Erik Paulsen on Tax Reform

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.

No European-style VAT (value-added tax).

RESOLUTION Opposing the imposition of a value-added tax:
• Whereas a value-added tax (VAT) is a type of sales tax that is assessed on goods at every stage of production;
• Whereas a VAT is a hidden tax that is ultimately passed along to consumers, but is embedded into the price of goods and services and therefore not transparent to the consumer;
• Whereas the average tax burden levied by the Federal Government since 1980 has been 18% of GDP;
• Whereas, within the next 15 years, Federal taxes are projected to rise to the highest level in US history;
• Whereas adding a VAT on top of the existing Federal income tax would increase the burden on United States taxpayers to unprecedented levels;
• Whereas the average VAT rate in Europe has risen from 5% when the tax was first introduced in the 1960s to 20% today;
• Whereas European countries that have imposed a VAT have seen their total tax burden rise to an average of over 40% of GDP;
• Whereas such high levels of taxation and spending crowd out private investment, which stifles economic growth and leads to chronically high levels of unemployment;
• Whereas the IRS has calculated that US taxpayers spend approximately $200 billion and 7.6 billion hours a year to comply with Federal tax laws;
• Whereas a VAT would only add another layer of complexity and compliance costs to a fundamentally unsound tax system;
• Whereas the burden of a VAT would fall most heavily on low-income and middle-class Americans; and
• Whereas a VAT would do nothing to restore fiscal accountability in Washington, but would simply bankroll wasteful and inefficient Federal Government spending:
• Now, therefore, be it Resolved, That--
• It is the sense of the House of Representatives that imposing a value-added tax would be a massive tax increase that would cripple families on fixed income and only further push back the US economic recovery; and
• the House of Representatives opposes a value-added tax.

Member of House Ways and Means Committee.

The Committee of Ways and Means is the chief tax-writing committee of the United States House of Representatives. Members of the Ways and Means Committee cannot serve on any other House Committees, though they can apply for a waiver from their party's congressional leadership. The Committee has jurisdiction over all taxation, tariffs and other revenue-raising measures, as well as a number of other programs including:

• Social Security
• Unemployment benefits
• Medicare
• Enforcement of child support laws
• Temporary Assistance for Needy Families, a federal welfare program
• Foster care and adoption programs

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."

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.