Comment: To PresidentAcAEURA(tm)s Advisory Panel on Federal Tax Reform It is my understanding that your Panel is asking for ideas/advice concerning contemplated changes to the US Tax System. Here are my four thoughts on the subject: 1) Transparency. Due to withholding, and other contributing factors, the average citizen doesnAcAEURA(tm)t fully appreciate how onerous the current tax system really is. This lack of information and awareness has allowed politicians to collect far more money from the American public than would be the case if the average citizen was properly informed. The new tax system, however it shakes out, should include a provision that allows each tax paying citizen to see exactly how much he or she is paying each time the tax is levied against them. For example, if a national sales tax should become the law of the land, it should NOT in my opinion, be structured like the European VAT tax. The VAT over there is hidden in many cases from the average citizen. My suggestion is that the new national tax system be prominently displayed every time a citizen has to pay it. A working model is the state sales tax: In California, when we make a purchase, the receipt clearly states how much sales tax we just paid. We should expect nothing less when we have to pay on a national basis, whether it be an income tax, Value Added tax or a national sales tax. 2) Simplicity. There are pros and cons concerning a Value Added Tax, national sales tax, etc. At the end of the day, whichever one is picked, the key to success is to create it simple and keep it simple. There is no excuse for the complexity that plagues the current system. I pray that whatever cure is finally found, doesnAcAEURA(tm)t wind up being worse than the (tax collection) disease from which we already suffer. 3) Sunset. Whichever new tax collection vehicle becomes the law of the land, it should incorporate, in my opinion a sunset provision, i.e. the ability for it to be changed, after a set period of time, since it will need to be renewed. In fact, I think we need to ASSUME that the new tax system will contain flaws that need to be corrected. That is certainly true for our current system (i.e. it contains flaws), and is very liable to be the case for anything new we try as well. A sunset law (an automatic end to the law, that must be renewed after a period of time, say 10 years), would help give assurance to those who might waver on approving a new tax law in the first place, comfort that flaws (fatal or just fickle) must be addressed, no later than a date certain in the future, and wonAcAEURA(tm)t hang around our necks like a permanent millstone; example: the current Alternative Minimum Tax. 4) Legitimacy. Whatever the final outcome, the new tax system must appear legitimate in the eyes of the American public. This can only be achieved, in my opinion, by some broad-based approval process. The conventional method has been to go the Constitutional Amendment route. Since a super-majority (two-thirds of the House and Senate must approve of the proposal and send it to the states for a vote, where three-fourths of them must affirm) is required for a Constitutional Amendment to become law, this would hopefully create the legitimacy needed for such a huge change to be accepted by the American public. A different (better?) alternative would be to hold a (super-majority) referendum, either on a national basis or state by state; in that way, each citizen could vote for the Amendment. A direct vote would be the ultimate expression of legitimacy, in my opinion. By way of comparison (of how we probably DONAcAEURA(tm)T want the approval process to unfold here), we need look no further than AcAEURAoeacross the pondAcAEURA?. It appears that the EU Constitution may not pass in all the 25 EU countries, which is required if it is to become legally binding. Individual-country issues aside, one big flaw with the EU system, according to many Europeans whom I know, is that several countries never allowed their people to vote on important EU agenda items, i.e. adopting the Euro as their currency. If memory serves, neither France nor Germany allowed their people to vote on this very important issue. Instead, those decision(s) were taken by the legislators of those countries. True, they are elected representatives of the people, but (in my opinion) the seeds for todayAcAEURA(tm)s dissent concerning the EU Constitution can be traced right back to the ongoing unhappiness of the citizens of many European countries that they were not allowed to vote on EU-related issues; thus they lacked then (and in part or in whole) still lack ultimate legitimacy. If you let the American people vote on the new tax plan, that is the purest form of Legitimacy (with a capital L) that I can imagine. Summary: I applaud your collective efforts to reform the current tax system. Assuming the end result includes transparency, simplicity, a sunset provision and legitimacy, I believe the American public will embrace and endorse your efforts. Thank you Sincerely Tod Snodgrass Rancho Palos Verdes, CA |