President's Advisory Panel on Federal Tax Reform - Federal Tax Reform

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Request for Comments #2 (Specific proposals to reform the tax code)
from Individual Group

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Posted: Apr 24, 2005

By: John Hone

Comment: Everyone should pay their fair share, no one rides for free. That includes
Individuals and Corporations alike. The current tax system is unfair and
needs to be changed as soon as possible. Just decide what is fair for
everyone (5, 10, 15, 20%). Don't penalize people for doing well or trying
to get ahead. And lastly keep it simple.

Posted: Apr 24, 2005

By: NULL

Comment: Hello,

Please work on correcting and simplifying the Federal Tax Code. My
suggestion is to create a flat tax system that will collect taxes from all
except of course the very low income and poor. With all persons, businesses
and corporations paying their fair share, the percentage of tax required
would be low but the government would collect enough revenues to fund all
the requirements to run and protect this country.

The flat tax could be a national sales tax system or just a pure flat tax
percentage base on the amount of income earned. I am not sure exactly what
would work but I do know that the current system is outdated and the middle
class bears the highest burden.

Please push hard for reform and allow all of us Americans to not be Taxed to
Death!

Thank you for your time and consideration.

Sincerely,

Mark D. Williams
635 Via Cumbres
Fallbrook, California 92028

Posted: Apr 24, 2005

By: NULL

Comment: Start by looking back over 90 years in our history to see why the 16th
Amendment to the Consitution was passed. The PRIMARY reason was wealth
redistribution. All other forms of taxes were found to be regressive
which was found to hurt the economy. Nobody was asked to pay any tax if
their income was less than TWICE the average income. The top bracket
started at $500,000 when the average income was $1000. In our nations
history, the top bracket has naver been lower than it is today (without
correcting for inflation).

If today's brackets were set with the same approach as was initially
used, nobody making less than $50,000 would pay income tax. There would
be at least 6 tax brackets with each bracket increasing by 5 to 10%. The
top bracket would start at about $10,000,000.

Wealth redistribution is needed now more than ever. Twenty five years
ago, top CEOs made as much in a month as middle class workers made in a
year. Today, top CEOs make much more in a month than middle class
workers make in a LIFETIME.

Tax increases on the rich in the early 90's by Bush and Clinton were
found to help the economy. They also were found to be an excellent
investment for the rich as the rich got much richer while the middle
class saw only modest improvements.

Thanks for the chance to speak out,

Bob Gould
Palm Desert, Ca.

Posted: Apr 24, 2005

By: Claude Cahen

Comment: Gentlemen....
Since the writer of the LA Times wrote in her collumn
that you could (possibly) be open and receptive to
some ideas here is my "2 cents comment"
regarding your endeavour of changing the tax code....

Let me start by congratulating all of you... Indeed
by tackling this problem of enormous complexity you
may create more than a reform but instead you really
may start a real "quiet" revolution which will
reverbate all over the world.....
Let me surmise my position:
The so- called "Income Tax" is certainly the most
unfair of all the taxation systems because it taxes
the "Human labor"... Labor in itself is the opposite
of comfort and relaxation... Depending of one's line
of work ,which can be more or less demanding, the
experience can be more or less (physically and
psychologically) taxing on the individual performing
his line of duty... Financially taxing the product of
this labor is the equivalent of kicking an already
knock down adversary..... It's basically "UNFAIR". Its
the equivalent of the famous "Double Whammy".
..... I realized , reading different publications
that nobody comes with the most important figure:
What is the percentage of "Direct taxes " compared
to "Indirect taxes " in the Federal budget ?
Only when this question will be properly
answered shall we be able to have the proper basis for
an open discussion: "Is this (Evil) income tax
necessary to fill the vault of the federal
government?"
Or, can we get by , by resting only on a
consumption tax?
In my view, this is very possible...And feasable!
For exemple in France where I studied economy the
direct income tax represented only 4% of the global
budget of the Nation .... In other words 96% of the
budget was covered by the "Added Value Tax" and other
excise taxes.... Nobody knew it! The Socialist
Government did every it could to avoid the
dissemination of such an information... The reason
rests on the fact that the "Income Tax" has a
political function : It's an EGALITARIAN tool which
has nothing to do with the economic needs of a
country but which exist just to make the poors believe
that there is a "Social Equity" guaranteed and
enforced by the Government. The income tax system
becomes an electoral tool in the hand of the
government. To gain more voices on electoral days ,
the government increases the income tax on the
"Richs".
This indeed is pure demagogery , but it works well
for the politicians who want to stay in power...And
this is part of the political game in Western Europe,
more specifically in France.... The result of this
situation ( This added to many more, which we cannot
adress in this forum) is a complete stagnation of the
European economy, a huge unemployment and a total
demoralisation of the Nation....
Historically speaking : The system of direct
taxation of the product of the labor was instaured in
the U. S. right after World War One, and started as a
" Voluntary Tax" Paid only by the most afluent
citizens....
Wouldn't it be the time to reverse back to this
pre-war era, and convert to an indirect system of
taxation?
It seems morally justified, econnomically viable and
politically doable.
The time of income tax has passed ,it's now time
to literally "Revolutionise" the system... A simple
change in the rate of taxation will NOT do it.... The
U.S. has to take a giant step and indeed will lead
the world in a general revision of the different tax
codes, all over the world.
Again :American true democracy will lead the
world... BY EXEMPLE and not by FORCE. It will be a
huge move!
A drastic revision and simplification of the
US tax code, leading toward the suppression of the
totally unfair "Income TAX" would probably remain in
history as the most significant advance and democratic
move of the last one hundred years.

Thanks for your attention
Claude R. Cahen MD

Best regards
CLAUDE R. CAHEN MD

Posted: Apr 24, 2005

By: Tim Gebhardt

Comment: I suggest that the United States gets rid of income taxes. It's too
easy for those with the time and money to figure out how to pay less
into the system than those that don't have the time and money to
manipulate the system.

I propose that the United States implement a national sales tax. I
believe that this has a few advantages:

1. Wealthy people purchase more at higher prices, so the wealthy would
pay more taxes than those that don't have as much.

2. Refunds could be given to those at or below the poverty level so they
don't pay much, if any, taxes.

3. It is easy for Americans to see how much they are being taxed than
the current system. It is also easy to fight for lower taxes.

4. I believe that it would encourage home ownership because those that
wish to own a home could save faster for a down payment on a home.
Those that wish to own their own home could put money in savings or
invest it and it would accumulate interest faster if the interest income
were taxed. The government would collect its taxes eventually when the
buyer(s) purchase the home, so everyone comes out a winner.

-Tim Gebhardt
tim@gebhardtcomputing.com

Posted: Apr 24, 2005

By: Pete Chiboucas

Comment: Hi,

Please change the maximum child tax credit to 2.

As you assess the current tax situation please consider this. People are
having children when they can't afford them. This puts a burden on society
in so many ways. All of us are expected to fund schools for these children-
even when some of us have personally chosen not to have children due to our
poor economic situation yet we end up paying for other peoples children.
And then these people are getting a tax break for having these children.
This is not good. And it really irks me. We need to encourage people to
keep their families to 1 or 2 children and one way to address this is to
keep the maximum tax credit to 2 children.

Thank you for considering this.

Posted: Apr 24, 2005

By: rogelio reyes

Comment: I am in agreement to most of the suggestions coming from the Citizens for
Tax Justice. That is 2 tax brackets of 15% for individual income of below
$90,000 and $180,000 for couples. 28% for incomes above those levels.

Writeoffs for charitable contributions up to 50% percent of total income,
medical and health expenses not covered by insurance, and pre-school to 6th
grade education espenses including day care would be allowed. Mortgage
interest payments will not be allowed. Additional 15% percent of total
income allowable writeoff for charitable contributions specific to education

and/or public medical/health assistance.

Rogelio Reyes, Jr.
Simi Valley, CA

Posted: Apr 24, 2005

By: John Mitchell

Comment: 4/22/05

Presidents Advisory Panel

I would like to weigh-in for the middle class on tax
reform as serious defects exist and serious threats to
Americans are being proposed.

1. No flat tax or VAT tax, as both of these are
regressive taxes requiring those who make the least to
pay the highest percentage of their disposal income on
taxes.

2. Fix "alternate minimum" tax to restore its
original purpose and not an extra burden on the middle
class. It should be indexed to avoid future problems.

3. Extend the IRC 125 rule to retired people so
that they too may pay their medical benefits pre tax.
Require pension funds to provide this feature.

John Mitchell

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Posted: Apr 24, 2005

By: Stephen Cole

Comment: Kudos to the panel for tackling this thorny issue. You will find that each
and every deduction, credit and entitlement has its constituency and if you
propose to eliminate or curtail these exceptions to universal taxation
you'll have EVERYONE up in arms. Of course I'm not telling you anything you
don't already know.

I would suggest that you have an opportunity here to make the US far more
competitive globally by making our tax system more efficient. Get rid of
ALL deductions, credits, entitlements, perks, etc., including Pres. Bush's
twin sacred cows: Charitable Contributions and Mortgage Interest Deductions.
Get rid of them ALL!

Replace the current system with a combination of a flat tax and a VAT,
scaled to not hammer the poorest and most destitute among us. Get rid of
the CPA's, lawyers, lobbyists and political greenmail that has perverted our
political-economic-budgetary process.

In your report, you have the opportunity to place the US on a path to a
sustainable economic model for the 21st century.

Best wishes and blessings,

Stephen Cole

A concerned citizen.

Posted: Apr 24, 2005

By: David

Comment:

I would propose having higher tax rates the wealthier you are, as defined by
some y=mx+b curve that rises exponentially and steeply for the upper 20%
wealthiest individuals. And there is no reason why the richest 5% of our
country shouldn't have up to 45% of their income taxed when one really looks
at how that disposable income is spent and what common good it could be
rechanneled to. Greed will be the downfall of this nation otherwise.

I would propose at minimum 5 tax brackets roughly along these lines,
appropriate for the % of income that is spent on basic needs vs. disposable
income:

10-15% for household income level $40,000 or less and above poverty level
15-20% for $41-80,000
25%-30% for $81,000-$200K
35%-40% for 201K to 1M
45% for over $1M

Additionally minimum wage is in desperate need of a dramatic increase.

The most important initiative however is to close tax loop holes, whether
that be by simplification or more laws, I don't know. But the corporate
stranglehold on the tax system is despicable and more tax dollars should be
channeled to countering private tax accountants working for corporations.

Dave English
Los Angles, CA

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Posted: Apr 24, 2005

By: Mike Burton

Comment: I read in the LA Times today that you are soliticiting comments on
proposed tax reform. This is a great idea, in fact, I think all branches
of the government should do this on a permanent basis. Here is what I
would suggest:

1 Simplify the income tax code. There should be a small number of tax
brackets (at most 4). All income should be taxed at the same rate (no
special rates for investment income, but see below where I suggest
eliminating the corporate profits tax). The current deductions are mainly
OK (they should be state and local taxes, medical expenses, charitable
contributions, mortgage interest (one home only, not two), employee
business expenses). That should be it. The other several hundred pages of
the income tax code should go. There should be absolutely no tax
shelters. US citizens who put their money in an offshore bank should be
taxed as if the money were in a US bank.

2 There should be absolutely no tax subsidies for anything. If the
government wants to support something it should appropriate the money
directly.

3 The exemption system should be changed. The exemption for a
dependent child should be raised to the average cost of maintaining a
dependent child, something like $10,000 per year. There should be no
exemption for the tax-paying adult.

4 The lowest income that is subject to income tax should be raised
to about #20,000 per year per adult in the household. People with very low
incomes already have to make social security contributions; that tax
burden alone is very difficult for them to pay.

4 After eliminating all of the ways in which rich people can legally
avoid paying taxes, we should, in exchange, lower the top income tax
bracket to something like 25%.

5 Rather than taxing corporate profits we should tax the income that
comes from those profits when it is paid to somebody as dividends, capital
gains, or interest (at the same tax rate as anybody else). If it is
reinvested in the business it should not be taxed.

6 After lowering the overall income tax rate, we should make up the
difference through a variety of means, including possibly:

higher taxes on alcoholic beverages

a value added tax

A graduated tax on cars and trucks that get poor gas mileage, with
the rate increasing proportionally to how low the gas mileage is.

a higher gasoline tax (I know this will be unpopular, but in the
long run it will be necessary to our survival

7 Reinstate the estate tax. Stop calling it a death tax. It is not
that, most people who die don't have to pay a tax, the tax comes
only if you try to pass on an estate. I would exempt all estates
under $5 million and have the tax graduated something like this:P

5-10 million 5%
10-20 million 7.5%
2--50 million 12.5%
50-100 million 20%
100 -500 million 25%
500 million + 30%

increased penalties for tax cheaters and increase spending on tax
enforcement (this has been shown to be cost effective).

Mike Burton
10 Morning Sun
Irvine, CA 92603

Posted: Apr 24, 2005

By: Emily Reeves

Comment: At some time in the past, even people who didn't itemize could deduct about
$100 for charitable gifts. I think this encouraged young people to think
about helping others.
Let's keep the income tax, but simplify it. The Cato Institute is a
beginning, although I would add a higher rate for income over $300,000.
Incomes for CEOs (ref. Saturday, April 13, 2005 Los Anglees Times, B18),
sports, movie and pop music stars are obscene, and ordinary people resent
those salaries. There should be a negative tax for the working poor.
Thank you for letting me contribute,
. emilyreeves@cox.net

Posted: Apr 24, 2005

By: gabriele goldaper

Comment: Utilizing a flat tax on all income at a rate established each year based on
the budget adopted by Congress
would be fair, uncomplicated and help control government spending. The only
exception would be for the tax to be applicable over some poverty line
minimum.
In addition inheritance taxes should be increased with an allowance for
farmers and small business to pay over some period of time.
Keep it simple!
Arthur Schwartz, Los Angeles, California

Posted: Apr 24, 2005

By: Jim Mc Carthy

Comment: My recommendations.

A flat tax of 15 - 17% on all income above a fixed amount to protect low
income earners. Either no deductions at all or just charitable. Mortgage
deductions aren't as important to peoples net income as advertised. The key
is that everyone, except for low income people, would pay taxes, eliminating
stories like those people earning huge incomes who pay no taxes, not even
AMT.

Jim McCarthy

Posted: Apr 24, 2005

By: Gary Treadwell

Comment: To the President's Advisory Panel on Tax,

Today I reviewed the suggestions identified in the LA Times Newspaper
concerning tax process ideas.

I to have considered this item and the follow recommendations are for your
review:

Tax Base - Flat Tax for all taxpayers, rate to be established annually based
on Federal Operating budget requirements.

Cost benefits:

IRS could decrease head count and remove the complexity of annual return
process by simple flat % tax.

Less audits would be required as less errors made by common citizen such a
myself (audit in 2001 due to miscalculation caused by misinterpretation of
rules by IRS and myself).

Would enhance cost control on Federal spending, an operating budget would
have to be prepared each year and adhered to. This is no different than the
public business sector in which a plan is made and adhered to or the
business go bankrupt.

Public Concerns:

Low income folks will have to pay the same portion as a high income person,
that is reasonable all must share in there personal responsibility of
supporting our government.

If the Peoples voice is that they want to support low income family and
other Social programs then buy all mean support the programs. However these
programs need to be considered and budgeted for first at the time of Federal
Operation budget development and integrated into the budget. With this type
of flat tax % ratio the government would be able to annual adjust the tax
base to the required level and promptly notify all citizens so that they can
pay the correct amounts of money to the government monthly.

The result Federal balance budget, low income and other Social programs
supported, and the government is doing what the people want.

Good luck on your task,

Gary S. Treadwell
ztread@msn.com

Posted: Apr 24, 2005

By: NULL

Comment: You do not want to hear this. Yes the current tax system is complex, yet
enforcing it with real support from congressional members is the significant
problem. Congressional members who would come out with support of the IRS
would not get elected. The following are a few simple solutions.
UNDERGROUND ECOMOMY: If everybody paid their fair share we would not be in
so much trouble. The underground economy is rampart. Not only the new
immigrants coming into this country but those born here. We need to capture
payments for services, rents, interest, commissions, fees, requiring
specific documentation in order for a taxpayer to be able to claim a
deduction. Specific employment agreements for W-2 employees, with canceled
checks in payment and all the payroll records that are normal. Specific non
employee agreement with the same. If a taxpayer does not have these records
they do not get the deduction, period. Condense and make the 10 common law
rules of who is an employee easier and specific. Problem areas: Attorneys
(generally congress members are a part of this group) regular and trust
account payments (Project Esquire), construction industry, real estate
transactions, areas of 1099 issuance. The IRS could carryout quick and
short audits of payments from company records without going into full fledge
audits and quickly determine compliance. I have more but your attention is
needed.
SOCIAL SECURITY: When you review the history of Social Security monies have
been taken from the funds for other government uses. This money needs to be
paid back and with normal interest. In addition, the Federal Government
needs to convert the retirement system they created for themselves which is
unfair to the people they represent (IT IS LIKE WE ARE BEING RIPPED OFF) to
the social security system the people have to work so hard to receive a
measly return. Somebody who works for a company or several companies paying
into the social security system over their life do not get 100% of their
salary. WHAT IS WRONG HERE?
In addition, why do people who never worked a day in their life in this
country get social security in some form. Why do children of these elderly
social security recipients never working here get a salary from Social
Services for taking care of them? I have seen this throughout 30 years of
being a CPA. Years ago before phase out of exemptions, an Anesthesiologist
making $500,000.00 did not claim his mother as a dependent because she would
not be able to collect social security which she was sending back to her
native country and his wife would not get a salary for taking care of the
mother in their mansion.
STUDENT LOANS AND GRANTS: Wealthy parents each making 6 figures did not
claim their children on their tax return, instead the children who received
a minimum salary from one of their parents businesses below the tax return
filing requirement claimed a address of a relative and themselves on their
own tax return, and when they applied for grants, etc., they did not have to
provide information from their 6 figure parents. A problem here is that
those that have a strong religious background and morals end up paying while
the standard of living of these 6 figure people continues to expand.

I have been a practicing CPA for 30 years and the above is just the surface.
I firmly believe congress is aware of these things and were they to stand up
for what is right they would not be elected. Robert L. Harrison, CPA can be
reached at the E-mail address from this E-mail, but be clear who you are or
you will be deleted. Thanks for letting this go into one ear.

Posted: Apr 24, 2005

By: MAR DOMINGUEZ

Comment: tax code should be simple. flat tax is good idea and should be tied to all
income level. tax should be as percentage of income. percentage should be
proportional to the income whether individual or corporation - as income go
up, tax percentage should increase. range of income to be taxed should be
narrow and the percent allocated in small portion. use a 45 degree curve,
x-axis as income and y-axis as percentage both from zero. eliminate the
current system where the tax burden falls on the majority of middle and low
income group. loopholes used by the rich and corporations accounting not
readily available to the majority to be eliminated. as saving cost, filing
tax every year should be eliminated as tax will taken automatically as
income is dispersed. no more bureaucratic internal revenue except for those
as needed and the complicated tax code. imagine the trillions that can be
saved.

Posted: Apr 24, 2005

By: Richard Stone

Comment: Dear Panel Members:

Our recommendation is for a VAT. This makes for a very simple "across the
board "
IRS income tax collection procedure. In addition, VAT is a tax collection
procedure
where we all pay.

If not the VAT system, then a "flat income tax" would be our second
suggestion.

Thank you and good luck!!

The Stones

Posted: Apr 24, 2005

By: NULL

Comment: Flat tax
Is the best idea. For example if the rate were 20% for all and I had income
of $1,000,000 versus someone else's $100,000, I would pay $200,000 in cash
to the treasury VS their $20,000. Help me here, is this not progressive,
producing ten times more actual spendable dollars? Think in cash not
percentages, otherwise it is punitive not progressive. I never inherited a
dime and built businesses employing several hundred people. This is a bad
thing and should be punished by a regressive higher tax rate? The same
rationale applies to the AMT.

Consumption tax or VAT.
I am 70 years old and I already paid my taxes as I made my money. I would
like to enjoy the fruits of my hard work and spend my "after tax" dollars
with out paying a second time for the same thing. Eliminate the "death tax"
for the same reason . Any income I make now or in the future, of course,
would be taxed, but only once.

The mortgage interest deduction is as sacred as Social Security. Eliminate
it and millions of people could not afford to stay in their homes.

Posted: Apr 24, 2005

By: Aaron Starr

Comment: President's Advisory Panel on Federal Tax Reform:

Rather than taxing individuals and corporations directly, why not instead
tax each state government on a percentage of their tax receipts? Each state
can decide for itself how to tax its residents, including how progressive
the tax rates should be.

Aaron Starr

Certified Public Accountant

Simi Valley, California

Posted: Apr 24, 2005

By: NULL

Comment: Dear Presidential Advisory Panel on Tax Reform,

I was so happy to read in the Los Angeles Times this Sunday morning that the
U.S. government would like to receive my comments about our federal taxes.
I have long wanted to give my opinion on this matter and have thought about
this at some length.

Firstly, what is fair? To everyone? I think equal tax rates are fair. A
flat tax with no exemptions and no deductions is fair. Why should someone
married be taxed differently then someone who is single? Why should a
couple with children be taxed differently then a couple without? Why should
someone who owns a house be taxed differently then someone without a home?
Why should one person be taxed 15% while the next person pays 28%? I've
always not understood how these laws and rules came about, but they just
don't seem quite fair.

Secondly, the total budgeted spending needs divided by the amount of
earnings of all wage earners will yield the flat rate tax percent to be
applied.

I appreciate this opportunity to give you my opinion on this very important
matter. I hope you will succeed in changing our government's taxing laws
for the better.

Best Regards,
Michele Deutsch

Posted: Apr 24, 2005

By: NULL

Comment: I believe that a Flat rate tax on all income of 10% below $100,000 and 20%
over $100,000 with no deductions would be fair to everyone.

Theodore Alan Nichols
Nvtheodore@aol.com

Posted: Apr 24, 2005

By: NULL

Comment: Robert M. Gordon

14851 Jeffrey Road, #22

Irvine, California 92618-8022

Voice: 949-552-7613 Email: capmNemo@AOL.com Fax: 949-552-7611

Another modest proposal

(with apologies to Jonathan Swift)

It is clear from all that is (and is not) happening in the
capitols of the country, from the words the Congress and of the president
of the United States that the matter of providing monies for the operation
of government is of great, if not overriding, concern. Although much of the
talk is about various kinds of taxes, it is clear from the emphasis placed
upon it that tax on income occupies the central role in the oratory of those
already in office (and those seeking to obtain office).

I suggest that emphasis on the income tax, graduated or not,
progressive or not, and reliance on it, prevents us from consideration of
alternative ways of raising revenues for the operation of government. In
particular, so many complain that the income tax is neither fair nor
equitable (I believe those complaints are legitimate). Because of these
complaints, it is worth considering alternatives about which the number of
such complaints might be lowered to some irreducible minimum. In addition,
the codes for determining who pays income tax, and how much should be paid,
are virtually opaque: I have been told by a CPA (who used to "do" my taxes)
that there might not be a single individual in the United States who can
honestly claim to understand ever word in the codes with which his practice
is concerned.

I intend to describe a substitute for the income tax, a
substitute that is likely to be deemed fair and equitable by everyone who
must pay it. (However, there will be many who will object to the substitute
for reasons that have nothing to do with fairness or equity.) Indeed, I
suggest that the substitute may/can eliminate the need for every other kind
of tax now imposed.

Even though the federal tax codes provide for what is called
income averaging, so that certain classes of taxpayers who might find
themselves the beneficiaries of so-called windfalls - for example, writers -
don't have to pay at the higher rates compelled by the magnitude of their
windfalls, the number of such beneficiaries is quite small, a miniscule
portion of the taxpaying population.

But the lack of fairness and equity in the federal tax code is
seen in other ways by a large portion of the taxpaying population. For
example, to calculate their taxable income, people who own houses -- or the
mortgages on them - are entitled to deduct from their gross income the taxes
and interest they pay on their homes/mortgages. But renters, whose rent is
determined in part by the amount of tax and mortgage interest paid by the
owner of the rental property, are not allowed to claim the tax and interest
portion of their rent as a deduction. In determining the amount of his
taxable income, the owner deducts from his gross income those same taxes and
interest payments; in other words, for tax purposes, for the owner, it makes
no difference whether he or his tenant pays the taxes and the interest.
Renters, it is clear, are discriminated against by the present rules for
income taxation.

In addition, I suggest that income tax is a short-term
partial-solution to the problem of raising revenue. In addition to fairness
and equity, I claim that the substitute I will describe looks at revenue
raising in the long term.

The Proposal

I propose that we impose a tax on all assets.

No one - I repeat, no one - shall be exempt from paying tax on
the assets over which he has control. Individuals (irrespective of their
age); corporate bodies, whether for profit of not-for-profit...all will pay
the asset tax.

Everyone who pays the tax pays at the same rate. For example,
so that the arithmetic in this paper is easier to deal with, suppose that
the rate for federal taxpayers is 1/10th of 1%. Then, Bill Gates, who might
have assets of $9 billion at tax time, would owe $9 million; Peter Ransome,
whose assets amount to only $57,000 (equity in his home, his 1993 Plymouth,
furnishings of his home, etc.), paying as the same rate, would owe $57.00.
The bank that holds the $109,236 balance of Ransome's mortgage would pay
$109.24 for that asset.

The Ford Foundation, whose assets may amount to some $14
billion, would pay the federal government $14 million.

Since the valuation of all the assets in the U.S. have been
estimated to amount to some $300 trillion, the federal revenues from this
one tax would be $300 billion.

If the asset tax were to be used to raise all the revenue for
the federal government in 1998, or 1999, the rate of taxation would have to
be between 0.4% and 0.5%. I repeat: everybody pays.

The tax rate for state governments would be considerably
smaller. Suppose, for example, that the valuation of assets in California
were $75 trillion. Since, in 1992, the state is looking for approximately
$50 billion, it could set the tax rate at 0.067 of 1%.

In passing, I note that we already collect taxes on some assets,
for example, on real property improvements. For a second example, many
state governments determine registration fees for motor vehicles on their
presumed valuation.

Much additional work needs to be done to make more precise what it is I am
proposing. I believe, however, that such work needs to be done by our
elected representatives as well as by others whose lives are to be affected:
taxpayers (in general), appraisers, tax collectors, etc. The proposal is
exactly the kind of thing that deserves much public scrutiny, thought and
discussion over a decent interval of time.

NOTE

I have not considered it appropriate to discuss here how to
determine the amount of tax revenue a taxing agency should be allowed to
collect. That is an important topic; it deserves treatment all by itself.

Revised 2 February2002

RMG/Asset tax2

Posted: Apr 24, 2005

By: Al Kubera

Comment:
----- Original Message -----
From: "Al Kubera"
To:
Sent: Sunday, April 24, 2005 11:49 AM
Subject: tax reform

> My tax reform proposal is to tax gross income on a progressive scale.
>
> Eliminate ALL deductions.
>
> Tax no income for singles who gross $25000 or less and couples $50000 or
> less.
>
> The progressive scale should be adequate to meet ALL government
> expenses,including the war in Iraq,
> and be adjusted annually to insure a budget balance.
>
> Al Kubera
> Orange, CA.
>

Posted: Apr 24, 2005

By: John Baker

Comment:
Dear Sir or Madam:

In early 2004, I came up with the idea of transforming my small business - a
Schedule C sole proprietorship to an LLC and to elect Subchapter S status in
order to pay less payroll (self employment) tax by paying myself a "fair"
salary and allowing the remainder of my income to flow to the bottom line
(which is treated as a distribution for S Corporations and, therefore, not
subject to payroll tax. I formed an LLC by the deadline (March 15) for the
tax year 2004. I attempted to vet this with the IRS from March 2004 to June
2004 to determine what a "reasonable" amount of compensation would be for a
business like mine. To my surprise, there seem to be no hard rules. I
spoke with a number of people at the IRS including the tax payers advocate's
office. I got varying responses and I was left confused and bewildered.
Literally no one could clearly articulate what the rule would be as it
applies to a small business owner in my situation. I threw out some amounts
for what I would consider a "fair" salary for my type of business and no one
would (or could) tell me if that was "reasonable". I was amazed. With a
tax code that has millions of tedious little rules, how could something this
big be left out? Literally, no one could give me any idea what a
"reasonable" salary would be for my type of business. In fact, several (but
not all) of the IRS people with whom I spoke warned me against employing
this strategy. They indicated that I would be opening myself up for audit
and potential interest and penalties. The court cases I could find also
provided very little useful guidance on the matter. They obviously are ad
hoc case by case rulings each with special circumstances related to a
particular case. The only thing I could ascertain from them is that paying
oneself no salary is not a good idea - which commonsense had already told
me. To make a long story short, I dropped this tax savings idea based on
the feedback I got from IRS employees (and cancelled my LLC and subchapter S
Corporation) for fear that I might be hit with an audit and end up paying
substantial interest and penalties if I adopted this tax saving strategy.
In my line of work, I have seen many other small business people endure the
wrath of the IRS interest and penalties, and believe me, I have no desire to
get into that sort of mess.

Fast forward to October 8, 2004. I was watching the Vice Presidential
debate on TV. I sat straight up in my chair as Vice President Dick Cheney
described that Vice Presidential candidate John Edwards had employed exactly
the same type of tax savings strategy for his single member LLC organized as
a subchapter S Corporation and had saved approximately $600,000 in payroll
taxes in the years prior to entering the U.S. Senate. Needless to say, I
was furious with my government for misleading me. My obvious question
(still unanswered as of this writing) is why in the IRS eyes is it o.k. for
Mr. Edwards to employ such a tax savings strategy and yet I was told by
numerous people at the IRS that I would be subjecting myself to potential
audit and associated interest and penalties. I printed Mr. Edward's tax
returns off the internet and sure enough Dick Cheney was right about how
much Mr. Edwards had saved. I don't disparage Mr. Edwards for taking
advantage of an apparent loophole in the system but the rules should be the
same for me as they are for him. Why was I told otherwise by the IRS
employees? I asked my wife "Is this the two Americas that Mr. Edwards so
vehemently talked about on the campaign trail - one for the guys who can
afford pricey tax advisors and tax attorneys and one for the little guys?"
As best I can tell from my research, Mr. Edwards was never audited by the
IRS. At his lofty income level I would think that he should have been
considered a high probability for an audit if the eyebrows of the IRS would
have been raised by his payroll tax treatment on his tax returns. In any
event, Mr. Edwards might have been able to withstand an IRS audit and been
able to pay for some high priced tax attorneys given he saved $600,000. How
many others in his high income status are also receiving the benefit of this
tax shelter? For me, it would be $3,000 - $4,000 a year in tax savings at
the most. I can't afford to (nor would I want to) get into a legal dispute
with the government over such a relatively small amount of money. However,
if I could save this amount each year in taxes, it might be enough for me to
pay for a vacation or make a down payment on a car. So, it is important to
me. In further researching the John Edwards tax strategy on the Internet, I
discovered that several tax advisors have evne dubbed the single member
LLC/subchapter S combo the "John Edward's tax shelter." When I asked
specifically about this, the IRS has completely avoided it in communications
back to me.

Subsequently, I have sent letters to my Senators and my Congressmen asking
them for their help in seeking clarification and clear guidance from the IRS
as it relates to my specific situation. While they have attempted to
intervene on my behalf, all I have received back is a restatement of my
original memos to the IRS outlining my research in the matter and references
to court cases which have little relationship to my specific situation. I
have received absolutely no specific guidance whatsoever as it relates to my
situation. If someone could just give me a dollar amount or % of income
that must be reported as a salary for my type of business. This is all I am
asking. It seems so simple and straightforward to me. I think the IRS
should answer my questions directly and avoid dancing around the issue. The
way I look at it is that it is either o.k. for taxpayers in my situation to
employ this tax strategy or it is not. If it is o.k., the IRS should tell
me what the dollar guidelines are so that I can avoid interest and penalties
in the event of an audit. If it is not o.k. for me, I need to know
specifically why it is appropriate for some and not others. Frankly, as a
taxpayer and a citizen, I believe I have had my intelligence insulted with
the responses I have received to date. All the written correspondence I
have received has no specifics and all of it seems to have a carefully
worded "politically sensitive" tone. I would characterize much of the
verbal communication I have had with IRS employees on this matter in much
the same light. They have all been very polite but have been extremely
guarded and vague in their communications. As a taxpayer, I am not
interested in politically correct generalized disertations on this issue. I
am only interested in, as John McCain might say "the straight talk express".
If there are no real guidelines or the guidelines are inadequate, just say
it clearly. Based on my research, conversations and the correspondence
received to date, I have already come to conclude that this is in fact the
case. The IRS should bluntly tell me as much in a written communication and
allow me to file an amended return and recover a portion of the payroll
taxes I have overpaid as a result of the misleading guidance I received to
date.

My conclusion is that there are just no clear rules as it relates to this
subchapter S payroll tax issue and a lot of good intentioned IRS employees
have been put into an uncomfortable situation by Congress. I suspect that
they can't give me the "clear" answer that I seek for fear that their jobs
might be at stake if they mis-speak or mis-write. One of them summed it up
this way when I pressed him for a clear answer, "We don't make the laws.
Congress makes the laws.... and this is an area where there is no clear
law." I sensed that many of them were frustrated that they couldn't provide
any real guidance on this matter. I ask your panel how such an important
tax issue that impacts millions of small businesses each year have been left
to such wide interpretation by small business owners and their accountants?
One thing I have yet to tell you is that I know something about payroll
taxes for S Corporation small business owners. In my business, I operate as
a business intermediary. Essentially, I help small business owners (mostly
S Corporations) sell their businesses. I have seen hundreds of S
Corporation tax returns over the course of my time in this business. I have
seen business owners who make $400,000 to $800,000 per year pay themselves
little or, in some cases, no salary and, therefore, little or no payroll
taxes. I have seen others pay themselves $100,000 or more in salary and pay
the resulting payroll taxes. In one case, I saw a minority business owner
who was losing money every year (and about to go out of business), paying
himself a $60,000 salary and paying the associated payroll taxes. I suspect
that he wasn't able to afford a high priced tax adviser and, therefore, was
paying more than he should have been paying in payroll taxes...when he could
have used the extra cash to help his business stay afloat. There just seems
to be no rhythm or reason other than how aggressive a small business owner
(and his/her tax advisor) are on this issue.

Now, on to the broader issue at hand and the real reason for this
correspondence. The federal government is forfeiting huge sums of payroll
tax (social security and Medicare taxes) by not closing this payroll tax
loophole for small business owners. This whole thing can be simplified. A
formula based approach should be employed. Add the sub S Corporation
owner's salary to his/her reported bottom line pretax income and arrive at a
fair % of that amount that will be subject to the payroll tax. Perhaps you
might want to consider different categories such as single member
LLC/subchapter S electors at one rate and the owner of a subchapter S
business that employs 2-10 employees at another rate, 10 - 100 at another
rate, etc. Regardless, putting in place a clear formula will help the
government increase its intake of payroll taxes from subchapter S business
owners - many of whom I think you will discover are avoiding a good portion
of this tax today. Again, I have seen a good number of sub S tax returns
over the past several years and I can attest that there are a lot of folks
who own small businesses who are not paying much in the way of payroll taxes
(and fewer who are). If you are looking for a way to help fund the Social
Security and Medicare Trust Funds, I can think of no better loophole to
close. A clear formula based tax that is not subject to tax advisor or
small business owner interpretation (and aggressiveness) is the answer. To
me, this is a better way to increase revenue than to raise payroll tax rates
on average employees.

Personnally, I would like to see an abolishment of the Federal Income tax
and replacement with a progressive national sales tax system that taxes the
purchase of luxury items at a higher level than basic items. For example:

Lowest sales tax rate to highest tax rate:

Federal Sales Tax free: Items that benefit the greater societal good: Such
as fuel efficient cars, Medical Care/Medicine. Some of these could be put
on and off as necessary to drive behavior (puchase of fuel efficient cars as
an example) that is good for all of us.

Basics: food (unprepared), clothing (up to a certain $ price level), autos
(up to a certain $ price level), houses and rent (up to certain price
level), basic communications
(internet service, PCs and phones), basic household capital goods (fridge,
stove, washer, dryer,etc), auto fuel and basic household utilities.

Non-Basic Liesure items that everyone should be able to afford and enjoy at
some level: (basic restaurants, travel, hotel, vacation, and other liesure
goods and services, cell phones, electronic goods like TVs, DVD players,
video games and other liesure goods and services, etc.

Luxury items(mostly enjoyed by the wealthy): Expensive cars, boats, homes
over certain values, vacation homes (2nd, 3rd, 4th, 5th), Luxury Vacations,
Hotels, Liesure activities.

Sin Items(Things that tend to be abused by the some citizens and end up
costing the greater society in the long run): Alcohol, Cigarettes, High
fat/high sugar foods, gambling, prostitution (where it is legal)

Good luck with your work and remember that simple clear concise rules are
usually better.

Sincerely,

John R. Baker
Taxpayer

Posted: Apr 24, 2005

By: Richard Ettington

Comment:
Re- request for opinions on tax reform:
A VAT (value added) Tax is very important- as Europe found years ago-- to
prevent loss of an estimated $200 to $300 BILLION lost in tax revenue every
year by tax cheats.
That should significantly increase total revenue while still allowing
rebates or exemptions most Americans have come to expect.

Dick Ettington, Palos Verdes, CA 310/541-6981

Posted: Apr 24, 2005

By: NULL

Comment:
"If you want to make enemies, try to change something."

-- Woodrow Wilson

What I'd really like to see is either a flat tax or VAT, but fat chance
anything will change, so I'll just offer an observation:

Whenever I don't pay estimated tax,I get penalized. Now let's follow that
through: by keeping money invested for as long as 15 months until April 15,
I am earning myself (and thus the IRS) extra taxable interest. How does the
IRS thank me for this remunerative largesse? By stiffing me with a penalty.
Am I correct in assuming the IRS doesn't want the extra money I'm generating
by holding off paying what I owe until April 15?

While politicians are not noted for their intelligence, I think even you can
see this is stupid; why not make withholding voluntary and allow those
taxpayers who are able, to pay what they owe in one lump sum each year? You
could even bring back a Federal version of the "Christmas Club" that banks
used to offer years ago. A taxpayer could "lock up" money owed to the IRS
in a taxable interest-bearing account that couldn't be touched until a few
days before April 15. That way the IRS could be certain the taxpayer wasn't
just putting the money into short-term nontaxable investments while waiting
until April 15.

I'll admit most people wouldn't have the financial fortitude to put away
money that used to go to withholding into such a "tax account", so maybe it
could be mandatory, with the taxpayer choosing whatever short-term taxable
vehicle from an IRS-approved list.

Les Kopel
Oxnard, CA

Posted: Apr 24, 2005

By: Mary Cooper

Comment: People under $20,000 --No taxes due
People under $250,00 --10% of income
People under $500,000 -- 15% of income
People over $500,000 -- 20% of income
There would be no deductions for anything. It would be taken out of paycheck
or you would pay estimated taxes.This would eliminate the wealthy from using
loopholes, there wouldn't be any.

Posted: Apr 24, 2005

By: John Carroll

Comment: Dear President's Advisory Panel on Federal Tax Reform:

As a self-employed business owner who spends half a week each year suffering
over tax forms, I am convinced tax simplification is long overdue, so I wish
you great inspiration and the best of political winds in completing your
work.

My suggestion is a trade-off: Eliminate the "death tax", yes -- but only
for individuals who willingly decide to do without Social Security and
Medicare benefits.

While we shouldn't punish the elderly (or their offspring) for accumulating
assets, nor do we want the wealthier among America's growing and
unprecedentedly well-off hordes of retirees taking a free ride on social
welfare programs that were never intended to be making 30-year payouts to
multi-millionaires.

In the days of the New Deal, when Social Security and Medicare were
launched, many of our comfortably-off citizens would have felt a sense of
"noblesse oblige", and most who could afford to would have refused "public
assistance" -- because they didn't need it, while the poor did. (Yes, there
was a stigma to taking "welfare" -- and, like so many stigmas that have gone
by the boards in recent decades, we'd all be better off if we could revive
that one.)

Because so many who don't need benefits take them anyway, the estate tax
should continue to be imposed (with the same or even a higher level of
exemptions) against anyone who collects Social Security for more than a
one-year trial period, or who collects Medicare benefits without paying
premiums for more than three years. During those "grace" periods,
recipients of benefits would be sent monthly opt-out forms with their Social
Security checks, and quarterly opt-out forms with their Medicare statements.
These forms, opting out of benefits in return for explicit protection from
potential exposure to the estate tax, could be executed before two witnesses
at their nearest SSA office; those needing transport could call an 800
number to schedule a free SSA pick-up to execute the forms, and there could
be a requirement that those opting out show the means to pay a certain
minimum level of medical costs.

Any "death taxes" eventually collected -- mind you, only from those who
insisted on getting their payroll taxes back in this life -- would be paid
into the Social Security and Medicare trust funds.

As any compassionate person would wish it, the elderly who have only a small
nest egg would continue to opt to receive the Social Security and Medicare
benefits that are provided for them. They would not fear the estate tax,
because they would have been given time and information to understand that
their net worth would not exceed the exemption levels.

The public interest, meanwhile, would be vastly better-served, and Social
Security and Medicare a good deal more solvent, if more wealthy retirees
volunteered to lighten the public burden. People live longer and longer.
While the well-off may sneer at how small Social Security payments are, it
rarely seems to cross their minds to refuse the checks. Perhaps both
political parties have reassured them too often that that they are entitled
to get out what they pay in. Well, yes, true enough -- but why not offer
them a choice: collect benefits, as is your right, or elect to keep your
estate intact, which is much more debatable as a "right" and certainly
shouldn't be a privilege open to someone who spends decades on the dole.

This plan would influence most retirees to think of their family's interest
as being in line with sparing the public coffers; too often, people these
days seem to think their family's best interests are *opposed* to what will
spare the public coffers.

For America's finances to be healthy for the long term, we have to stop
making the elder generation's choices seem to carry no price ticket, and we
have to stop telling ourselves that what we individually choose is not the
rightful concern of to our fellow citizens.

Best wishes,

JOHN D. CARROLL

Posted: Apr 24, 2005

By: NULL

Comment: The goal is to keep it as simple as possible as the majority of
individual tax filers have no idea of what the code comprises.Therefore
one set of rules for the individual and another set of rules for
businesses, incorporated or not.

For the individual filer, a flat tax of X% with only mortgage interest
and charitable donations as deductible items> Pension plan
contributions (with limits) also deductible, as would be any State
income tax paid.

As for Corporations, again a flat tax, but gross income to be reduced
by any depreciation on machinery and/or real property and direct
overhead expenses.

It could well be that H&R Block type of operation would lose a lot of
customers, but maybe not, as there are many individual filers who would
still need assistance.

Last recommendation is to spread out the filing time.Surnames with
beginning letters A thru D file in January>Surnames E thru K file in
April, I thru R in July and the balance in October. The pressure on the
US Post Office and CPA's and IRS employees would be radically reduced.

Sincerely (and with hope)
G.Gordon,C.L.U

Posted: Apr 24, 2005

By: JOEL VALENZUELA

Comment: As an attorney/CPA, I have long detested our tax system which requires an
annual tax return submission. I consider the current system to be tortious,
time-consuming and of little value. It adds no value but creates an army of
attorneys/cpa's who charge the public for tax submission and tax advice.
Citizens make too many economic decisions based on tax consequences.

I have long favored a flat tax because it is the simplest system and levels
the playing field. Everyone pays a percentage of their income. You define
income to mean all revenue received, from whatever source. After the tax is
computed, you can allow credits for activities the Government considers
worthwhile, such as:

* Exemptions for dependents, age, health, etc.
* Credits for use of environmental energy efficient activities (autos,
solar, etc.)
* Credits for medical expenses that exceed Medicare & Private
insurance reimbursements
* Other credits

I also favor a two-tiered system such as that proposed by the Cato Institute
- a dual rate plan with different rates for those under a $90,000 single,
$180,000 joint filers paying at say, 15% and filers above these levels
paying at a rate of 27%.

I would accept any system that is simple and taxes people equitably, even if
it means I have to pay more taxes. The important thing is to simplify the
system so that one can file a return without hiring an expert - so that
citizens can make spending/economic decisions without first submitting their
decision to the crystal ball of a so-called tax specialist.

Thank you for the opportunity to comment.

Joel Valenzuela
11601 Candela Drive.
Alta Loma, CA 91701
(909) 989-0111

Posted: Apr 24, 2005

By: NULL

Posted: Apr 24, 2005

By: NULL

Posted: Apr 24, 2005

By: Clifford Lawrence

Comment: My name is Cliff Lawrence. I am a working professional, married with
four grown children. I strongly encourage an overhaul in the way the
Federal government generates revenue.

1. Description of proposal

As much as possible, and in the simplest way possible, revenues for the
cost of government services should be derived directly for the services
provided, for individuals and businesses. The income should be
collected in the simplest and most efficient way possible.

Impose a national sales tax or a VAT of 7% . Flat rate income taxes of
20% should be paid by businesses. Individuals with income above a
minimum amount of $50,000 (head of household) or $80,000 (joint) should
be taxed at the flat rate of 8%. Individuals in the top 1% of income
should be taxed at the flat rate of 20%. All capital gains and
investment income should be included as regular income, except for the
sale of a principal residence.

Specific services such as those listed below can be taxed directly.
Roads and Highways, etc., should be paid for by sales taxes on
energy
costs for transportation using the roads and highways.
Medical, social, and criminal justice costs for alcohol abuse and
for
tobacco use should be paid for by sales taxes on alcohol and tobacco.

Deductions:
100 percent of direct Education costs (tuition, books, and associated
fees, but not living expenses) to a limit of $10,000 per year and 100%
of all charitable donations should be excluded from income tax,
regardless of age and income level. Medical costs exceeding 10% of an
individual's annual income should be 100% deductible. State income and
property taxes for the principal residence only should be 100%
deductible.

Dependent Exemptions:
Similar to current tax code except no limitation on age and does not
have to enrolled in college.

2. Impact of Proposal

The above offers a simple prescription for all tax payers. One of the
major injustices of the current income tax is there are many
individuals who are not on a payroll and do not have taxes withheld
from their earnings. They are paid by cash for their services and do
not report income. The national sales tax or VAT compensates for this
major problem as those individuals spend their non reported income for
goods and services.

The setting of the flat income tax rates, sales tax or VAT rate, and
the minimum income limit is subject to a congressional study to ensure
a balanced budget, and to maximize the efficiency of government
provided services.

This plan reduces tax filing to a simpler procedure and is required
only for those that choose to claim exemptions or deductions. Employee
withholding of income taxes is still required. For those earners not on
a payroll, banks will be required to report the annual cash flow for
individual accounts and will be required to withhold taxes on the
deposits for the limits indicated above, unless the account holder
proves that payroll withholding is in place.

Posted: Apr 24, 2005

By: McGee, Michael (Pardee)

Comment: Dear Tax Reform Panel:

I support a flat tax, somewhere in a range of 15-17%, on all income
regardless of income level. I would retain write-offs for mortage interest
and charitable deductions only. I believe that a flat tax on all income
will incentivize all taxpayers to vote and become more engaged in issues of
importance. A simplified tax levy will reduce the burden upon the
individual to engage costly and time-consuming experts to file complex
returns. Taxes can be more accurately deducted from income as it is earned
which will result in more timely collections of revenues into government
coffers.

Respectfully,

Michael V. McGee
870 Chester Avenue
San Marino, CA 91108
michael.mcgee@pardeehomes.com

Posted: Apr 24, 2005

By: tod snodgrass

Comment:

To PresidentAcAEURA(tm)s Advisory Panel on Federal Tax Reform

It is my understanding that your Panel is asking for ideas/advice concerning
contemplated
changes to the US Tax System. Here are my four thoughts on the subject:

1) Transparency. Due to withholding, and other contributing factors, the
average
citizen doesnAcAEURA(tm)t fully appreciate how onerous the current tax
system really is.
This lack of information and awareness has allowed politicians to collect
far more
money from the American public than would be the case if the average citizen
was
properly informed. The new tax system, however it shakes out, should include
a provision
that allows each tax paying citizen to see exactly how much he or she is
paying
each time the tax is levied against them.

For example, if a national sales tax should become the law of the land, it
should
NOT in my opinion, be structured like the European VAT tax. The VAT over
there is
hidden in many cases from the average citizen. My suggestion is that the new
national
tax system be prominently displayed every time a citizen has to pay it. A
working
model is the state sales tax: In California, when we make a purchase, the
receipt
clearly states how much sales tax we just paid. We should expect nothing
less when
we have to pay on a national basis, whether it be an income tax, Value Added
tax
or a national sales tax.

2) Simplicity. There are pros and cons concerning a Value Added Tax,
national
sales tax, etc. At the end of the day, whichever one is picked, the key to
success
is to create it simple and keep it simple. There is no excuse for the
complexity
that plagues the current system. I pray that whatever cure is finally found,
doesnAcAEURA(tm)t
wind up being worse than the (tax collection) disease from which we already
suffer.

3) Sunset. Whichever new tax collection vehicle becomes the law of the
land, it
should incorporate, in my opinion a sunset provision, i.e. the ability for
it to
be changed, after a set period of time, since it will need to be renewed. In
fact,
I think we need to ASSUME that the new tax system will contain flaws that
need to
be corrected. That is certainly true for our current system (i.e. it
contains flaws),
and is very liable to be the case for anything new we try as well.

A sunset law (an automatic end to the law, that must be renewed after a
period of
time, say 10 years), would help give assurance to those who might waver on
approving
a new tax law in the first place, comfort that flaws (fatal or just fickle)
must
be addressed, no later than a date certain in the future, and
wonAcAEURA(tm)t hang around
our necks like a permanent millstone; example: the current Alternative
Minimum Tax.

4) Legitimacy. Whatever the final outcome, the new tax system must appear
legitimate
in the eyes of the American public. This can only be achieved, in my
opinion, by
some broad-based approval process. The conventional method has been to go
the Constitutional
Amendment route. Since a super-majority (two-thirds of the House and Senate
must
approve of the proposal and send it to the states for a vote, where
three-fourths
of them must affirm) is required for a Constitutional Amendment to become
law, this
would hopefully create the legitimacy needed for such a huge change to be
accepted
by the American public. A different (better?) alternative would be to hold a
(super-majority)
referendum, either on a national basis or state by state; in that way, each
citizen
could vote for the Amendment. A direct vote would be the ultimate expression
of
legitimacy, in my opinion.

By way of comparison (of how we probably DONAcAEURA(tm)T want the approval
process to unfold
here), we need look no further than AcAEURAoeacross the pondAcAEURA?. It
appears that the EU
Constitution may not pass in all the 25 EU countries, which is required if
it is
to become legally binding. Individual-country issues aside, one big flaw
with the
EU system, according to many Europeans whom I know, is that several
countries never
allowed their people to vote on important EU agenda items, i.e. adopting the
Euro
as their currency. If memory serves, neither France nor Germany allowed
their people
to vote on this very important issue. Instead, those decision(s) were taken
by the
legislators of those countries. True, they are elected representatives of
the people,
but (in my opinion) the seeds for todayAcAEURA(tm)s dissent concerning the
EU Constitution
can be traced right back to the ongoing unhappiness of the citizens of many
European
countries that they were not allowed to vote on EU-related issues; thus they
lacked
then (and in part or in whole) still lack ultimate legitimacy.

If you let the American people vote on the new tax plan, that is the purest
form
of Legitimacy (with a capital L) that I can imagine.

Summary: I applaud your collective efforts to reform the current tax system.
Assuming
the end result includes transparency, simplicity, a sunset provision and
legitimacy,
I believe the American public will embrace and endorse your efforts.

Thank you

Sincerely

Tod Snodgrass
Rancho Palos Verdes, CA

Posted: Apr 24, 2005

By: James Throgmorton

Comment: Dear Senators: I am very much in favor of a voluntary flat tax as an
alternative to the present burdensome and costly tax code. Suggest 17% tax
rate.

Yours truly,

Jim Throgmorton

13260 El Dorado Drive, #188-D

Seal Beach, CA 90740

Posted: Apr 24, 2005

By: NULL

Comment: Tax Reform Idea:

The Land Tax, or "Single Tax" proposed by 19th century economist Henry
George.

NO income or sales tax, only the value of land is taxed.

Advantages:

1. Simple to define and enforce. The tax is x% of the assessed land value.
You can try to hide income, but you can't hide land.

2. Pro-growth. The marginal tax on both income and consumption is zero.

3. Progressive. The wealthy are disproportionate owners of land and will
therefore pay most of the taxes.

The last two points are an ideological win-win for conservatives and
liberals. The rich pay a lot of taxes but still have an incentive to get up
in the morning and go to work.

Henry George had a moral philosophy underlying his land tax. If you take a
parcel of land and build a farm or factory, the income from your productive
effort is rightfully yours. But since neither you nor any other person
"created" the raw land, profiting from simply owning land is "unearned
income" anf fair game for taxation. Think of it as paying rent to society.

Frederick Singer
Huntington Beach , CA

Posted: Apr 24, 2005

By: Arthur Irwin

Comment:
I am suggesting that the U.S. have a value added tax exempting food and
charitable donations. Practically all of Europe has had a value added tax
for years and it seems to work for them. I realize that such a move would
do away with the IRS but to me that is an advantage. Many of the employees
of the IRS could be used to check the returns from the businesses. Thanks
for asking for comments. Beth Irwin

--- Arthur Irwin
--- abirwin1@earthlink.net
--- EarthLink: The #1 provider of the Real Internet.

Posted: Apr 24, 2005

By: maralys

Comment: To: Advisory Panel on Federal Tax Reform:

The IRC is a farce, even for attorney, and tax evaders know it. It
makes a mockery of the U.S. political system.

Please urge Congress to:

1. Simplify the code immensely;
2. Break taxable income into 3 levels/rates:

$30,000 to 100,000 15%

100,000 to 250,000 22%

250,000 up 27%

3. Eliminate the AMT.

4. Revise the estate tax:
0 to 10,000,000 exempt
10,000,000 and up, 25%

Robert V. Wills: 1811 Beverly Glen Dr., Santa Ana, Calif. 92705
(714) 544-0344 E-mail: Maralys@Cox.net

Posted: Apr 24, 2005

By: NULL

Comment: Single taxpayers $15,000 tax free, Joint taxpayers $30,000 tax free. 15%
tax rate on all earnings above these amounts up to $80,000. 25% tax rate on
all earnings above $80,000, but less than $200,000. 30% tax rate on all
earnings above $200,000, but less than $300,000. 35% tax rate on all
earnings over $300,000. Social Security benefits included in earnings. No
reduced rates for capital gains or dividends. Continue the $3000 capital
loss maximum annual deduction. Phase out tax free income from municipal
bonds over 20 years, 5% of these earnings would be included in year one
income, 10% the second year, etc. No deductions allowed, but provide a 25%
tax credit on all charitable donations. Index the tax rate schedule
annually.
These approach would be slightly favorable to my wife and I, income $300,000
plus in 2004 and to our single daughter with $86, 500 in earnings. The rates
might have to be a little higher to be IRS revenue neutral
Thank you for allowing me to input this to you. We need a much simpler
system.
John L. Dampman Seal Beach, California

Posted: Apr 24, 2005

By: Norman D. Melling

Comment: Request a delivery reply!

-----Original Message-----
From: Norman D. Melling [mailto:nmelling@comcast.net]
Sent: Friday, April 22, 2005 10:52 PM
To: 'comments@taxreformpanel.gov'; 'president@whitehouse.gov';
'michael.fitzpatrick@mail.house.gov'; 'Fischer, Karen (Santorum-DC)';
'Senator_Specter@Specter.Senate.gov'
Subject: Proposal for Tax Reform
Importance: High

To: The President's Advisory Panel on Federal Tax Reform
April 22, 2005

The attached is a copy of my proposal as an alternative to the current IRS
Income Tax.

http://home.comcast.net/~PreciousIdeas/IFTS4-22-05.doc

Norman Melling 17 Hillside Lane
Doylestown, PA 18901
215-345-7939
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

To: President George W. Bush's Tax Advisory Panel April 22, 2005

This proposal is for an alternative to the current IRS Income Tax System.

"INVESTMENT FEE" TAX SYSTEM (IFTS) (c)

SUMMARY:

1. IFTS is an alternative to the IRS.

2. Basic concept is that a 1% fee on the purchase of all investments, not
sales, will raise sufficient revenue for government.

3. No complex tax codes. No forms. No time consuming expensive compliance
schedules or burdens. No unjust enforcement bureaucracy for the collection
processes.

4. Businesses will thrive under the IFTS.

5. IFTS Stimulates economic growth by encouraging investments and
creating cash flow into the community.

6. IFTS Encourages home ownership.

7. IFTS Encourages charitable contributions.

8. Voluntary involvement further benefits Low Income Citizens.

9. Citizens will have a powerful impact on the government budget
funding.

10. IFTS is simple, clear, fair and balanced to all, plus it is
superior to the "Flat Tax" or the "National Sales Tax" ("Fair Tax").

11. IFTS is easily implemented and can be phased in over a few years.

SUBMITTED BY: Norman D. Melling

17 Hillside lane

Doylestown, PA 18901

215-345-7939

This proposal is under a copy write in order to keep the entire proposal in
context. Not chopped up. All rights remain. It is offered to the President's
Tax Reform Advisory Panel to consider as an alternative Tax concept. If
accepted, additional details will follow.

Inspiration and influence of the IFTS proposal is acknowledged to be from:

Max Schwartz and Demetrius Traggis

http://home.comcast.net/~PreciousIdeas/IFTS4-22-05.doc

"INVESTMENT FEE" TAX SYSTEM (IFTS) (c)

BASICS: The "Investment Fee Tax System," IFTS, is a simplified approach as
an

alternative to the IRS. It can be phased in over a few years. All
investments are subject to a

nominal 1% fee when purchased, not sold! No forms, special privileges, tax
accounting

obligations other than that the IFTS fee is immediately sent to the Treasury
electronically by

the investment market. Investments are stocks, bonds, real estate, art,
precious items, etc.,

which are purchased for profit. Exemptions are necessary personal
consumables or required

items for living standards, like the "Primary" home, car, consumables or
services needed for

personal livelihood. Primary home ownership and mortgages are tax offset.
They are not

considered as an investment. However, second homes, cars, etc. are
considered investments

and subject to IFTS. As an incentive to encourage home ownership, the
mortgages and State

and Local taxes shall be refundable up to 20% of the IFTS fees paid for
Mini-Bonds (see #5

below). It is anticipated that at least $3T annually will initially flow
into the Treasury and

grow as the economy grows, due to the stimulus of the IFTS approach. It is a
scheme to

encourage and favor investments while stimulating the economy. It applies to
individuals

as well as businesses. No burdensome forms, changing complex tax codes or
specialists

needed to comply with the tax code and burdensome bureaucracy dictates.
Besides

eliminating the national debt it will create new dynamic industries and
infrastructures. It

stimulates cash flow which drives our capitalistic economy toward innovation
and

productivity. Innovation is our greatest national asset. We cannot compete
with third world

labor rates, but we can lead with innovation. Cash flow creates jobs at all
levels, which

compound itself toward even greater investments as the economy grows.

PURPOSE: According to our founding Father's documents, the purpose of

government is to protect our inalienable rights that were endowed to us by

our Creator. Government serves us, not the other way around. Government

does not have any rights other than what the people grant it. Congress is

severely restricted by the Constitution. With respect to covering the cost
of

operating government it is not the right of anyone to take from someone and

give to another, other than by obtaining that privilege with the consent of
the

people. The IFTS is a just, fair and balanced approach to raise funds for

government operations because it allows the people to give their consent to

government by the way they invest their own capital.

APPROACH & GOALS:

1. IFTS applies a nominal 1% fee on all investments. (3% to 10% for

Foreign owned entities or items)

2. Interest earned on savings or stock dividends are considered
re-investments

if retained in the account and therefore subject to the IFTS 1% fee. If
withdrawn

there is no IFTS fee. This increases the public cash flow.

3. Investments are inheritable and tax free.

4. Businesses simply apply the nominal 1% IFTS fee toward all capitol
investments

and enhancements, plus all services and expenses associated with the for
profit business

venture. This investment fee approach is similar to the European Union's
"Value Added

Tax", but at a nominal fee. IFTS business costs are generally passed onto
the customer

as increased pricing. Potential cheaters or abuse shall be severely
punished. IFTS rules

are simple and clear without costly, time consuming complex tax code
structure and

compliance processes. Focus on profit making, not taxes.

5. Congress shall create "Focused Government Budget Line Item

Investments" as part of the IFTS approach:

"Focused Budget Line Item Investments" are "Mini-Bonds" with a

base face value equal to the standard "Treasury Note" interest.

Congress in its wisdom during the budget cycle sets the planned

multiyear funding profile for all line item expenditures. Congress shall

select a number of sample programs or projects with definable

deliverables, within the budget, that represent a cross section of the

government's obligations to fund. These special "focused line items"

are to be listed as potential investment opportunities for the public to

consider as Mini-Bonds.

E.G.: Alternative Fuel / Energy Developments; Urban Mass

Transportation; Urban / Suburban Infrastructure; Health; Education;

Arts and Welfare; Inner and Outer Space developments; DOD and

National Security; Foreign Aid; etc.

These selected "focused" line items, if available for "investment Mini-

Bonds," will allow the public to have a greater impact and emphasis on

which programs, or specific projects, are more important than others; by

the way they choose to invest in which project or program. By following

the money which is invested, the importance to the citizens of our great

country will be clear to everyone as to which direction to guide our

leaders and what outcome is expected. The people have a vast wealth of

wisdom to be applied here. The budget doesn't change, but it allows

Congress to hold fast on programs deemed needed, even if unpopular.

Budget line items inadequately funded will provide an excellent Mini-Bond

investment, while offsetting the government funding obligations. It will

accelerate the outcome of deliverables, because increased funding

generally means earlier success, which we all gain from. As an incentive

these "Mini-Bonds" should also provide a greater award for early

successful delivery of the programs planned. These incentives should be

proportionately tied to the early delivery and potential savings to the

government by not needing to fund the specific project deliverables in the

planned budget out-years. This could double or triple the payoff "return on

investment" to the individual's investment account and accumulated

wealth, while directly influencing the governmental policy directions and

economic stability of the United States of America. It gives each citizen a

great voice and power to influence our future. Wise investors will

participate and watch the funded programs as an indication as to what

growing industries will emerge with government sponsorship..

6. Benefits will flow to Low Income citizens by encouraging them to

participate in investments. The government pays back each investor an

incentive payment of up to $100 reflecting the initial fee paid for
investing the

first $10,000. Therefore, the first $10,000 invested is tax free.
Investments

above that are subject to the 1% fee or a 3% to 10% fee for an investment
in a

foreign owned entity. No one has to invest, including those who have low

income, but if anyone wants to take advantage of the growth and benefits
that

come from compound interest, or stock and bond growth, even if it were in

"stable" municipal or government Mini-Bonds, then the 1% fee applies. The
fee

is simply collected and sent immediately to the US Treasury electronically,

directly from the market place. Simple rules, no forms and direct accounting
of

each purchase will eliminate the overwhelming bureaucratic structure and

complications that have a negative impact on our lives and economy.

7. Encourage charitable contributions by allowing a refund of up to 20%

off their IFTS fees paid to any Focused Budget Line Item Investments

Mini-Bonds. This encourages a greater involvement in government

Funded operations; which will include faith based initiatives, Arts &
Culture,

Planned Parenthood or Abstinence morality organizations, etc. The

citizen can invest in any market investment, but to get the charitable

refund the investment must be in the Mini-Bonds. Budget line items may

be under funded, but if the citizens fund these items it sends a strong

message to the administration, Congress, media and others, as to what is

important to the citizens of this country, and what directions it is
important

to follow.

8. IFTS generates sufficient funds to meet government obligations, by

voluntary investments, which therefore give the government the rights to

perform basic services given to it by the citizens. "Flat Tax" alternatives

retain the IRS and its bureaucracy and burdens. The "National Sales

Tax" ("FAIR Tax") is a consumption tax which discourages economic

growth, because it taxes consumables for all people, low and high income,
and

would generate "black" or gray markets creating problems with

enforcements. It would have a detrimental affect on our nation. It puts the

burden of tax collecting on the "Point of Sales" proprietor.

9. The IFTS is the only proposed tax system that does not demand
compulsory

participation and investments are considered "voluntary." It is fair and
balanced, and is

easily understood and implemented, while generating funds to operate all
governmental

functions and stimulate economic growth. A growing economy stimulates
greater

investments. It cuts over $600B annual burden of bureaucratic obligations
and controls,

that limit our economic growth and freedoms. IFTS will make the USA more

competitive in the world. Businesses will favor being established in the USA
over

unstable offshore options. Out-sourcing will be for the right reasons, not
for tax policies.

Excess funds resulting from the Investment Fee Tax System will give the
government

flexibility to offer grants and incentives to stimulate development and
growth in specific

areas; such as alternative energy, urban transportation, safety & security,
education, health

care, environment, etc.

Additionally, potential lower IFTS fees are possible if more than sufficient
funds are

collected. Optionally greater benefits and health care can be forthcoming to
the entitlement

annuitants or welfare, or foreign humanitarian aide. These increased
payments will be a

positive reward to a growing economy we all participate in. It will give the
public greater

incentives to be involved, because it will result in a feedback reward
potential. Everyone

gains with a taxation system which is based upon the consent of the people.

Posted: Apr 24, 2005

By: Billie Dickey

Comment: Dear Tax Reform Panel

I offer the following suggestions for your consideration:

[1] People earning less than $10 per hour should not be required to have
income tax withheld from their paychecks. Those folks need that money at
the time they earn it, not several months later following the filing of
their tax return.

[2] Likewise, given the actual cost of living these days and into the
future, people over 65 and are retired, should not have to pay income tax if
their annual gross income is less than $30,000. (I have an aunt, [age 98 -
retired federal employee with better than usual health insurance - who still
lives alone], having an annual gross income of between $18,000 and $19,000 -
who is required to make estimated tax payments of $300 every quarter. That
is just unconscionable!!)

Clearly, the cost of living is not going to become less -- and not every
family making less than $100,000 has enough left over to save for retirement
or even to send their kids to college -- so when they reach retirement age,
it would be nice if they received a break from the payment of income taxes
when they are not earning an income.

[3] Congress and all federal employees should be required to participate in
Social Security just like the rest of us, instead of having their secret
retirement arrangement. The federal government should have to explain why
the American taxpayer should support two different retirement plans [three,
if you count State retirement plans].

I have not heard one viable explanation/reason why federal employees should
have a separate [superior and unequal] retirement and health care
arrangement.

Not only that, but the rest of us not only have to endure withholding from
our earnings of Social Security and Medicare, but WE THEN HAVE TO PAY FOR
THE SUPERIOR RETIREMENT AND HEALTH CARE PLANS FOR FEDERAL EMPLOYEES via
increased taxes. Well, the federal employees can just start putting up with
the same level of retirement income via Social Security and they may
henceforth pay for their own health care out of their net paycheck.

[Consider: if members/families of Congress were required to have their
medical problems treated at Veteran's Hospitals, the current deficiences at
Veteran's Hospitals would be immediately corrected.]

[4] Which brings to mind another question: Why the distinction between
"earned" and "unearned" income? It would seem to me that the taxbreaks
should be given to those who earn their money via sweat and long hours --
not to those whose money is so great that it does the earning.

[5] Someone should get a handle on the definition of "rich."

"Rich" is earning that amount of money that allows one to easily afford to
pay taxes and still have his wealth after doing so -- like the Rockefellers,
Kennedys and Heinz-Kerrys. These folks have never explained just what tax
law permits them to retain their [unearned] wealth. This writer does not
resent such wealth -- but only having to put up with these types endlessly
lecturing the rest of us on "the evil ambitions, etc. of the rich"

For some economic/tax purposes, the "rich" designation begins at
$70,000-$85,000 -- for others $150,000, or $180,000, or above $200,000 and
others, $1,000,000 and up. We are entitled to know a clear definition of
the term vis-a-vis earnings, taxes, penalties [alternative minimum tax],
etc.

With today's prices for basic needs such as rent/mortgage, food for the
family, transportation, basic clothing and perhaps a movie now and then,
when husband and wife work and earn annual salaries of $28,000 to $38,000 or
$32,000 to $42,000 for gross incomes of $66,000 and 74,000 respectively, it
is outrageous that they get lumped into higher income brackets -- as if over
$50,000 is a lot of money.

[6] A flat tax of 17% would be acceptable -- IF the taxpayer could be
assured that it would not be increased with every new Congress perceiving
that it needs yet more money -- facts that are not likely.

Congress and all of the rest of the spendthrifts that make up the federal
government are going to have to learn to make their dollars count. The
American taxpayer does not have unlimited funds -- regardless of what the
federal government thinks it needs.

Finally, have some 8th graders make suggestions for improving Form 1040 and
related rules in such a way that any nearly-educated adult can understand
what is being asked of him when endeavoring to comply with income tax law.

Thank you for your attention.

Billie Dickey
661/ 944-0229
P.O. Box 694
Pearblossom, CA 93553-0694

Posted: Apr 24, 2005

By: Philip Degenhart

Comment: Thank you for taking the time to consider my thoughts.

The tax code should be simple and not include any deductions. It is up to
each individual to determine what, if any, investments they need and the
government should not be subsidizing them. I favor a three step flat tax
system, on income, similar to the one outlined below.

Step 1:

Individuals making less than $20,000.00 per year.
Couples and/or Head of household making less than $40,000.00 per year.

Tax Rate: 0%

Step 2:

Individuals making between $20,001.00 and $150,000 per year.
Couples and/or Head of household making between $40,000.00 and $300,000.00
per year.

Tax Rate: Fist $20,000.00 or $40,000.00 = 0%
Above $20,000.00 or $40,000.00 = 18%

Step 3:

Above the levels outlined above the tax rate should be 28%

As stated earlier there should be no write offs, not even mortgage or
children. The only distinction should be with or without dependants.

FYI - This will increase my personal taxes but it is worth it to make the
system simpler.

I also favor increasing the tax collection in conjunction with the
simplification plan. The only requirement would be that the excess tax COULD
NOT be used by the government and would be used to reduce the deficit. Once
the deficit is paid off, the rates could be re-evaluated based upon current
data.

Thank you again.

Philip P. Degenhart
514 Newport Dr.
Lompoc, CA 93436

Posted: Apr 24, 2005

By: GENE COX

Comment: I vote for VAT!

Solving the problem of the low income segment of the population will take
more data then I possess to offer a solution; be it a rebate table based
upon reported income or some such approach.

Taxing on consumption precludes all the problems of "adjusted income
"manipulations under the present code and makes outright evasion near
impossible. I say "near" because I never underestimate the imagination of
the dedicated contrarian