Tom Emmer on Tax Reform

Keep taxes low to move toward a path of prosperity

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• Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.
• Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.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• Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.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.

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.