Precious little reform in tax reform panel

The president’s tax reform panel has failed to answer even the most basic questions on any of the major reform plans, instead opting for another tweak of the income tax, hardly tax reform.

The effect on the following wasn’t examined at all:

1. Economic growth

2. Foreign trade

3. Interest rates

4. Job creation

5. The $300 billion to $500 billion compliance cost

6. Entitlement programs like Social Security, Medicare and Medicaid

7. Complexity

8. The poor, the middle class, the rich

9. Wealth repatriation

10. Future federal revenues

11. The $5 trillion-a-year collateral damage of the exemption-riddled 90,000-page present code.

Out of hundreds of hours of testimony, less than five were on the major tax reform plans like the AFFT Fair Tax and Steve Forbes’ flat income tax; all the rest was on the present tax code.

Not only was the panel flat-out incompetent, but they went way beyond that by active deception and subterfuge.

The Fair Tax version of a national retail sales tax, with its pre-bate system, has no exemptions, except for used goods, and would therefore tax at 23 percent while removing 22 percent in embedded taxes, ending the income and payroll taxes forever while retail prices with the sales tax included remain essentially the same. The Fair Tax is just that much more efficient. The present code has 90,000 pages of exemptions that are the main cause of complexity, corruption and economic harm.

So the panel set up a straw man by creating an unworkable retail sales tax that no major group other than it is proposing. Their “straw man” would continue all your favorite exemptions. However, what remained would have to be taxed at 87 percent in order to be revenue neutral. Voila! A national retail sales tax is “unworkable.” What is unworkable is this panel. They are not interested in reform at all. Even their name is a deception and an affront to any thinking individual.

The panel was selected by the president. In order to seem unbiased, the nation’s leading economists who have made tax reform their major interest were intentionally excluded (is this a result of political correctness?). These include Dale Jorgenson of Harvard and Laurence Kotlikoff of Boston University and others. It is no wonder the panel failed to make even a timid recommendation for real tax reform. They did not meet even one of the goals set by the president, which were:

1. Simplify federal tax laws to reduce the costs and administrative burdens of compliance with such laws.

2. Share the burdens and benefits of the federal tax structure in an appropriately progressive manner while recognizing the importance of homeownership and charity in American society.

3. Promote long-run economic growth and job creation, and better encourage work effort, saving and investment, so as to strengthen the competitiveness of the United States in the global marketplace.

The Fair Tax meets every one of the president’s recommendations and more. This panel should be disbanded in disgrace. Their recommendations should be completely ignored. They did a negative service for the country and should be ashamed of themselves, especially those members who know better or should know better like MIT economist James Poterba.

I am calling on you to show the leadership that Maine and America need now more than ever to correct this outrageous injustice to all Americans. We desperately need leaders with courage to stand up and speak for us. As a voter, I, and my fellow Fairtaxers, will vote for the candidate who publicly supports the Fair Tax.

Tim Clark is a Fairtax.org volunteer who lives in Glenburn.