better--the flat tax or the old system. Given
JB> the choice, most people would opt for a simpler system.
JB> Stronger Economy, More Federal Revenue
JB> The low tax rate would set off an economic boom by letting people keep
JB> more of what they earn and by lowering barriers to risk taking. Every
JB> time the tax burden on the American people has been reduced, better-
JB> paying jobs and new businesses were created, incomes rose, and the
JB> standard of living improved. But those weren't the only benefits: Lower
JB> taxes also drove government revenues up, not down.
JB> When President John F. Kennedy enacted across-the-board tax reductions,
JB> including dropping the top tax rate from 91% to 70%, the economy boomed.
JB> Federal receipts mushroomed. Something very similar happened as a result
JB> of the Reagan tax reductions and again from the tax-rate reductions
JB> enacted two years ago on capital gains, dividends and personal income.
JB> This brings us to the absurdity of static analysis, which assumes that
JB> changes in tax rates have little or no impact on our behavior. Think of
JB> it this way: If people's incomes were taxed at 100% on Mondays and a
JB> zero percentage rate on Tuesdays, how many people do you think would
JB> show up for work on Monday? Washington's static analysts, mired in their
JB> rigid, wrongheaded theories, would swear up and down that attendance
JB> would be the same on Mondays as it would be on Tuesdays.
JB> When Congress increased the capital gains tax levy in 1986, the so-
JB> called experts at the Joint Committee on Taxation estimated that this
JB> tax increase would increase capital gains revenues. Wrong. Tax receipts
JB> plummeted.
JB> By contrast, when President Clinton agreed with congressional
JB> Republicans in 1997 to cut the capital gains tax rate from 28% to 20%,
JB> critics wrung their hands, predicting revenues would drop and deficits
JB> would increase. In fact, revenues from capital gains increased
JB> dramatically.
JB> As a result of static analysis, revenue loss from tax cuts tends to be
JB> overstated, which makes it harder to enact tax cuts.
JB> To conclude, Mr. Chairman, the monstrosity of the tax code we have today
JB> has created a problem of monstrous proportions. And like every big
JB> problem, it requires a big solution. Fiddling around the margins of the
JB> tax code won't do the trick. A simpler, fairer flat tax will.
JB> We already know flat taxes work because they've been enacted in Hong
JB> Kong, Russia, Lithuania, Latvia, Estonia, Ukraine, Slovakia, Romania,
JB> Serbia and Georgia. Other nations are actively considering their own
JB> versions of a flat tax. What are we waiting for--especially now, when
JB> the rest of the world, including India and China, is determined to catch
JB> up with us?
JB> I want to thank this committee for allowing me to testify today, and I
JB> want to applaud you for your courage in taking on this very important
JB> issue.
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