Tom Graves on Tax Reform

Repeal the Death Tax.

A BILL to repeal the Federal estate and gift taxes:
• Subtitle B of the Internal Revenue Code of 1986 (relating to estate, gift, and generation-skipping taxes) is hereby repealed.
• The repeal shall apply to estates of decedents dying, gifts made, and generation-skipping transfers made after the date of the enactment of this Act.

Replace income tax & employment tax with FairTax.

• Repeals the income tax, employment tax, and estate and gift tax.
• Imposes a national sales tax on the use or consumption in the United States of taxable property or services.
• Sets the sales tax rate at 23% in 2011, with adjustments to the rate in subsequent years.
• Allows exemptions from the tax for property or services purchased for business, export, or investment purposes, and for state government functions.
• Prohibits the funding of the Internal Revenue Service (IRS) after FY2013.
• Establishes in the Department of the Treasury: (1) an Excise Tax Bureau to administer excise taxes not administered by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); and (2) a Sales Tax Bureau to administer the national sales tax.
• Terminates the sales tax imposed by this Act if the Sixteenth Amendment to the U.S. Constitution (authorizing an income tax) is not repealed within seven years after the enactment of this Act.

Taxpayer Protection Pledge: no new taxes.

Politicians often run for office saying they won't raise taxes, but then quickly turn their backs on the taxpayer. The idea of the Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing.

In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is actually made to a candidate's constituents, who are entitled to know where candidates stand before sending them to the capitol. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which he or she signed the Pledge.

Since its rollout with the endorsement of President Reagan in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts.

Adopt a single-rate tax system.

The Contract from America, clause 4. Enact Fundamental Tax Reform:

Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words--the length of the original Constitution.

Repeal tax hikes in capital gains and death tax.

The Contract from America, clause 10. Stop the Tax Hikes:

Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.

Replace income tax & estate tax with 23% sales tax.

Congress finds the Federal income tax--
1. retards economic growth and has reduced the standard of living
2. impedes the international competitiveness of US industry
3. reduces savings and investment by taxing income multiple times
4. slows the capital formation necessary for real wages to steadily increase
5. lowers productivity
6. imposes unacceptable and unnecessary administrative and compliance costs
7. is unfair and inequitable
8. unnecessarily intrudes upon the privacy and civil rights of US citizens
9. impedes upward social mobility.

Findings Relating to National Sales Tax- Congress finds further that a broad-based national sales tax on goods and services purchased for final consumption--
1. is similar in many respects to the sales and use taxes in place in 45 of the 50 States
2. will promote savings and investment
3. will promote fairness
4. will promote economic growth
5. will raise the standard of living
6. will increase investment
7. will enhance productivity and international competitiveness
8. will reduce administrative burdens on the American taxpayer
9. will improve upward social mobility; and
10. will respect the privacy interests and civil rights of taxpayers.

REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES
• Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.
• Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.
• Funding of Social Security Trust Funds [will be] from general revenue
• Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.
• IMPOSITION OF SALES TAX: There is hereby imposed a tax on the use or consumption in the US of taxable property or services.
• In the calendar year 2013, the rate of tax is 23% of the gross payments for the taxable property or service.

Permanently repeal the estate tax.

Congressional Summary:

• H.R.143: Effective for estates of decedents dying after December 31, 2010, chapter 11 of subtitle B of the Internal Revenue Code of 1986 is repealed.
• H.R.177: Subtitle B of the Internal Revenue Code of 1986 (relating to estate, gift, and generation-skipping taxes) is hereby repealed.

OnTheIssues Explanation: At the end of 2010, the temporary one-year suspension of the estate tax ended. This bill proposes to make it permanent, with zero exemption. The "exemption" means the amount one can inherit without taxation. In 2009 the rate was 45% and the exemption amount was $3.5 million. On January 1, 2010 a "one year repeal" of the tax was effectuated by a temporary, one-year-only rate of 0%. On January 1, 2011 the estate tax is scheduled to a top rate of 35% and the exemption amount is scheduled to be $5 million, or $10 million for married couples.

Supports the Taxpayer Protection Pledge.

[The ATR, Americans for Tax Reform, run by conservative lobbyist Grover Norquist, ask legislators to sign the Taxpayer Protection Pledge in each election cycle. Their self-description:]

In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. Since its rollout in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts. Today the Taxpayer Protection Pledge is offered to every candidate for state office and to all incumbents. More than 1,100 state officeholders, from state representative to governor, have signed the Pledge.

The Taxpayer Protection Pledge: "I pledge to the taxpayers of my district and to the American people that I will: ONE, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

Opponents' Opinion (from wikipedia.com):In Nov. 2011, Sen. Harry Reid (D-NV) claimed that Congressional Republicans "are being led like puppets by Grover Norquist. They're giving speeches that we should compromise on our deficit, but never do they compromise on Grover Norquist. He is their leader." Since Norquist's pledge binds signatories to opposing deficit reduction agreements that include any element of increased tax revenue, some Republican deficit hawks now retired from office have stated that Norquist has become an obstacle to deficit reduction. Former Republican Senator Alan Simpson, co-chairman of the National Commission on Fiscal Responsibility and Reform, has been particularly critical, describing Norquist's position as "no taxes, under any situation, even if your country goes to hell."

Repeal the death tax, immediately and with no expiration.

Repeals the federal estate, gift, and generation-skipping transfer taxes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

• Subtitle B of the Internal Revenue Code of 1986 (relating to estate, gift, and generation-skipping taxes) is hereby repealed.
• The repeal shall apply to estates of decedents dying, gifts made, and generation-skipping transfers made after the date of the enactment of this Act.

Replace income tax and IRS with FairTax.

Congressional Summary: This bill imposes a national sales tax in lieu of the current income and corporate income tax, employment taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2017, with adjustments in subsequent years. U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon family size and poverty guidelines. No funding is allowed for the operations of the Internal Revenue Service after FY2019. Finally, the FairTax terminates if the 16th Amendment to the Constitution (authorizing an income tax) is not repealed within 7 years.

Supporters reasons for voting YEA: Rep. MORAN: I am all on board on tax reform, but the best solution is not tinkering with the current system; it is an overhaul of the current Tax Code. The FairTax, in my view, brings two goals front and center: to pass on to the next generation of Americans the freedoms and liberties guaranteed by our Constitution, and the opportunity for every American to live the American dream.

Opponents reasons for voting NAY: (by FairTaxWarrior.com):

• Criticisms from The Left
  • The FairTax rate is really 30%, not the 23% proponents say.
  • It's an additional national sales tax.
  • It's really just a windfall tax cut for the rich.
  • A sales tax is regressive, and punishes the poor unfairly.
  • It's just a scheme to let corporations escape paying taxes.
• Criticisms from The Right:
  • The FairTax does nothing to cut government spending.
  • The 23% rate is too high.
  • It 's the largest welfare increase in history [via the Family Consumption Allowance]
• General criticisms
  • The FairTax will negatively impact the housing market [by removing the mortgage deduction].
  • Black market activity will increase.
  • The IRS won't really be abolished.
  • The Flat (Income) Tax is a better option.
  • It will be a nightmare to transition to The FairTax from an Income Tax.

Death Tax is a pernicious double tax.

Heritage Action Summary: This bill would repeal the estate and generation-skipping transfer taxes, as well as cut the top gift tax rate.

Heritage Foundation recommendation to vote YES: (4/16/2015): Collectively, these measures repeal the pernicious double tax known as the "death tax," and result in a tax cut of $269 billion over 10 years. The death tax hurts economic growth and therefore limits the ability of Americans to prosper. Repealing the death tax would generate an average of 18,000 jobs annually and increase the overall net worth of American households by $300 billion a year. The federal government should encourage, not punish, Americans who work and pay taxes their whole lives, save enough to support themselves through retirement, and retain the ability to fulfill the American Dream by passing along a better life to their children.

Secretary of Labor Robert Reich recommendation to vote YES: (robertreich.org 6/4/2015): At a time of historic economic inequality, it should be a no-brainer to raise a tax on inherited wealth for the very rich. Yet there's a move among some members of Congress to abolish it altogether. Today the estate tax reaches only the richest 2/10 of 1%, and applies only to dollars in excess of $10.86 million for married couples or $5.43 million for individuals. That means if a couple leaves to their heirs $10,860,001, they now pay the estate tax on $1. The current estate tax rate is 40%, so that would be 40 cents. Yet according to these members of Congress, that's still too much. Our democracy's Founding Fathers did not want a privileged aristocracy. Yet that's the direction we're going in. The tax on inherited wealth is one of the major bulwarks against it. That tax should be increased and strengthened.

Legislative outcome: Passed by the House 240-179-12; never came to vote in Senate.