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Request for Comments #3 (Benefits and problems with various tax reform proposals)
from Organization, Association or Government Group
Back to List
| Posted: Jun 07, 2005 |
By: National Association of State Retirement Administrators |
Subject: Comments on Behalf of the Following Organizations and Associations: NCSL, NASACT, NACo, USCM, NLC, IAFF, FOP, NAPO, IUPA, IBPO, IBCO, IAEP, AFT, NEA, AFSCME, SEIU, NAGE, NAN, NASRA, NCPERS, NCTR, NAGDCA GFOA, IPMA-HR, NPELRA
File: PPNTestimonytoTaxReformPanelFinal0.doc
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| Posted: Jun 08, 2005 |
By: Linda Goold |
Subject: Real Estate and Tax Reform
File: taxreformcommcomments.doc
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| Posted: Jun 10, 2005 |
By: Adam Smith Institute |
Subject: Voluntary compliance
Comment: We are a UK-based economics think-tank. In the course of your deliberations on the voluntary compliance system and the wider use of return-free initiatives, we would like to make some comments, pointing to difficulties that this has caused in the UK, and problems with our pay-as-you-earn system. However, your work on this issue came late to my notice and we cannot submit a memorandum until next week. Would this be acceptable?
Dr Eamonn Butler
Director
Adam Smith Institute
23 Great Smith Street
London SW1P 3BL
UK
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| Posted: Jun 10, 2005 |
By: Rachelle Bernstein |
Subject: NRF Comments On Tax Reform
File: NRFSubmissiontoPresidentsAdvisoryPanel.doc
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| Posted: Jun 10, 2005 |
By: Asia-Pacific Council of American Chambers of Commerce |
Subject: Taxation of Americans Working Overseas
File: FOURTHAPCACPostionPaper.doc
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| Posted: Jun 10, 2005 |
By: Cynthia L. Moore |
Subject: Value of State and Local Government Retirement Plans
File: LtrtoTaxReformPanel061005.doc
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| Posted: Jun 10, 2005 |
By: Congressman John Linder |
Subject: Answers to Questions about the FairTax
File: LinderStatementPresidentsTaxReformPanel.pdf
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| Posted: Jun 10, 2005 |
By: Software Finance & Tax Executives Council |
Subject: Comments
Comment: Attached, please find the comments of the Software Finance and Tax Executives Council.
File: SoFTECCommentsFinal.pdf
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| Posted: Jun 10, 2005 |
By: Congressman Michael C. Burgess (TX-26) |
Subject: Freedom Flat Tax Act
Comment: The Freedom Flat Tax Act of 2005
Submitted by
U.S. Representative Michael C. Burgess (TX-26)
1721 Longworth House Office Building
Washington, DC
June 10, 2005
I would like to thank President Bush for his leadership on tax reform, as well as the members of this panel for their service. I believe that this is one of the most important issues facing our nation today. I am pleased to have the opportunity to offer my Freedom Flat Tax proposal to the Tax Reform Panel for consideration.
I would first like to associate myself with former Majority Leader Armey's written comments, which he submitted to this panel during the May 12, 2005 hearing in Washington, DC.
In 1996, long before I even considered running for Congress, I picked up a copy of Dr. Armey's book and read it from cover to cover. At that time, I believed that it was a common sense proposal and I still believe that today.
I have enormous respect for Leader Armey and am grateful for his leadership on this issue. I am glad that he continues to champion for the flat tax because I believe that his expertise is invaluable to the debate.
Having said that, I would like to offer the Freedom Flat Tax Act (H.R. 1040 in the 109th Congress) to the panel for consideration. The Freedom Flat Tax Act is a modified version of the Armey-Shelby flat tax. I have included the text of the Freedom Flat Tax Act with my written comments for your review. Rather than describe my entire proposal, which is extremely similar to the Armey-Shelby Flat Tax, I would like to describe the major differences between the two proposals.
I believe that Mr. Stephen Moore, who testified before this panel on May 12, 2005, discussed the basic concept behind the Freedom Flat Tax Act of 2005. The largest difference between the Armey-Shelby Flat Tax and the Freedom Flat Tax Act is that my bill would create an optional flat tax system. It would leave it up to individual taxpayers to decide when to opt-into the flat tax.
The reason that this opt-in clause is so critical can be illustrated by the Tax Reform Act of 1986 (P.L. 99-514), which was the last time that the tax code has been reformed. As this panel knows, The Tax Reform Act of 1986 both broadened the tax base and lowered marginal rates. After its passage, people who had made financial decisions based on the tax laws of the time woke up one morning to discover that the rules had changed overnight. The sudden changes to the tax code made by the Tax Reform Act of 1986 had a significant negative impact on the energy and real estate sectors of the economy in Texas.
While I believe that the best tax system is one that does not encourage individuals to make financial decisions based on the tax code, our current system does just that and we need to recognize that fact as we make changes. I believe that it is fundamentally unfair to penalize people who have played by the rules by changing the rules in the middle of the game.
That is why the Freedom Flat Tax Act allows taxpayers to make a one-time, permanent election to the flat tax system. Taxpayers can either remain in the current income tax system, or they can opt into the new, streamlined and simplified flat tax system. It allows taxpayers who have bought a house with the assumption that they could deduct their home mortgage interest to decide if it would be to their financial advantage to jump to the flat tax. If it were me, I'd gladly give up my home mortgage interest deduction in order to opt into the pro-growth flat tax. But not everyone is the same.
Under the Freedom Flat Tax Act, the decision to move to a single rate system would be entirely up to the individual or business, not up to the government. If someone has constructed their domestic finances, or their business finances, in a way that maximizes earnings under the current federal income tax code, they would be allowed to stay within the code. We should not penalize taxpayers for doing what we encouraged them to do in the first place.
There would be no ability to move between the two systems. The Taxpayer Bill of Rights would, however, extend to flat tax electors in order to provide the "innocent spouse" protection that is provided in current law.
There are other minor differences, but the proposals are otherwise very similar in concept. For example, The Freedom Flat Tax Act contains inflation-adjusted numbers for the personal exemptions and the wording of the supermajority provision, which requires a supermajority of Congress to vote in order to increase the tax rate or change the tax structure, is different than the Armey-Shelby proposal.
In conclusion, I urge the panel to consider The Freedom Flat Tax Act, as well as the Armey-Shelby Flat Tax proposal. As Dr. Armey, Dr. Hall, Mr. Moore, and Mr. Forbes all discussed in their testimony to the panel, I believe that the flat tax has a lot to offer America.
File: FreedomFlatTaxActof2005.pdf
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| Posted: Jun 10, 2005 |
By: Tim Marx, Minnesota Housing Finance Agency |
Subject: Benefits of the tax code for housing
File: PresAdvisoryPanelTaxReformltr61005.pdf
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| Posted: Jun 10, 2005 |
By: Affordable Housing Tax Credit Coalition |
Subject: Tax Reform and the Low-Income Housing Tax Credit
File: AffordableHousingTaxCreditCoalitionComments.PDF
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| Posted: Jun 10, 2005 |
By: National Council of State Housing Agencies |
Subject: The Case for Protecting the Housing Credit and Bond Programs
File: NCSHATaxReformComments_6_10_05.doc
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| Posted: Jun 10, 2005 |
By: Ad Hoc Group of Organizations |
Subject: The Importance of Retaining the Successful Retirement Plans that Serve our Nation’s Educational, Non-Profit, Governmental, and Small Business Employees
Comment: Please see attached file
File: 0605taxpanellet1.doc
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| Posted: Jun 10, 2005 |
By: Erin Quinn |
Subject: Low Income Housing Tax Credit and Tax-Exempt Private Activity Bond programs
File: TaxReformPanelLetterKMSig0605.doc
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| Posted: Jun 13, 2005 |
By: Port of Tacoma |
Subject: harbor maintenance tax
File: HMTlettertoMackBreauxPanel.doc
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| Posted: Jun 27, 2005 |
By: Ryan Kingsly |
Subject: FairTax is not Fair
Comment: How Does NESARA Compare to the Fair Tax Act of 2003 (H.R. 25)?
Although NESARA (http://nesara.org/bill/index.htm) proposes replacing the income tax with a national retail sales tax, the NESARA and FairTax plans differ considerably.
FairTax taxes all retail sales events. That means all necessities of life—food, medicine and mandated expenses—all will be taxed. Such an approach is regressive. NESARA provides 20 classes of straightforward at-the-counter exemptions (NESARA, Part II, Section 5(C)).
To offset this violation of basic rights and regressive approach, FairTax proposes a monthly rebate to “qualified families” (FairTax, Title II, Sections 301–305). This action clearly voids some of the reasons for abolishing the income tax—the intrusion of government into our private lives and the continuation of the social welfare state. Americans have had enough of this administrative legal plunder mind set.
Qualified family eligibility is dependent upon an arbitrary administratively defined poverty level, with Health and Human Services defining that level (FairTax, Title II, Section 303). The government-by-administrative-agency nonsense continues. Worse yet, the Social Security Administration stays involved in the tax game because that agency has been delegated as the agency to mail the monthly rebate checks (FairTax, Title II, Section 304). No family member may be counted toward the rebate unless the family member applies for and receives a social security account number (FairTax, Title II, Section 302(b)(2)). So much for privacy and the end of that obnoxious number.
Furthermore, to remain qualified, families must register annually (FairTax, Title II, Section 302(d)). Fail to register every year and families lose their eligibility for receiving the rebates (FairTax, Title II, Section 302(f)).
Almost comically, if not so sad, FairTax excludes family members who are incarcerated, or will be incarcerated (FairTax, Title II, Section 302(l)). This is a strange concept. Apparently the entire reason for the rebate program is to negate the regressive effects of the tax on essentials of life, especially to those considered living below the so-called state-defined poverty level. Nobody needs to be a rocket scientist to know that many of the people who are incarcerated are people who live below the poverty level, and are often the breadwinners of the family. The same holds true for political prisoners—people who have been convicted of arbitrary statutory crimes.
Lastly, notice that the natural rights and essential purchases of only “qualified” families are acknowledged (FairTax, Title II, Section 302). The rest of America is evidently not qualified. Legal plunder continues.
Under FairTax, the federal government still will be in the social welfare business, handing out checks. Proponents of FairTax claim no exemptions are necessary because to do otherwise will promote special interests lobbying. Yet, those proponents turn right around and provide exemptions to so-called “qualified” families, instead of straightforward exemptions at the cash register. Such proposals allow for government noses to stay protruded into people’s lives. Everybody has a special interest in working, eating, housing, receiving medical care and buying insurance. What is so hard about exempting the essentials of life and simply getting government out of our private lives? The entire rebate process is repugnant and preposterous.
The question must also be asked, what are the administrative costs of this complicated rebate process, as opposed to simple, straightforward at-the-counter exemptions? Additionally, what are the administrative costs associated with the complicated system of credits provided by the bill (FairTax, Title II, Sections 201–207)?
Although the working class pays the sales tax, purchases made for business/trade purposes are exempt from the sales tax (FairTax, Title II, Section 102, 103(g)). Perhaps people can see why so many businesses, corporations, and trade associations are in favor of the bill! Not only are big business, that is, big contributors, relieved of the corporate income tax, capital gains taxes, depreciation schedules, and paperwork on employee withholding, those companies also will be subject to no national sales taxes on any business investments. Who is left with the burden of the national sales tax? The working class of America. Surprise! Surprise!
FairTax attempts to tax barter transactions (FairTax, Title II, Section 103(f)). Barter is not a commercial retail event and is not taxable. Barter is a like-for-like trade action between private parties and is not an event in commerce. FairTax will convert an honest transaction into a crime. Shades of the current Internal Revenue Code.
FairTax requires sellers to establish bank accounts (FairTax, Title II, Section 501(e)). As with the income tax, we smell a few unlawful seizures around the corner, as well as a few fishing expeditions by the taxing authorities. Under NESARA, sellers are liable to pay the tax. Period. That is all that is needed. Numerous sellers could make their deposits directly into a single national sales tax bank account opened by the government at each local bank much more efficiently than forcing ever seller to open and maintain a separate commercial bank account for their sales tax deposits. It is rare for anyone to have problems depositing money into a bank account; getting the money out is the usual difficulty.
In any case, bank accounts are irrelevant, nor should any person be coerced into opening a bank account. Forcing people to open bank accounts is a violation of the fundamental right to contract and not contract. So much for financial privacy and protection of rights!
FairTax requires sellers to post bond (FairTax, Title II, Section 501(g)). There is no reason for such nonsense.
Worse, FairTax requires all sellers to register with Uncle Sam (FairTax, Title II, Section 502). FairTax states that any seller who fails to register is not allowed to sell (FairTax, Title II, Section 502(e)). In other words, failing to register converts the normal business of selling into a crime! Again, so much for privacy. Instead, we have nothing but a clever disguise for State control and monitoring. Resistance against registration likely will be just as belligerent as with the current income tax.
Of course, because FairTax will tax service contracts, that essentially means all laborers and contractors must register with the state. Furthermore, taxing labor is a time bomb waiting to explode (please read the following sections).
NESARA proposes a national sales tax rate of 14%, equal to $14 on a taxable purchase of $100 for a total cost of $114. This is the usual method of calculating a sales tax—as an add-on. The FairTax national sales tax rate is 30%. That is a total cost of $130 for buying a $100 item. FairTax proponents claim an initial rate of 23%, somewhat deceptive because that rate is calculated by dividing the $30 tax by the total cost of $130.
FairTax also eliminates all payroll taxes including Social Security and Medicare (FairTax, Title I, Section 102) making the initial FairTax sales tax rate (FairTax, Title II, Section 101(b)) necessarily that much higher than the rate proposed by NESARA (NESARA, Part II, Section 5(A)). Still the NESARA proposed base rate of 14%, is less than the general revenue rate of 14.91% proposed by FairTax (FairTax, Title II, Section 101(b)(3)).
Although neither bill attempts to resolve the Social Security and Medicare mess, NESARA leaves the payroll taxes untouched. FairTax eliminates the payroll taxes, but employers still will have to report wages paid in order for employees to receive Social Security credits (FairTax, Title II, Section 903).
There is a subtler problem with the FairTax sales tax rate. FairTax declares an initial rate of 23% (FairTax, Title II, Section 101(b)(1)), but after 2003 the sales tax rate will be the sum of the declared general revenue rate (14.91%); the old age, survivors and disability insurance rate; and the hospital insurance rate (FairTax, Title II, Section 101(b)(2)). The first rate is currently 6.2% and the latter is 1.45%. In other words, after 2003, the national sales tax rate would be 22.56%. But notice that with an increase in any of those rates, the national sales tax rate also increases. With the current Social Security and Medicare mess, which Congress has repeatedly failed to adequately address, what do you think will happen to future national sales tax rates?
FairTax essentially places the burden of proof on all accused (FairTax, Title II, Section 506). That is, any person merely accused of failing to pay a tax will be guilty until proven innocent. As with the income tax, here we go again! Burden of proof must be on the government. Period. Worse, FairTax maintains one of the most invasive features of the current tyrannical income tax: the authority to summons, and to conduct examinations and audits (FairTax, Title II, Section 508).
NESARA provides a simple, straightforward administrative process in tax disputes. Under NESARA, should the National Tax Service (NTS) believe a tax has not been paid, the NTS merely prepares a statement of the alleged taxable activity and issues an Assessment/Preliminary Notice of Deficiency (NESARA, Part II, Section 7). That’s all that is needed and the burden of proof stays where it belongs—on the government. Should an alleged taxpayer desire to dispute the alleged tax, the alleged taxpayer can certainly introduce their books and records as evidence to quash the allegations, but nowhere does NESARA authorize the tyrannical practice of continuing the madness of issuing summonses and conducting examinations, audits and fishing expeditions. Such practices are tyranny and invasions of privacy.
FairTax states that government purchases are subject to the sales tax (FairTax, Title II, Section 102(a)(3), Section 703). That makes no sense. Every time the government buys something, it taxes itself, and pays itself the revenue? Such a ploy is a facade, only circulating currency in and out of government coiffures. There is no net effect of such a maneuver except added administrative costs. Why pay the cost of all that extra accounting and paperwork? Isn’t the national sales tax supposed to reduce paperwork and administrative costs? NESARA exempts all sales to the United States government (NESARA, Part II, Section 5(C)(1)).
FairTax allows for withholding of income for non-resident aliens (FairTax, Title II, Section 905). So much for the so-called abolishment of the personal income tax. Expect the same confusing arguments about vague terms such as gross income.
FairTax, H.R. 25, is a terrible start, and we can do better. Much better. NESARA not only provides fiscal policy reform, but monetary policy reform (NESARA, Part I). With NESARA, the purchasing power of the currency will stabilize. FairTax has no such provisions.
FairTax also provides no relief from current banking laws (NESARA, Part I, Section 7).
Both FairTax and NESARA are designed to be revenue neutral. That means neither bill changes the current income and outgo of revenues collected. Other than that similarity, the differences between NESARA and FairTax are obvious.
FairTax addresses only symptoms, not root causes. The bill continues the intrusion of government into our private lives. FairTax is regressive in nature because not all households will qualify for rebates, and the bill contains no provisions to resolve the root problem, an unsound monetary system (NESARA, Part I). Tax reform is a good start, but ultimately futile without monetary reform. NESARA solves both problems.
NESARA is built upon the foundations of life, liberty and property, does not unduly tax the necessities of life and does not support intrusions into private lives. NESARA was written from within the grass roots of America, not by special interests. That’s why NESARA will work. FairTax is not the answer.
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This response to FairTax is taken from the NESARA Institute: http://nesara.org/comparisons/hr_25.htm
A copy of the National Economic Stabilization and Recovery Act draft proposal can be found here: http://nesara.org/bill/index.htm
Discussion regarding NESARA and other tax and monetary reform proposals can be found here:
http://www.thewordfiles.com/nesara
Sincerely,
Ryan Kingsly
Administrator
NESARA Discussion Board
http://www.thewordfiles.com/nesara
File: FairTaxvsNESARA.doc
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| Posted: Jun 27, 2005 |
By: NESARA Discussion Board |
Subject: Flat Tax vs NESARA
Comment: The Flat Tax vs The National Economic Stabilization and Recovery Act (NESARA)
http://nesara.org/comparisons/flat_tax.htm
Practically speaking, the flat tax solves few problems.
Currently many Americans pay as much as 33% or more in cumulative taxes because tax rates vary for each individual based on income brackets, exemptions and a complex system of tax codes. The flat tax proposal would create a single flat rate tax fixed at 17% that would be the same rate for all Americans. Most Americans would see this as a reduction in tax rate as the national average is currently 22%.
In summary:
- Individuals would be initially taxed at a flat rate of 17%.
- Somewhat reduces the tax rate for many Americans.
- Eliminates double taxation.
- Simplifies tax preparation. Corporations and individuals would be able to file their returns on a postcard-size tax form.
- Encourages savings as individuals would no longer pay tax on income from savings, capital gains, and interest income.
- Reduces IRS staff and overhead and simplifies tax preparation.
- Corporations would be allowed to expense all their investments—no more complex depreciations.
- Taxable income is redefined as total income minus savings and investments minus a threshold income. The typical family threshold income is $36,800.
- Under this plan nearly half of all households would pay no federal income tax.
- Greatly reduces the cost of compliance by an estimated 90%.
Disadvantages:
- Would not eliminate the IRS.
- Would not eliminate the paper work or paper trails or intrusions on privacy.
- Eliminates deductions or credits for charitable donations.
- Corporations could deduct all wages and salaries, but benefits like social security, health or life insurance would no longer be tax exempt.
- Corporations would no longer be able to deduct interest payments on debt.
- There’s still paper work involved, many hours of unproductive labor to support the process, there’s still a rogue IRS on the loose, there is still intrusion of privacy, there is still taxation on production rather than consumption, and with a flat tax there is still an unsound money system. The Flat Tax supposedly reduces the unproductive labor and paper work involved with compliance, but in the end, the Flat Tax is still an immoral and intrusive income tax.
The Flat Tax provides no provisions to resolve the root problem, an unsound money system. Tax reform is a good start, but ultimately futile without monetary reform. NESARA solves both problems.
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This response to the Flat Tax is taken from the NESARA Institute: http://nesara.org/comparisons/flat_tax.htm
A copy of the National Economic Stabilization and Recovery Act draft proposal can be found here: http://nesara.org/bill/index.htm
Discussion regarding NESARA and other tax and monetary reform proposals can be found here:
http://www.thewordfiles.com/nesara
Sincerely,
Ryan Kingsly
Administrator
NESARA Discussion Board
http://www.thewordfiles.com/nesara
File: FlatTaxvsNESARA.doc
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| Posted: Jul 12, 2005 |
By: Center for American Progress |
File: CenterforAmericanProgress.pdf
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| Posted: Jul 12, 2005 |
By: America's Health Insurance Plan |
File: AmericasHealthInsurancePlan.pdf
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| Posted: Jul 12, 2005 |
By: Colorado Housing and Finance Authority |
File: ColoradoHousingandFinanceAuthority.pdf
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| Posted: Jul 12, 2005 |
By: National Association of Affordable Housing Lenders |
File: NationalAssociationofAffordableHousingLenders.pdf
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| Posted: Jul 12, 2005 |
By: Arkansas Development Finance Authority |
File: ArkansasDevelopmentFinanceAuthority.pdf
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| Posted: Jul 12, 2005 |
By: North Carolina Housing Finance Agency |
File: NorthCarolinaHousingFinanceAgency.pdf
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| Posted: Jul 12, 2005 |
By: Alabama Housing Finance Authority |
File: AlabamaHousingFinanceAuthority.pdf
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| Posted: Aug 28, 2005 |
By: William T. Sellers |
Subject: Real Estate
Comment: As the director of an Idaho non-profit, concerned with helping organize & find capital for high-technology startups using technology transferred from the Idaho National Lab, I would urge the panel to take a deep, critical look at real estate.
Nothing in America has garnered the extent of what Warren Buffett calls, "mal-investement" than real estate---both residential, multi-family & commercial. If we have a real estate bust, from this egregious tax-induced real estate addiction, we will look back and wonder why we didn't see it coming.
I urge the panel to apply a strict means test AND cap to residential real estate mortgage-interest deductibility. Way, way way too much of our capital has been wasted in this orgy of consumption!
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| Posted: Sep 26, 2005 |
By: Eli Lilly |
File: TerritorialSystemWhitePaper.doc
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| Posted: Sep 26, 2005 |
By: Eli Lilly |
File: CoverLetterTerritorialPaper.pdf
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