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Testimony Before Subcommittee on Select Revenue Measures
House Committee on Ways and Means ^ | September 26, 2006 | Steve King, a Representative in Congress from the State of Iowa

Posted on 10/01/2006 3:44:05 PM PDT by pigdog

Many of the proposals that are being brought before you have merit. But they have merit in the same sense that treating the symptoms of a serious disease rather than the underlying cause of the disease has merit. If we have no means of treating the underlying disease, then we treat the symptoms in the hope the disease will run its course and the patient will improve. If we have not yet accurately diagnosed the disease, then we alleviate the symptoms until the tests are completed and we can attack the underlying problem. On the other hand, if we understand the disease and we have the means to treat it, there is no merit in withholding curative treatment from the patient and only treating the patient’s symptoms.

Yet that is precisely what this Congress is doing with our tax policy. We understand the destructive impact that the current tax system is having on the American people. We understand that the current tax system is driving high paying jobs overseas and destroying opportunity for the American people because we tax American producers heavily whether the goods are sold in the U.S. or abroad but impose no tax on foreign production sold here. We understand that the current tax system has a dramatic adverse impact on the standard of living of the American people by discouraging work, savings, investment and entrepreneurship. We understand that the current tax system is obscenely complex and costly. We understand that the current tax system is unfair. We understand that the current tax system can barely be administered and fosters evasion at an ever accelerating pace notwithstanding ever more severe penalties and ever more intrusive reporting requirements.

Yet all Congress has done is tinker with an irretrievably broken tax system. We owe the American people a better tax system. And we should deliver one.

What would a better tax system look like? What are the criteria by which we should measure whether a tax system is good or bad?

A good tax system should not favor consumption over savings and investment. A good tax system should have the lowest possible marginal tax rates, removing to the greatest extent possible the disincentive to work, save and invest and providing the greatest opportunity for upward mobility. A good tax system should not put US producers at a disadvantage with those who produce abroad; it should not provide an artificial incentive to move jobs and production overseas. A good tax system should impose the same tax burden on all forms of productive activity and should tax each activity at a uniform rate. A good tax system should treat human capital formation and physical capital formation alike. A good tax system should dramatically reduce the administrative and compliance burden on the public. Such a tax system would lead to a dramatic increase in the prosperity of the American people.

A good tax system should exempt the poor from tax and allow everyone to meet the necessities of life before paying tax. Once the necessities of life have been met, however, a good tax system should treat people equally without favoring one set of taxpayers over another. A good tax system should not play favorites or reward the politically powerful and well connected.

A good tax system should be transparent and understandable so the public understands it; it should not hide the true tax burden or obfuscate. A good tax system should be politically stable, so that the reform will last. The transition to such a system should be manageable and fair. Such a tax system would be honest and improve the American political system.

The tax reform proposal that best meets these criteria is H.R. 25, the FairTax.

The FairTax replaces the individual and corporate income tax, all payroll taxes and the estate and gift tax with a 23 percent national retail sales tax on all consumption of goods and service without exception. A prebate would be provided monthly in advance to all households. The prebate amount would be equal to the poverty level times 23 percent. An extra amount is provided to married couples to prevent a marriage penalty.

The FairTax eliminates the current tax bias against saving and investment. It would, therefore, promote capital formation, increase productivity and enhance the competitiveness of American workers. The FairTax would get the government out of the business of picking favorites among industries and investments and allow businesses to invest based on what makes business sense. The FairTax has the broadest possible tax base consistent with economic growth. It, therefore, has the lowest possible marginal tax rates. It will dramatically reduce the tax drag on work, savings and investment and promote economic growth and prosperity to the maximum degree.

The current tax system drives good jobs and businesses out of the U.S. Why? The current tax system taxes U.S. American producers – both workers and companies – whether the goods and services are sold in the U.S. or abroad. The current tax system imposes no tax burden whatsoever on foreign goods and services sold in the U.S. The U.S. tax system accords a nearly 20 percent advantage to foreign producers. And virtually every foreign country relies to a great degree on consumption taxes (usually VATs) that are imposed on U.S. goods sold there and rebated on foreign goods sold here. It should come as no surprise that we produce only 2/3 of what we consume, that our great manufacturing companies are in decline and that high quality blue collar jobs are rapidly leaving the U.S. We have now lost our agricultural surplus and our services sectors are under intense pressure.

The FairTax remediates this problem by taxing foreign and U.S. goods alike when sold at retail. U.S. exports are not taxed. It levels the playing field. No other tax plan with wide support does this.

The FairTax treats investments in human capital and physical capital alike. Both are treated as investments and not taxed. No other tax plan does this.

The FairTax repeals the regressive payroll tax and entirely untaxes the poor. The prebate ensures that no poor American will pay tax on their consumption expenditures and dramatically reduces the tax rate on middle income Americans. No other tax plan does this.

The FairTax would eliminate the massive administrative burden on the American people imposed by the current system. For the first time in living memory, April 15th would be just another Spring day. What people earned would be what they keep. And every American would understand the tax system and how it worked.

By reducing marginal tax rates dramatically, the Fairtax reduces the incentive to engage in tax evasion. By radically simplifying the tax system, if audit resources are held constant, audit rates will increase and the likelihood of apprehending tax evaders will increase. Thus, the benefit of evading taxes will decline and the cost of tax evasion will increase and tax evasion will decline.

The FairTax offers us an unprecedented opportunity to make the lives of the American people better. It will enable U.S. workers and businesses to compete effectively in world markets. It will stop the hemorrhaging of high quality jobs that we are experiencing. It will promote entrepreneurship and enhance capital formation and productivity improvement. It will be fair and it will be comprehensible. It will reduce the tax gap and it will reduce compliance costs.

It is time to adopt the FairTax.

Thank you.


TOPICS: Business/Economy; Government
KEYWORDS: fairtax; first; flattax; formsa; fraudtax; incometax; isa; scam; slavetax; taxes; taxreform
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A very good read and right on target.
1 posted on 10/01/2006 3:44:07 PM PDT by pigdog
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To: Taxman; ancient_geezer; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; n-tres-ted; ...

More good stuff!!!


2 posted on 10/01/2006 3:44:49 PM PDT by pigdog
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To: pigdog
Bookmarked!

Fair tax bump.

The fairtax will use up the same amount of purchasing power that the current income tax does (maybe even less) but encourage productivity and investment instead of consumption and living beyond our means.

The fairtax returns the power of taxation to the individual in that he or she is free to decide when and where to pay the tax.

3 posted on 10/01/2006 3:51:35 PM PDT by groanup
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To: pigdog
Bumperoo.

New tag line.

4 posted on 10/01/2006 3:53:46 PM PDT by groanup (The FairTax has no payment deadline for the tax payer.)
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To: pigdog

Steve King lays it out.

Treat the disease, not the symptoms.

The FairTax is the cure!


5 posted on 10/01/2006 3:58:03 PM PDT by EternalVigilance (What man doesn't know about God's creation is still enough to fill a universe...)
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To: EternalVigilance

"It is time to adopt the FairTax."


6 posted on 10/01/2006 4:10:35 PM PDT by Zon (Honesty outlives the lie, spin and deception -- It always has -- It always will.)
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To: Zon

Great tagline.


7 posted on 10/01/2006 4:22:38 PM PDT by EternalVigilance (What man doesn't know about God's creation is still enough to fill a universe...)
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To: groanup
Sure enuf!!!

It's time for the FairTax!!!

8 posted on 10/01/2006 5:11:32 PM PDT by pigdog
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To: ancient_geezer; Taxman; pigdog; Principled; EternalVigilance; PhilWill; kevkrom; n-tres-ted; ...
Excellent Post! The Fair Tax also dramatically reduces tax evasion and is much more transparent than the current system. FairTax ping!
9 posted on 10/01/2006 5:16:46 PM PDT by Man50D (Fair Tax , you earn it , you keep it!)
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To: Taxman; pigdog; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; n-tres-ted; Zon; ...
A Taxreform ping for you all.

A solid commentary on whats wrong with the bandaid approachs we are plagued with currently.

If anyone would like to be added to this ping list let me know.

 

John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all federal income, SS/Medicare payroll, and gift/estate taxes outright replacing them with with a national retail sales tax administered by the states.

H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.

Refer for additional information:


10 posted on 10/01/2006 6:03:13 PM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: EternalVigilance
Steve King lays it out.

And does it extremely well if you ask me!

Treat the disease, not the symptoms.

AMEN!!!

The FairTax is the cure!

And AMEN!!!

11 posted on 10/01/2006 6:08:07 PM PDT by Bigun (IRS sucks @getridof it.com)
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To: Your Nightmare; Always Right; lewislynn; lucysmom; Mojave

More FraudTax nonsense.


12 posted on 10/01/2006 6:39:57 PM PDT by balrog666 (Ignorance is never better than knowledge. - Enrico Fermi)
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To: balrog666

Thanks for the thread bump!! Every little bit helps.


13 posted on 10/01/2006 6:48:54 PM PDT by pigdog
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To: balrog666

The failed spammers take solace in hits.


14 posted on 10/01/2006 7:37:23 PM PDT by Mojave
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To: Mojave

Nope ... just like to see others get an opportuniy to find out how great the FairTax is - and those bumps help.


15 posted on 10/01/2006 8:34:00 PM PDT by pigdog
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To: pigdog

BTTT! Excellent article.


16 posted on 10/02/2006 3:28:41 AM PDT by ovrtaxt (We gotta watch out for the Hellbazoo and the Hamas...)
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To: Mojave
You (or any of the other IRS shrills) were not forced to click on this post....for crying out loud, if your definition of spam includes this post then grow half a brain and don't read it.

Next step: start writing that you find such posts to be "offensive" and "oppressive" and that we need to "promote diversity"....hey, if you are really good you can make some victims.

gag.
17 posted on 10/02/2006 6:39:37 AM PDT by socialismisinsidious ( The socialist income tax system turns US citizens into beggars or quitters!)
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To: socialismisinsidious
In time, we'll probably see even more of he IRS shills since that's what they do - attack and take cheap shots at other posters - rather than debate.

They like to pass the "word" around of a new attack point so they can all show up and do their thing. the upside, of course, is that it helps keep the thread bumped.

On a recent Tax Reform thread, we had about 4,000 viewers which is quite good for a "dry" subject like taxes.

18 posted on 10/02/2006 7:53:08 AM PDT by pigdog
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To: groanup

It has no grace period either.


19 posted on 10/02/2006 9:58:32 AM PDT by lucysmom
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To: pigdog
On a recent Tax Reform thread, we had about 4,000 viewers which is quite good for a "dry" subject like taxes.

4000 is pretty good, but people are more interested in the truth about the FairTax:

JORGENSON EXPLODES FAIRTAX MYTH (FR Exclusive)
  Posted by RobFromGa
On News/Activism 08/25/2005 12:40:44 AM EDT · 703 replies · 11,172+ views

20 posted on 10/02/2006 10:22:24 AM PDT by RobFromGa (The FairTax cult is like Scientology, but without the movie stars)
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