Comment: To: The President's Advisory Panel on Federal Tax Reform April 22, 2005 The attached is a copy of my proposal as an alternative to the current IRS Income Tax. I request an e-mail reply to ensure that this proposal has been received and is to be considered. http://home.comcast.net/~PreciousIdeas/IFTS4-22-05.doc Norman Melling 17 Hillside Lane Doylestown, PA 18901 215-345-7939 +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ To: President George W. Bush's Tax Advisory Panel April 22, 2005 This proposal is for an alternative to the current IRS Income Tax System. "INVESTMENT FEE" TAX SYSTEM (IFTS) (c) SUMMARY: 1. IFTS is an alternative to the IRS. 2. Basic concept is that a 1% fee on the purchase of all investments, not sales, will raise sufficient revenue for government. 3. No complex tax codes. No forms. No time consuming expensive compliance schedules or burdens. No unjust enforcement bureaucracy for the collection processes. 4. Businesses will thrive under the IFTS. 5. IFTS Stimulates economic growth by encouraging investments and creating cash flow into the community. 6. IFTS Encourages home ownership. 7. IFTS Encourages charitable contributions. 8. Voluntary involvement further benefits Low Income Citizens. 9. Citizens will have a powerful impact on the government budget funding. 10. IFTS is simple, clear, fair and balanced to all, plus it is superior to the "Flat Tax" or the "National Sales Tax" ("Fair Tax"). 11. IFTS is easily implemented and can be phased in over a few years. SUBMITTED BY: Norman D. Melling This proposal is under a copy write in order to keep the entire proposal in context. Not chopped up. All rights remain. It is offered to the President's Tax Reform Advisory Panel to consider as an alternative Tax concept. If accepted, additional details will follow. Inspiration and influence of the IFTS proposal is acknowledged to be from: Max Schwartz and Demetrius Traggis http://home.comcast.net/~PreciousIdeas/IFTS4-22-05.doc "INVESTMENT FEE" TAX SYSTEM (IFTS) (c) BASICS: The "Investment Fee Tax System," IFTS, is a simplified approach as an alternative to the IRS. It can be phased in over a few years. All investments are subject to a nominal 1% fee when purchased, not sold! No forms, special privileges, tax accounting obligations other than that the IFTS fee is immediately sent to the Treasury electronically by the investment market. Investments are stocks, bonds, real estate, art, precious items, etc., which are purchased for profit. Exemptions are necessary personal consumables or required items for living standards, like the "Primary" home, car, consumables or services needed for personal livelihood. Primary home ownership and mortgages are tax offset. They are not considered as an investment. However, second homes, cars, etc. are considered investments and subject to IFTS. As an incentive to encourage home ownership, the mortgages and State and Local taxes shall be refundable up to 20% of the IFTS fees paid for Mini-Bonds (see #5 below). It is anticipated that at least $3T annually will initially flow into the Treasury and grow as the economy grows, due to the stimulus of the IFTS approach. It is a scheme to encourage and favor investments while stimulating the economy. It applies to individuals as well as businesses. No burdensome forms, changing complex tax codes or specialists needed to comply with the tax code and burdensome bureaucracy dictates. Besides eliminating the national debt it will create new dynamic industries and infrastructures. It stimulates cash flow which drives our capitalistic economy toward innovation and productivity. Innovation is our greatest national asset. We cannot compete with third world labor rates, but we can lead with innovation. Cash flow creates jobs at all levels, which compound itself toward even greater investments as the economy grows. PURPOSE: According to our founding Father's documents, the purpose of government is to protect our inalienable rights that were endowed to us by our Creator. Government serves us, not the other way around. Government does not have any rights other than what the people grant it. Congress is severely restricted by the Constitution. With respect to covering the cost of operating government it is not the right of anyone to take from someone and give to another, other than by obtaining that privilege with the consent of the people. The IFTS is a just, fair and balanced approach to raise funds for government operations because it allows the people to give their consent to government by the way they invest their own capital. APPROACH & GOALS: 1. IFTS applies a nominal 1% fee on all investments. (3% to 10% for Foreign owned entities or items) 2. Interest earned on savings or stock dividends are considered re-investments if retained in the account and therefore subject to the IFTS 1% fee. If withdrawn there is no IFTS fee. This increases the public cash flow. 3. Investments are inheritable and tax free. 4. Businesses simply apply the nominal 1% IFTS fee toward all capitol investments and enhancements, plus all services and expenses associated with the for profit business venture. This investment fee approach is similar to the European Union's "Value Added Tax", but at a nominal fee. IFTS business costs are generally passed onto the customer as increased pricing. Potential cheaters or abuse shall be severely punished. IFTS rules are simple and clear without costly, time consuming complex tax code structure and compliance processes. Focus on profit making, not taxes. 5. Congress shall create "Focused Government Budget Line Item Investments" as part of the IFTS approach: "Focused Budget Line Item Investments" are "Mini-Bonds" with a base face value equal to the standard "Treasury Note" interest. Congress in its wisdom during the budget cycle sets the planned multiyear funding profile for all line item expenditures. Congress shall select a number of sample programs or projects with definable deliverables, within the budget, that represent a cross section of the government's obligations to fund. These special "focused line items" are to be listed as potential investment opportunities for the public to consider as Mini-Bonds. E.G.: Alternative Fuel / Energy Developments; Urban Mass Transportation; Urban / Suburban Infrastructure; Health; Education; Arts and Welfare; Inner and Outer Space developments; DOD and National Security; Foreign Aid; etc. These selected "focused" line items, if available for "investment Mini- Bonds," will allow the public to have a greater impact and emphasis on which programs, or specific projects, are more important than others; by the way they choose to invest in which project or program. By following the money which is invested, the importance to the citizens of our great country will be clear to everyone as to which direction to guide our leaders and what outcome is expected. The people have a vast wealth of wisdom to be applied here. The budget doesn't change, but it allows Congress to hold fast on programs deemed needed, even if unpopular. Budget line items inadequately funded will provide an excellent Mini-Bond investment, while offsetting the government funding obligations. It will accelerate the outcome of deliverables, because increased funding generally means earlier success, which we all gain from. As an incentive these "Mini-Bonds" should also provide a greater award for early successful delivery of the programs planned. These incentives should be proportionately tied to the early delivery and potential savings to the government by not needing to fund the specific project deliverables in the planned budget out-years. This could double or triple the payoff "return on investment" to the individual's investment account and accumulated wealth, while directly influencing the governmental policy directions and economic stability of the United States of America. It gives each citizen a great voice and power to influence our future. Wise investors will participate and watch the funded programs as an indication as to what growing industries will emerge with government sponsorship.. 6. Benefits will flow to Low Income citizens by encouraging them to participate in investments. The government pays back each investor an incentive payment of up to $100 reflecting the initial fee paid for investing the first $10,000. Therefore, the first $10,000 invested is tax free. Investments above that are subject to the 1% fee or a 3% to 10% fee for an investment in a foreign owned entity. No one has to invest, including those who have low income, but if anyone wants to take advantage of the growth and benefits that come from compound interest, or stock and bond growth, even if it were in "stable" municipal or government Mini-Bonds, then the 1% fee applies. The fee is simply collected and sent immediately to the US Treasury electronically, directly from the market place. Simple rules, no forms and direct accounting of each purchase will eliminate the overwhelming bureaucratic structure and complications that have a negative impact on our lives and economy. 7. Encourage charitable contributions by allowing a refund of up to 20% off their IFTS fees paid to any Focused Budget Line Item Investments Mini-Bonds. This encourages a greater involvement in government Funded operations; which will include faith based initiatives, Arts & Culture, Planned Parenthood or Abstinence morality organizations, etc. The citizen can invest in any market investment, but to get the charitable refund the investment must be in the Mini-Bonds. Budget line items may be under funded, but if the citizens fund these items it sends a strong message to the administration, Congress, media and others, as to what is important to the citizens of this country, and what directions it is important to follow. 8. IFTS generates sufficient funds to meet government obligations, by voluntary investments, which therefore give the government the rights to perform basic services given to it by the citizens. "Flat Tax" alternatives retain the IRS and its bureaucracy and burdens. The "National Sales Tax" ("FAIR Tax") is a consumption tax which discourages economic growth, because it taxes consumables for all people, low and high income, and would generate "black" or gray markets creating problems with enforcements. It would have a detrimental affect on our nation. It puts the burden of tax collecting on the "Point of Sales" proprietor. 9. The IFTS is the only proposed tax system that does not demand compulsory participation and investments are considered "voluntary." It is fair and balanced, and is easily understood and implemented, while generating funds to operate all governmental functions and stimulate economic growth. A growing economy stimulates greater investments. It cuts over $600B annual burden of bureaucratic obligations and controls, that limit our economic growth and freedoms. IFTS will make the USA more competitive in the world. Businesses will favor being established in the USA over unstable offshore options. Out-sourcing will be for the right reasons, not for tax policies. Excess funds resulting from the Investment Fee Tax System will give the government flexibility to offer grants and incentives to stimulate development and growth in specific areas; such as alternative energy, urban transportation, safety & security, education, health care, environment, etc. Additionally, potential lower IFTS fees are possible if more than sufficient funds are collected. Optionally greater benefits and health care can be forthcoming to the entitlement annuitants or welfare, or foreign humanitarian aide. These increased payments will be a positive reward to a growing economy we all participate in. It will give the public greater incentives to be involved, because it will result in a feedback reward potential. Everyone gains with a taxation system which is based upon the consent of the people. Norman D. Melling April 22, 2005 PreciousIdeas@Hotmail.com Doylestown, PA http://home.comcast.net/~PreciousIdeas/IFTS4-22-05.doc |