Posted on 11/02/2005 10:09:04 AM PST by Eaglewatcher
-1- An Open Letter to the President, the Congress, and the American people Concerning Reform of the Federal Tax Code
Dear Mr. President, Members of Congress, and Fellow Americans,
We, the undersigned business and university economists, welcome and applaud the ongoing initiative to reform the federal tax code. We urge the President and the Congress to work together in good faith to pass and sign into federal law H.R. 25 and S. 25, which together call for:
• Eliminating all federal income taxes for individuals and corporations,
• Eliminating all federal payroll withholding taxes,
• Abolishing estate and capital gains taxes, and • Repealing the 16th Amendment
We are not calling for elimination of federal taxation, which would be irresponsible and undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax code, including payroll withholding taxes.
We are calling for elimination of federal income taxes and federal payroll withholding taxes.
We endorse replacing these costly, oppressively complex, and economically inefficient taxes with a progressive national retail sales tax, such as the tax plan offered by H.R. 25 and S. 25 – which is also known as the FairTax Plan. The FairTax Plan has been introduced in the 109th Congress and had 54 co-sponsors in the 108th Congress.
If passed and signed into law, the FairTax Plan would:
• Enable workers and retirees to receive 100% of their paychecks and pension benefits,
• Replace all federal income and payroll taxes with a simple, progressive, visible, efficiently collected national retail sales tax, which would be levied on the final sale of newly produced goods and services,
• Rebate to all households each month the federal sales tax they pay on basic necessities, up to an independently determined level of spending (a.k.a., the poverty level, as determined by the Department of Health and Human Services), which removes the burden of federal taxation on the poor and makes the FairTax Plan as progressive as the current tax code,
• Collect the national sales tax at the retail cash register, just as 45 states already do,
• Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax revenue as now raised by federal income taxes plus payroll withholding taxes,
• Continue Social Security and Medicare benefits as provided by law; only the means of tax collection changes,
• Eliminate all filing of individual federal tax returns,
• Eliminate the IRS and all audits of individual taxpayers; only audits of retailers would be needed, greatly reducing the cost of enforcing the federal tax code,
An Open Letter to the President, the Congress, and the American people -2- • Allow states the option of collecting the national retail sales tax, in return for a fee, along with their state and local sales taxes,
• Collect federal sales tax from every retail consumer in the country, whether citizen or undocumented alien, which will enlarge the federal tax base,
• Collect federal sales tax on all consumption spending on new final goods and services, whether the dollars used to finance the spending are generated legally, illegally, or in the huge “underground economy,”
• Dramatically reduce federal tax compliance costs paid by businesses, which are now embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world markets,
• Bring greater accountability and visibility to federal tax collection,
• Attract foreign equity investment to the United States, as well as encourage U.S. firms to locate new capital projects in the United States that might otherwise go abroad, and
• Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education to be investment, not consumption, which will make education about half as expensive for American families as it is now.
The current U.S. income tax code is widely regarded by just about everyone as unfair, complex, wasteful, confusing, and costly. Businesses and other organizations spend more than six billion hours each year complying with the federal tax code. Estimated compliance costs conservatively top $225 billion annually – costs that are ultimately embedded in retail prices paid by consumers.
The Internal Revenue Code cannot simply be “fixed,” which is amply demonstrated by more than 35 years of attempted tax code reform, each round resulting in yet more complexity and unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing more than 2.8 million words). Our nation’s current income tax alters business decisions in ways that limit growth in productivity. The federal income tax also alters saving and investment decisions of households, which dramatically reduces the economy’s potential for growth and job creation.
Payroll withholding taxes are regressive, hitting hardest those least able to pay. Simply stated, the complexity and frequently changing rules of the federal income tax code make our country less competitive in the global economy and rob the nation of its full potential for growth and job creation.
In summary, the economic benefits of the FairTax Plan are compelling. The FairTax Plan eliminates the tax bias against work, saving, and investment, which would lead to higher rates of economic growth, faster growth in productivity, more jobs, lower interest rates, and a higher standard of living for the American people.
An Open Letter to the President, the Congress, and the American people -3- The America proposed by the FairTax Plan would feature:
• no federal income taxes,
• no payroll taxes,
• no self-employment taxes,
• no capital gains taxes,
• no gift or estate taxes,
• no alternative minimum taxes,
• no corporate taxes,
• no payroll withholding,
• no taxes on Social Security benefits or pension benefits,
• no personal tax forms,
• no personal or business income tax record keeping, and
• no personal income tax filing whatsoever.
No Internal Revenue Service; no April 15th; all gone, forever.
We believe that many Americans will favor the FairTax Plan proposed by H.R. 25 and S. 25, although some may say, “it simply can’t be done.” Many said the same thing to the grassroots progressives who won women the right to vote, to those who made collective bargaining a reality for union members, and to the Freedom Riders who made civil rights a reality in America.
We urge Congress not to abandon the FairTax Plan simply because it will be difficult to face the objections of entrenched special interest groups – groups who now benefit from the complexity and tax preferences of the status quo. The comparative advantage and benefits offered by the FairTax Plan to the vast majority of Americans is simply too high a cost to pay.
Therefore, we the undersigned professional and university economists, endorse a progressive national retail sales tax plan, as provided by the FairTax Plan. We urge Congress to make H.R. 25 and S. 25 federal law, and then to work swiftly to repeal the 16th Amendment. Respectfully,
Donald L. Alexander Professor of Economics Western Michigan University
Wayne Angell Angell Economics
Jim Araji Professor of Agricultural Economics University of Idaho
Ray Ball Graduate School of Business University of Chicago
Roger J. Beck Professor Emeritus Southern Illinois University, Carbondale
John J. Bethune Kennedy Chair of Free Enterprise Barton College
David M. Brasington Louisiana State University
Jack A. Chambless Professor of Economics Valencia College
Christopher K. Coombs Louisiana State University
William J. Corcoran, Ph.D. University of Nebraska at Omaha
Eleanor D. Craig Economics Department University of Delaware
-4- An Open Letter to the President, the Congress, and the American people
Susan Dadres, Ph.D. Department of Economics Southern Methodist University
Henry Demmert Santa Clara University
Arthur De Vany Professor Emeritus Economics and Mathematical Behavioral Sciences University of California, Irvine
Pradeep Dubey Leading Professor Center for Game Theory Dept. of Economics SUNY at Stony Brook
Demissew Diro Ejara William Paterson University of New Jersey
Patricia J. Euzent Department of Economics University of Central Florida
John A. Flanders Professor of Business and Economics Central Methodist University
Richard H. Fosberg, Ph.D. William Paterson University
Gary L. French, Ph.D. Senior Vice President Nathan Associates Inc.
Professor James Frew Economics Department Willamette University
K. K. Fung University of Memphis
Satya J. Gabriel, Ph.D. Professor of Economics and Finance Mount Holyoke College
Dave Garthoff Summit College The University of Akron
Ronald D. Gilbert Associate Professor of Economics Texas Tech University
Philip E. Graves Department of Economics University of Colorado
Bettina Bien Greaves, Retired Foundation for Economic Education
John Greenhut, Ph.D. Associate Professor Finance & Business Economics School of Global Management and Leadership Arizona State University
Darrin V. Gulla Dept. of Economics University of Georgia
Jon Halvorson Assistant Professor of Economics Indiana University of Pennsylvania
Reza G. Hamzaee, Ph.D. Professor of Economics & Applied Decision Sciences Department of Economics Missouri Western State College
James M. Hvidding Professor of Economics Kutztown University
F. Jerry Ingram, Ph.D. Professor of Economics and Finance The University of Louisiana-Monroe
Drew Johnson Fellow Davenport Institute for Public Policy Pepperdine University
Steven J. Jordan Visiting Assistant Professor Virginia Tech Department of Economics
Richard E. Just University of Maryland
Dr. Michael S. Kaylen Associate Professor University of Missouri
David L. Kendall Professor of Economics and Finance University of Virginia's College at Wise
Peter M. Kerr Professor of Economics Southeast Missouri State University
Miles Spencer Kimball Professor of Economics University of Michigan
James V. Koch Department of Economics Old Dominion University
Laurence J. Kotlikoff Professor of Economics Boston University
Edward J. López Assistant Professor University of North Texas
Franklin Lopez Tulane University
Salvador Lopez University of West Georgia
Yuri N. Maltsev, Ph.D. Professor of Economics Carthage College
Glenn MacDonald John M. Olin Distinguished Professor of Economics and Strategy Washington University in St. Louis
Dr. John Merrifield, Professor of Economics University of Texas-San Antonio
An Open Letter to the President, the Congress, and the American people -5- Dr. Matt Metzgar Mount Union College
Carlisle Moody Department of Economics College of William and Mary
Andrew P. Morriss Galen J. Roush Professor of Business Law & Regulation Case Western Reserve University School of Law
Timothy Perri Department of Economics Appalachian State University Mark J. Perry School of Management and Department of Economics University of Michigan-Flint
Timothy Peterson Assistant Professor Economics and Management Department Gustavus Adolphus College
Ben Pierce Central Missouri State University
Michael K. Pippenger, Ph.D. Associate Professor of Economics University of Alaska
Robert Piron Professor of Economics Oberlin College
Mattias Polborn Department of Economics University of Illinois
Joseph S. Pomykala, Ph.D. Department of Economics Towson University
Barry Popkin University of North Carolina-Chapel Hill
Steven W. Rick Lecturer, University of Wisconsin Senior Economist, Credit Union National Association
Michael Rizzo Assistant Professor of Economics Centre College
Paul H. Rubin Samuel Candler Dobbs Professor of Economics & Law Department of Economics Emory Univeristy
John Ruggiero University of Dayton
Michael K. Salemi Bowman and Gordon Gray Professor of Economics University of North Carolina at Chapel Hill
Dr. Carole E. Scott Richards College of Business State University of West Georgia
Carlos Seiglie Dept. of Economics Rutgers University
John Semmens Economist Phoenix College, Arizona
Alan C. Shapiro Ivadelle and Theodore Johnson Professor of Banking and Finance Marshall School of Business University of Southern California
Dr. Stephen Shmanske Professor of Economics California State University, Hayward
James F. Smith University of North Carolina- Chapel Hill
Vernon L. Smith Economist W. James Smith Dean of Liberal Arts and Sciences and Professor of Economics University of Colorado at Denver
John C. Soper Boler School of Business John Carroll University
Roger Spencer Professor of Economics Trinity University
Daniel A. Sumner, Director, University of California Agricultural Issues Center and the Frank H. Buck, Jr., Chair Professor, Department of Agricultural and Resource Economics, University of California, Davis
Curtis R. Taylor Professor of Economics and Business Duke University
Robert Vigil Analysis Group, Inc.
John H. Wicks, Ph.D. Professor Emeritus Department of Economics University of Montana
F. Scott Wilson, Ph.D. Canisius College
Mokhlis Y. Zaki Professor of Economics Emeritus Northern Michigan University
An Open Letter to the President, the Congress, and the American people -6-
You're tpaine?
In fairness, we all tend to trash experts we don't agree with, and conservatives often dismiss anyone from a university who supports a liberal mindset. Just because "experts" say it is a good idea doesn't always mean it is.
It would favor the grasshoppers over the ants.
It would favor the grasshoppers over the ants.....Mojave
Exactly.
If you are just starting out or have gone through life without accumulating any savings worth mentioning, the Fair Tax is great......assuming you are not one of those Americans that pays little or no taxes.
If you have gone through life building up a hefty nest egg, it will double-tax every post-tax dollar you have managed to save when the Fair Tax takes effect.
There is a simple way to deal with the problem and I posted it a on Fair Tax thread a while back. I'll let you think it over. ....Polybius
The first thing the Fair Tax proponents have to do is acknowledge that there is a double taxation issue instead of tap-dancing around it.
It then has to be addressed and it is not that difficult to do.
If the Fair Tax takes effect on, say, 1 January 2008, the Government can create regulated accounts (along the lines of current Government regulated accounts such as SEP's, IRA's, etc.) into which individuals with post-tax savings can transfer those savings. Let's call these accounts "PTS Accounts" (Previously Taxed Savings Accounts).
As of 1 January 2008, individuals with these PTS Accounts could then spend that PTS money, tax-free, by the use of special PTS Debit Cards that tap the money in the PTS Accounts.
As of 1 Januar 2008, if you pay with cash or with a check or with a VISA, you pay the 23% Federal Fair Tax.
As of 1 Januar 2008, if you pay with your PTS Debit Card, the purchase is tax-free in regards to the Federal Fair Tax.
Any money earned on or after 1 January 2008, would not be allowed into PTS Accounts and would be spent subject to the Federal Fair Tax.
Do you have a point? I know you imagine you have, -- but you haven't made one. Try again.This isn't rocket science but if you don't understand the simple concept of the legislation, or at least read it, it is.
The first year of the Fairtax the rate is "23% of the gross payments" (that's in quotes for a reason). After the first year the rate is: "the combined Federal tax rate percentage".
The combined Federal tax rate percentage is the sum of--After the first year the bureaucrats at SS would determine a rate equal to 15.3% of the SS wage base.`(A) the general revenue rate (as defined in paragraph (4), and
`(B) the old-age, survivors and disability insurance rate, and
`(C) the hospital insurance rate.
If you are an employee you are presently paying 7.65% and your employer is paying 7.65%
If, after a Fairtax is passed, your employer retains the 7.65% previously paid on your behalf but gives you 100% of your paycheck the bureaucrats would calculate the sales tax rate at 15.3%...that would be a 100% tax increase.
Get it?
progressive national retail sales tax...
The word "progressive" was mentioned at least twice in this "proposal."
Why should anybody buy into a "progressive" proposal? Everytime I see the "p" word, my skin crawls.
My hackles have been raised. Explain why we should endorse this over what Boortz is proposing.
FRiend,
Did you read what they wrote? This is no good at all.
Support Boortz's plan. 'Pod.
My hackles have been raised. Explain why we should endorse this over what Boortz is proposingMan is your face gonna be red...This IS what Boortz is proposing...
ok, then why is the word "progressive" used? Why the insistence on tying it to past Left successes?
ok Frank, I'll ask you.
Why should we support anything that puts the word "progressive" up front and center?
And relies on past successes of the Left as one of its main selling points?
You must be kidding. Just because Wayne Angell says it good, you assume its good?
Of course, don't pay any attention to me (since I am an economist at a leading unversity).
As I said before, there are many great economists in the U.S. and only a scant few signed the letter. I got it and threw it in the trash.
We have absolutely no idea what a radical shift in the tax system will cause. Suppose we do it and the government can't finance its operations (such as the military). So, excuse me if some of us don't sign a petition on something that we don't know about.
As I said, I know a bunch of these people PERSONALLY and while I respect them, they are agreeing in theory without a clue of how it will work.
Do a web search for "public economics" or "public economists" and then find those at University of Chicago, Stanford, MIT, Harvard. Then cross list it with the petition. NADA!
Several people have attacked me for voicing an opinion - one that I am far more qualified to answer than virtually anyone on this site. Try doing some research before launching an attack. It is the same reason that I do not attack people who have served in the military.
Other than this little missive I'll pay no attention to you whatsoever: I was replying to another poster who found these economists to be undistinguished. You obviously fit that description.
My friend you are full of used food. Why should anyone believe that you have more than a high school education? The list of economists in the article is impressive. Have you been black-balled by them or something? Your self-importance will carry no weight here.
BTW, this is a site for DEBATE. Pick up your credentials, stand, turn left, walk to the hall, turn left into the bathroom and flush them down the toilet. If you want to debate, fine. If you want to jump in here and claim that only you know the truth, then go to DU.
Now you can attack me for paying more attention to you than I promised in my earlier post.
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