Got an email letter from my gressman John Kline today. It appears the whole party is starting the push for tax reform. Yeah!! Keep up the good work guys. See details below.
Many constituents tell me they believe our current tax code is far too complicated and should be eliminated or reformed. I am pleased to tell you I and my colleagues in Congress are already considering how best to simplify this confusing system and make it more fair for the American taxpayer.
While abolishing the IRS and replacing the income tax has much appeal, I am concerned Congress will only get "halfway across the stream," and we will end up with both an income tax and its replacement. We must be careful to avoid the unintended consequences that often accompany such large-scale changes.
At the end of last year, I sent out a mailing in which constituents were encouraged to share their thoughts on the federal tax code. Over 2200 constituents responded to the survey - 78% of whom indicated they prefer some degree of reform.
Constituents were asked to share their preference among the four reform proposals currently being weighed. The responses broke down as follows:
49% Flat Tax: The Flat Tax would replace the graduated income tax and most deductions and exemptions with a flat tax on income. Proposals include a truly flat rate of 20 percent or a rate of approximately 22 percent, which would enable the retention of deductions for charitable donations and mortgage interest.
27% National Retail Sales Tax: The National Retail Sales Tax would replace federal income, estate, and Social Security and Medicare payroll taxes with a tax on the sale of goods and services. The rate would be set at 23 percent in 2005. In following years the tax would be set at a blended rate taking into account a fixed general revenue tax rate of 14.91 percent and rates to be determined to support Social Security and Medicare. Many have suggested exempting goods such as food and pharmaceuticals from the tax.
20% No Change.
2% Value-Added Tax: The Value-Added Tax (VAT) would replace the income tax with a system of consumption taxes. VATs are typically collected by companies adding value to goods and services.
0.4% Transaction Fees: This proposal would replace federal taxes on individuals and corporations with a system of fees on all non-cash transactions. These fees would be similar to those charged by some banks for transactions by customers when they use checking accounts to make payments to third parties.
While I have not committed my support to any one option, I am committed to reforming the current system and ensuring a more simple and fair system of taxation.
President Bush has named a bipartisan panel to draft a fundamental tax reform proposal. This panel will be asked to review all options, seek input from members of Congress, hold public hearings, and provide advice to the Treasury secretary. I am eager to hear the findings of this panel and to weigh-in on this critical issue. I will continue to keep you informed as we make progress toward a tax code which enables more Americans to achieve economic prosperity.
Question of the Week: Congress passed legislation this week which implements the recommendations of the 9/11 Commission. The legislation would
- Make it more difficult for illegal immigrants to obtain a state driver's license or identification documents; - Eliminate abuse of the asylum system by strengthening the burden of proof for asylum-seekers and providing greater discretion for judges;
- Strengthen deportation laws for those who participate in terrorist-related activities; and - Facilitate the completion of the San Diego border fence.
DO YOU BELIEVE THESE INCREASES IN BORDER SECURITY MEASURES WILL KEEP AMERICANS BETTER PROTECTED FROM A TERRORIST ATTACK?Click here to answer...
