2012 Candidates for President

Ron Paul

Summary

Congressman Paul is a strong advocate for reforming the tax system and lowering the overall tax burden on the American people. At a tax day speech in 2010, Congressman Paul stated that taxes were equivalent to stealing from the citizens and were a symptom of a runaway government. Congressman Paul often states that he opposes the view that all revenue is owned by the government and that it allows citizens to keep certain amounts. He states that all taxes beyond minimal government spending is stealing and minimum government spending is defined by the constitution. Taxes should therefore be limited to paying for only those actions constitutionally defined.

In 2005 Congressman Paul argued for the ability of citizens of states with sales taxes instead of income taxes to deduct those sales taxes from the federal government income tax. He states that not being able to deduct these taxes puts states on an unequal footing with states with income taxes whose citizens can deduct those taxes.

Throughout that year, Congressman Paul argued against tax reform that did not include lowering of tax rates or elimination of taxes. He stated that doing anything else was equivalent to a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays.

In addition to overall lowering of tax rates, one tax that Congressman Paul has specifically sought to end is the death tax. He has stated that the death tax is an especially galling form of double taxation as Americans already pay federal and state income taxes, capital gains taxes, local property taxes, sales taxes, and federal taxes on items like gasoline and telephone use, yet the government still seeks to tax money that people manage to save after paying these taxes. He has stated that the estate tax raises little money and exists based solely on the politics of fearing dynastic families. He quoted a scholar by stating that the estate tax does four things-- discourages savings and investment, undermines job creation and wage growth, stifles investment, and contradicts a central premise of American life, namely, building wealth and “getting ahead.” He has co-sponsored legislation to repeal the death tax.

Congressman Paul has also argued for the removal of the Alternative Minimum Tax (AMT). He notes that the source of the tax - that large portions of the population were escaping paying taxes - is false and that the government should be able to dictate how much of a citizen's earnings they can keep based upon the income the government believes is appropriate.

Congressman Paul supports the Fair Tax in theory, as a sales tax is less susceptible to manipulation and loopholes. However, he notes that installing a sales tax without repealing the 16th amendment (the income tax) would only lead to a scenario where both the sales tax and the income tax are enforced.

As part of his 2012 Presidential campaign, Congressman Paul has stated that once the federal government is properly limited, he would move to end the income tax and abolish the IRS, along with the capital gains tax, and the estate tax.

Sales Tax Deduction

In February of 2005, Congressman Paul released a press statement noting his support for making the deductions for state sales tax permanent.

Paul Joins Effort to Make State Sales Tax Deduction Permanent 

February 9, 2005 Washington, DC: Congressman Ron Paul and other members of the Texas congressional delegation have joined Congressman Kevin Brady in working to create a permanent states sales tax deduction. This campaign will correct an injustice that affects millions of Texas taxpayers.

Most American taxpayers are able to deduct their state income taxes from their federal tax bill. Until 1986, citizens of Texas and other states with no income tax were allowed to claim a federal tax deduction for state sales taxes. In 1987, however, that state sales tax deduction was eliminated. As a result, Texas taxpayers have been unfairly penalized.

At the end of 2004, Congress passed a larger tax bill that restored the state sales tax deduction for 2 years. New legislation is needed, however, to ensure the deduction becomes permanent and Texans never pay more federal taxes than residents of other states. Congressman Paul and his House colleagues from Texas will work with Congressman Brady as cosponsors of legislation before the House Ways and Means committee, and the delegation is committed to passing the bill before the 2 year provisional measure expires.

In October of 2007, Congressman Paul issued a press statement noting his support for fairness in the tax system for states that have a sales tax.

Congressman Paul Demands Tax Fairness for His State

Congressman Paul Joins with 72 Other Members to Demand Tax Fairness for His State

October 29, 2007

Washington, DC - Congressman Ron Paul has signed on to a letter directed to the leadership of the House Ways and Means Committee asking them to continue allowing sales taxes to be deductible on Federal Income Tax returns. This deduction is set to expire at the end of this year.

State income taxes are deductible on federal income tax returns, however Texas and six other states do not have a state income tax, relying instead on sales taxes for revenue. This puts residents of these states on unequal footing if the sales tax deduction is allowed to expire.

“While my long term goal is to make the sales tax deduction permanent, even an extension would be a victory for taxpayers in Texas ,” stated the Congressman.

Congressman Ron Paul is fighting for this deduction to be renewed either long-term or permanently for tax fairness in Texas . In addition to signing on to this letter, he has cosponsored HR 60, which calls for the sales tax deduction to be made permanent, and HR 3680 which extends it for another year. 

Tax Reform is a Shell Game

In March of 2005, Congressman Paul used his "Texas Talk" to address the discussions concerning tax reform. He notes that the concept of the sales tax is not likely to happen as an income tax would likely come back if the 16th amendment wasn't repealed.

Tax Reform is a Shell Game
March 7, 2005

Tax reform is back in the news, brought to the political forefront by a recent meeting of the president’s advisory panel on tax reform. Once again, politicians and former politicians are lamenting the complexity of our tax laws, as though their own spending measures have nothing to do with it. But we’ve heard this song before. In fact, we’ve been promised a simpler, fairer, and better income tax system many times, most recently in 1997 and 1986 when Congress made relatively significant changes to the tax code.

Yet the federal tax system remains an embarrassment, both in terms of the tax burden itself and the outrageous compliance costs engendered by its complexity. One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s.

The president has thrown cold water on the consumption tax proposal, however, by announcing he opposes any reform that eliminates mortgage and charitable deductions. This leaves us with variations on the flat tax concept, which was savaged by the political left when advocated by the likes of House Majority Leader Dick Armey and Steve Forbes in the 1990s.

Lew Rockwell of the Ludwig von Mises Institute offers a very simple test for any tax reform proposal: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. The reform debate is strictly about politics and not serious economics.

Both sides use demagoguery but don’t propose truly significant tax reductions. Both sides use the outrageous expression “cost to government” when talking about the impact of tax legislation on revenues. This implies that government owns everything, and that any tax rate less than 100% costs government some of its rightful bounty. Government spending is the problem! When the federal government takes $2.5 trillion dollars out of the legitimate private economy in a single year, whether through taxes or borrowing, spending clearly is out of control.

Deficit spending creates a de facto tax hike, because deficits can be repaid only by future tax increases. By this measure Congress and the president have raised taxes dramatically over the past few years, despite the tax-cutting rhetoric. The real issue is total spending by government, not tax reform. Who wants a 40% flat tax? Who wants a national sales tax if it adds 35% to the retail price of everything we buy? In other words, why change the tax structure if spending stays the same? Once we accept that Congress needs $2.5 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.

Simpler Tax Code

In October of 2005, Congressman Paul used his "Texas Talk" to note that no one opposes a simpler tax system with the exception of those in Washington.

Who Opposes Simpler, Lower Taxes?
October 17, 2005

The president’s advisory panel on tax reform held a public meeting last week to discuss possible changes to our tax code, which most Americans view as a disgrace. Unfortunately, the reform panel consists almost entirely of Washington beltway insiders who have absolutely nothing in common with ordinary American taxpayers. The members are former Congressmen and Senators, DC think tank scholars, university professors, and-- unbelievably-- a former commissioner of the IRS! It’s hard to imagine someone more opposed to taxpayer interests than the head of the IRS, the very agency that millions of Americans want abolished.

It’s doubtful that former politicians and tax bureaucrats will propose meaningful tax reform. After all, we’ve heard this song before. Remember the big tax reform bills of 1986, 1997, and 2001? We were promised a simpler tax code each time, but it never happened. Some slight progress has been made in terms of very modest rate reductions and a slow phaseout of the estate tax, but even those changes may be reversed by revenue-hungry future congresses. The reform panel should have two simple goals: make taxes lower, and make taxes simpler. Anything else quite frankly is insulting to the American public. But during several hours of discussion last week, the various panelists talked about everything but those two objectives. Instead they embraced the practice of using the tax code as a tool for social engineering, debating what exemptions, credits, and deductions should be tinkered with to steer taxpayers toward or away from certain activities.

The panelists also misused the term “tax subsidy” over and over. A true subsidy is very simple: certain individuals or businesses receive taxpayer money from the government. But the panel members clearly have accepted the thoroughly leftist idea that all income belongs to the state, and therefore the state “subsidizes” you by letting you keep some of the money you earned. This is nonsense. If the government uses tax dollars to build you a house, you have received a subsidy. Taxpayers have given you something. But if you pay less in income taxes because of the mortgage interest deduction, you have not been “subsidized” by anyone. The government has not given you something; it simply has taken less. What kind of tax reform proposals can we expect from people who can’t understand the fundamental difference between a subsidy and a tax cut?

When it comes to actual tax reform legislation in Congress, don’t underestimate the lobbying influence of accountants, tax attorneys, tax preparers, IRS employees, and mortgage companies, just to name a few. Many, many groups and industries benefit from our Byzantine tax system in one way or another. They will not accept major changes to the tax code without a fight. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes.

Government spending is the problem! When the federal government takes $2.5 trillion dollars out of the legitimate private economy in a single year, whether through taxes or borrowing, spending clearly is out of control. Deficit spending creates a de facto tax hike, because deficits can be repaid only by future tax increases. By this measure Congress and the president have raised taxes dramatically over the past few years, despite the tax-cutting rhetoric. The real issue is total spending by government, not tax reform.

Death Tax Repeal

In October of 2005, Congressman Paul used his "Texas Talk" to address the need to repeal the estate tax.

Will the Estate Tax ever be Repealed?
October 24, 2005

Just two years ago, Congress was poised to eliminate the hated estate tax permanently. Today, however, several U.S. Senators are using their own wasteful spending habits to justify retaining the tax. In the eyes of these Senators, budget deficits are never the result of too much spending, but rather too little taxing. They cannot imagine giving up even the tiny fraction of federal revenues raised by the estate tax. Why is a one percent revenue cut unthinkable to these lawmakers, while annual three or five percent spending increases are considered business as usual?

To answer this question, look no further than the transportation bill passed last week in the Senate. It is perhaps the most pork-filled, wasteful appropriations bill passed in years. The bottom line is that spending money is what keeps these Senators in office. They won’t stop pork spending because the American voting public rewards them for it.

The estate tax, more accurately known as the death tax because it is levied when a taxpayer dies, confiscates anywhere from 37% to 55% of a individual’s assets. While these rates are unconscionable, the death tax also represents an especially galling form of double taxation. Americans already pay federal and state income taxes throughout their working lives. They pay income and capital gains taxes on money they save and invest. They pay local property taxes on their homes. They pay various sales taxes whenever they buy something. They even pay steep federal taxes on gasoline and telephone use. Yet after a lifetime of burdensome taxes, the death tax punishes Americans one last time simply because they worked hard, saved, and invested to pass something on to their families.

In 2001 the House debated an outright repeal of the estate tax. Political considerations-- based on the false argument that the estate tax only applies to some imagined class of dynastic families-- prevented the passage of an immediate repeal. Instead, a slow ten-year phaseout bill passed in both the House and Senate chambers. Incredibly, however, the Senate added a provision that would cause the tax rules to revert back to the current system after the ten-year period. In other words, the death tax will return after 2011! So a taxpayer dying in 2010 would pay no estate tax, while his unfortunate neighbor dying the next year would get a whopping bill from the IRS.

Accountants and tax attorneys might support this crazy system, but it creates an estate planning nightmare for American families. Some doctors even warn it could give elderly people a morbid incentive to time their deaths out of concern for their loved ones. The tired argument that the estate tax only affects the rich simply is false. Many of my constituents are farmers, ranchers, and small business owners. They are hardly rich, but some of them have built up valuable businesses they would like to pass on to their children. Yet when they die, their children rarely have the liquid cash needed to pay the death tax bill. Often the business must be sold or divided to raise money for the IRS. Many family farms across this country have been bought by large corporations because of the estate tax.

Ultimately, the argument against the death tax is a moral one. People should not be punished for working hard, saving, and building wealth. Our society should respect the most basic property right, namely the right to dispose of one’s property as one chooses. The American dream is based on making a better life for one’s children, despite the empty rhetoric of the class-warfare politicians in Washington. Building wealth is not sinister, it is admirable. Our tax rules should encourage the decidedly American virtue of saving for the future.

Numerous Permanent Tax Cuts

In December of 2005, Congressman Paul released a press statement noting his support for making numerous tax cuts permanent.

Congress Passes Several Tax Cuts Benefiting Texas

December 7, 2005 Congressman Ron Paul joined an overwhelming majority of his congressional colleagues in voting to pass several tax cuts this week, including measures that directly benefit Texans. Several new tax provisions provide specific relief for those living in counties affected by Hurricane Rita earlier this year. All of the new tax provisions will be available for individuals and businesses filing their 2005 returns. Below are summaries of some of the specific tax cuts passed by Congress this week:

• Texans can continue to deduct sales taxes from their income taxes in 2006, assuring parity with taxpayers who deduct state income taxes;
• Individuals affected by Rita can withdraw money from their IRA or pension plan without incurring penalties;
• Small employers who continued to pay employees in the aftermath of Rita can claim significant tax credits;
• Individuals can deduct casualty losses resulting from Rita regardless of adjusted gross income;
• Military personnel can use tax-free combat pay as income to receive the earned income tax credit;
• Individuals can deduct higher education expenses regardless of whether they itemize;
• Teachers can deduct the cost of classroom supplies regardless of whether they itemize;
• Higher exemption levels for the dreaded Alternative Minimum Tax (AMT) are extended; and
• Lower tax rates for dividend and interest income are extended.

Tax Relief Extension Reconciliation Act

In May of 2006, Congressman Paul released a press statement noting his support for the Tax Relief Extension Reconciliation Act.

Congress Passes Middle-Class Tax Relief Legislation

May 11, 2006

Washington, DC: Congressman Ron Paul yesterday joined more than 240 of his colleagues in the House of Representatives in voting to pass the Tax Relief Extension Reconciliation Act. This legislation was needed to prevent a tax increase on small business owners, seniors, and married couples scheduled for 2006 and 2008. The bill centers on averting tax hikes on capital gains and dividends, exempting ordinary taxpayers from the alternative minimum tax (AMT), and helping small business owners by extending the Section 179 expensing provision.

“Many of the provisions contained in this legislation were necessary to avoid serious tax consequences for millions of American taxpayers,” Paul stated. “Dividend and capital gains tax relief is needed to encourage people to save for their retirements, and the alternative minimum tax is especially harmful. It was never intended to apply to ordinary taxpayers. This legislation takes a small step toward easing the burden on middle class taxpayers.”

Specifically, the Tax Reconciliation bill:

-Extends the lower 15% rate for capital gains and dividend income for an additional two years. Mutual fund holders who designate a portion of their dividends as capital gains distribution also benefit from this provision. -Prevents the AMT from ensnaring more middle class taxpayers. It creates a higher AMT exemption level for 2006 ($62,550 for joint filers; $42,500 for single filers). AMT relief is the largest piece of the bill; 15 million middle class taxpayers otherwise would be subject to AMT in 2006. -Allows many non-refundable tax credits to be claimed against AMT, including the mortgage interest credit, the Hope education credit, and the Lifetime Learning credit. -Extends the vitally important small business expensing deduction (Section 179) at $100,000 through 2009.

Why Won't Congress End the Estate Tax

In June of 2006, Congressman Paul used his "Texas Talk" to ask why congress won't end the estate tax.

Why Won't Congress Abolish the Estate Tax?
June 12, 2006

The U.S. Senate had a golden opportunity to repeal the federal estate tax last week, but fell a few votes short. I fear that vote might represent the high-water mark in the movement to get rid of this destructive tax once and for all. Fortunately, estate taxes no longer devour 60% of some individuals’ wealth when they die. Congress passed legislation in 2001 that reduced estate tax rates and increased the amount of assets exempt from the tax. Yet Congress has been unable to abolish the estate tax altogether, and due to a political compromise the old rates will be back in effect come 2011 unless Congress acts first.

The estate tax raises very little money. In fact, even at its height the estate tax accounted for only a little more than 1% of federal revenues. A congressional Joint Economic committee report estimates that Americans spend as much avoiding estate taxes—paying attorneys and accountants—as they do paying estate taxes. A study by a Stanford professor concluded that “True revenues associated with estate taxation may well have been near zero, or even negative.”

It’s no longer a matter of tax policy or economics—the arguments in favor of the estate tax have all been demolished. Instead, the estate tax survives purely because of politics. The real motivation behind the estate tax is a deep-seated hostility to property rights, and a misguided fear of family dynasties. But people don’t keep money in mattresses anymore. Money inherited from an estate is either spent, saved, or invested—all of which are better for the economy than sending it to Washington, where bureaucratic overhead consumes at least 50 cents of every dollar.

If you truly own your property, you have the right to dispose of it any way you wish. You can sell it, give it away, or direct who will receive it when you die. This control is the essence of property rights. If you can’t control what happens to your property, you don’t really own it. That’s why the estate tax is so destructive. Since people don’t want the government controlling their property when they die, they twist themselves into pretzels finding ways to avoid turning assets over to the IRS. Some create elaborate trusts to minimize their taxes, supporting the economically wasteful estate-planning industry. Others simply lose their entrepreneurial spark, stop working, and spend their money-- succumbing to a “die broke” attitude.

Again, the issue is control. People who have worked hard to build wealth simply cannot stand to see government take a big chunk of their assets when they die, so they do anything they can--even economically harmful things—to prevent it. This is what supporters of the estate tax cannot seem to understand. For smaller, family-owned farms and ranches, the estate tax is especially threatening. Such operations may be worth several million dollars when the value of land, livestock, buildings, and equipment are considered. Yet when the owner dies, his heirs often do not have liquid cash to pay a hefty tax bill. As a result, all or part of the family business may be sold to pay the IRS. This has accelerated the trend toward corporate ownership of American farms and ranches.

As William Beach at the Heritage Foundation summarizes, the estate tax does four things-- all of which are bad for the economy and frankly un-American: First, it discourages savings and investment. Second, it undermines job creation and wage growth. Third, it stifles investment. Forth, it contradicts a central premise of American life, namely, building wealth and “getting ahead.” For all of these reasons, it’s time to get rid of the estate tax once and for all.

Taxes and Spending are the Real Problem

In October of 2006, Congressman Paul used his "Texas Talk" to discuss the problems associated with spending and taxes.

Taxes, Spending, and Debt are the Real Issues
October 16, 2006

In Washington we hear a lot of talk about tax cuts, but the rhetoric does not always match the reality. For most Americans, taxes remain too complex and too high. After the tumult of the upcoming midterm election, it is imperative that Congress gets back to basics and addresses our terrible tax system. Lower taxes benefit all Americans by increasing economic growth and encouraging wealth creation. I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise.

Whether a tax cut reduces a single mother’s payroll taxes by forty dollars a month, or allows a business owner to save thousands in capital gains and hire more employees, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us more than if those dollars were sent to the black hole known as the federal Treasury.

Many conservatives have touted the Fair Tax proposal as an issue in the upcoming election. A pure consumption tax like the Fair Tax would be better than the current system only if we truly did away with the income tax by repealing the 16th amendment. Otherwise, we could end up with both the income tax and a national sales tax. A consumption tax also provides more transparency and less complexity. But the real issue is total spending by government, not tax reform. In other words, why change the tax structure if spending stays the same? Once we accept that the federal government needs $2.7 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.

I apply a very simple test to any proposal to overhaul the tax code: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. Congress should simply focus on cutting existing taxes and reducing spending, instead of complicated overhauls of the system.

The question to ask yourself is this: What would I do with the money withheld from my paycheck each month? The answer is simple: you would spend, save, or invest the money, all of which do more for the economy and society than sending it to Washington. Thanks to the deception of income tax withholding, however, some people actually look forward to tax time and a much-anticipated refund. Imagine how quickly Americans would demand lower taxes and spending if they had to write the federal government a check each month!

Tax relief is important, but members of Congress need to back up tax cuts with spending cuts- and they need to vote NO on every wasteful appropriations bill until we start over with the federal budget. True fiscal conservatism combines both low taxes and low spending. Cutting spending would not be hard if Congress simply showed the political will to tackle the problem. I’m not talking about cutting the rate at which government spending grows, but cutting the actual amount of money spent by the federal government in a single year. If federal spending grows at 5% rather than 7% one year, that’s hardly a great achievement on the part of Congress. The current federal budget of around $2.7 trillion could be cut to $2.5 trillion quite easily. The vast majority of Americans would not even notice. But we must begin chipping away at the federal budget if we hope to address the underlying problem of government debt.

Right Start Child Care and Education Act

In September of 2007, Congressman Paul issued a press statement noting his support for the Right Start Child Care and Education Act.

Congressman Ron Paul Cosponsors "The Right Start Child Care and Education Act"

September 12, 2007

Washington , DC - Congressman Ron Paul has signed on as a cosponsor of legislation that would ease the tax burden on America ’s parents, struggling with child care expenses.

The Right Start Child Care and Education Act of 2007 is a comprehensive reform that increases the existing child care tax credit to $5,000 (from $2,400) for the first child and $10,000 for the second. It also increases the current business tax credit for providing child care services at work from $150,000 a year to $225,000. And it creates the “Right Start Child Care Professional” tax credit to encourage college graduates to choose child care as a profession.

Between the income tax, sales tax, property tax, gas tax, capital gains tax, the cost of regulatory compliance and various licenses and fees, an average of 52% of national income goes to government in one form or another. According to Americans for Prosperity, Texans work more than half the year just to pay for government.

The Dependent and Child Care Tax Credit has been increased only once in the last 25 years. Yet, inflation and child care costs are on the rise and have become the next largest expense after mortgage or rent for most families with young children.

“With a mountain of taxes to pay, having one parent stay at home is no longer a viable option for many Americans. The least the government can do for parents making these difficult decisions is to ease the tax burden on them and make it more economical for places of employment to provide on-site child care. Repealing all income taxes is my ultimate goal, but this bill, which allows American parents to keep more of their own money, is a step in the right direction.” Stated Congressman Paul.

Taxpayer Choice Act of 2007

In October of 2007, Congressman Paul released a press statement noting his support for the Taxpayer Choice Act of 2007.

Congressman Paul Cosponsors the "Taxpayer Choice Act of 2007"

October 16, 2007

Washington, DC - Congressman Ron Paul has signed on to co-sponsor legislation that will repeal the Alternative Minimum Tax on individuals and replace it with an alternative, simplified tax that individuals may choose.

The Taxpayer Choice Act of 2007 H.R. 3818 would completely repeal the Alternative Minimum Tax, which was originally enacted to impose taxes on a small number (originally only 155) of the wealthiest Americans. Because the tax is not indexed to inflation, more and more Americans are falling under the AMT trap. Temporary increases in the exemption amount have been extended until the end of 2010. If the AMT is not repealed, 50 million taxpayers will be affected within a decade, up from 3.5 million in 2006.

In addition, H.R. 3818 introduces a highly simplified tax alternative with tax brackets at 10% and 25%, a generous standard exemption and no special deductions. Taxpayers who are frustrated and bewildered by our current complicated tax code can opt-in to this simplified version, which is designed to be revenue neutral, but very transparent and much easier to administer. It is indexed to inflation.

“This new tax structure could greatly reduce the cost of compliance, and make the financial pretzels we twist ourselves into to reduce our tax burden a thing of the past. It would certainly be better than what we have now, so I hope my colleagues in Congress will join me in supporting this bill,” stated Congressman Paul.

The Estate Tax

In October of 2007, Congressman Paul used his "Texas Talk" to address the estate tax and the need to end it.

Taxing Ourselves to Death

This past week, Congress had an opportunity to permanently repeal the death tax by amending the Tax Collection Responsibility Act of 2007 to include language that ends the estate tax forever. This would have been a good provision in an overall bad bill. 212 Democrats were enough to keep this spectre looming on the horizon if the Bush tax cuts are not renewed in 2011. The bill passed without this silver lining and now we face big increases in taxes and penalties in the next five years.

The underlying attitude behind this bill, and the estate tax, is what I find so distressing about tax policy in this country today - that being a growing disregard for property rights, which are so important to the American dream. The basic tenets of the American dream are that through hard work and ingenuity, you can earn a better life for yourself, and you can give your children a better start than you had. Surveying American history this vision has played out through steady economic progress and growth from one generation to the next.

Our prosperity now is our reward for hard work and achievement in the past. Today we are the strongest economy in the world, and have much to be proud of, but Congress doesn’t seem to understand that we did not tax our way here. Conversely, a nation certainly can tax its way out of prosperity, and that’s one danger I see with this bill, and with policies like the death tax. The death tax punishes one of the greatest and ultimate satisfactions of achieving the American dream – the knowledge that your life’s work is an investment in your family’s future. Instead of being able to focus on hard work, however, death tax provisions keep countless estate planners working countless hours helping Americans negotiate through complicated tax laws just to keep the fruits of their life’s work out of the squandering hands of government.

Other anti-property rights provisions in the Tax Collection Responsibility Act make desperate last attempts to extract the most amount of revenue possible from expatriots on their way out the door. A telling signal that a country is taxing itself to death is capital flight and expatriation. When successful Americans no longer feel their property is secure from government thieves, and they have too much to lose by staying, they vote with their feet and go elsewhere. This country is poorer for the loss of that citizen’s investment here, but it is their right to keep and enjoy what they have built up. How dare Congress or the IRS try to deny them that? And what message does that send to the next generation of young entrepreneurs? It is troubling to me that this country is chasing away wealth, while entitlements recklessly grow. The power to tax is the power to destroy, and we are making strides towards destroying prosperity but expanding the welfare state. This is a dangerous and untenable trend. 186 Republicans and 10 Democrats voted with me last week to kill the Death Tax. It is my hope that we will get another chance in the future to end this punitive and un-American tax for good.

The AMT

In November of 2007, Congressman Paul used his "Texas Talk" address to discuss the need to end the Alternative Minimum Tax.

Tax Reform Promises Treats, Delivers Tricks

Representative Charles Rangel’s recently announced plan to address the impending Alternative Minimum Tax’s application to middle-class Americans demonstrates limited economic understanding. The Alternative Minimum Tax (AMT) began in the late 1960's because 155 wealthy taxpayers had become savvy enough with loopholes that they managed to avoid income taxes altogether. Very few Americans avoided taxes completely this way, nonetheless, policy was enacted that now threatens 25 million Americans.

Rangel's plan boasts loudly about repealing the AMT, but under the Democrats’ pay-as-you-go rules, actual tax cuts are not allowed. Congress must replace any tax revenue reduction with an increase somewhere else, and of course, there are no rules preventing tax hikes. Thus, a new 4% surtax on incomes over $150,000 for singles and $200,000 for couples is proposed to "pay for" the estimated lost revenue. This simultaneously raises $36 billion MORE than simply leaving the AMT alone, and creates a huge new marriage penalty tax. It won't be long before $150,000 is an average income, and middle class taxpayers will again face the situation we see coming today from inflation and the AMT. Overall, the Rangel tax plan is estimated to increase taxes by $3.5 trillion over the next 10 years. With the leadership in Congress calling for this massive tax hike, spending levels promising to absorb all that and then some (thanks to our ambitiously misguided foreign policy), as well as the Federal Reserve's again cheapening the dollar,

American taxpayers are wondering where their purchasing power went. We are working harder than ever before, as our standard of living falls. The founding fathers never saw taxation as a method to direct social behavior or enforce equality. Equality to them was equality under the law, not equality of outcome, or income. It was not the founding fathers' job to manage the economy, or make American businesses competitive. That was up to the free market and American businesses. The founders sought to provide only protection of property and civil liberties such that job creation could happen naturally and peacefully in a stable, prosperous environment. They never sought to take from the rich to give to the poor, or rob Peter to pay Paul. But today, the top 5% of earners in this country pay over half of all income taxes collected, but only bring in a third of the income. One third of Americans pay nothing or receive subsidies from government.

Tax policy should not be based on the premise that government owns you and allows you to keep some arbitrary amount of your labor. Thus, the AMT should be repealed. The estate tax should be repealed. Capital gains taxes should be repealed. The income tax should be repealed. We don’t need to overhaul or adjust tax policy, we need to scrap the whole thing and start over. But this message is not getting through to the leadership of Congress. Congress has ensnared itself in rules so that the only changes in tax policy allowed are increases, while the administration is obsessed with spending, especially spending us into oblivion by spreading this dead-end war when we should be coming home. If Washington can only do wrong, then let’s hope for gridlock, until a more sensible Congress is in office. Sometimes a do-nothing Congress is a lot better than the alternative.

The Family Farm, Small Business, and Home Tax Relief Act

In November of 2007, Congressman Paul released a press statement noting his introduction of the Family Farm, Small Business, and Home Tax Relief Act.

Congressman Paul Cosponsors "The Family Farm, Small Business and Home..."

November 5, 2007

For immediate release

Washington, DC - Congressman Ron Paul, has signed on to co-sponsor legislation that will give immediate estate tax relief so Americans will not lose the family farm, home, or small business when they experience a death in the family.

Currently, the estate tax is in year 6 of a slow 9 year phase out culminating in 2010 when the estate tax will be completely repealed. If no action is taken, in 2011 the estate tax will reset to pre-tax cut levels, which will mean estates worth more than $1 million (or close to that amount) will again be taxed at a rate of 55%.

Major provisions of The Family Farm, Small Business, and Home Tax Relief Act:

• Increase the estate tax exemption amount from $2 million (2007 levels) to $3.5 (indexed for inflation) million and holds the tax rate at 45%, thus implementing immediately the forthcoming 2009 estate tax levels.
• Exempt a small business or family farm up to $8 million (indexed for inflation) from calculation of estate tax value.
• Exempt one principle residence up to $2 million (indexed for inflation) from calculation of estate tax value.
• Repeals the generation skipping tax (GST) immediately. The GST is scheduled for repeal in 2010.

“It is patently un-American to tax workers all their lives on the fruits of their labor, and then still take sizeable chunks of what’s left at the end that rightfully belongs to their families. It is an insult to what this country stands for. When a family has just lost someone, it is not right that the government puts them out of their home, farm or business as well,” stated Congressman Paul.

Capital Gains Real Estate Exemption

In November of 2007, Congressman Paul issued a press statement noting his introduction of legislation to allow a capital gains exemption for real estate.

Congressman Paul Cosponsors a Tax Relief Bill
Congressman Ron Paul Cosponsors a Tax Relief Bill

November 19, 2007

For immediate release

Washington, DC - Congressman Ron Paul has signed on as co-sponsor to a long overdue piece of legislation that would increase the capital gains exemption amount for real estate transactions. Paul said, “The investment in a home is often the largest investment average Americans will ever make. They rely on appreciation and equity in that home for financial security throughout their lives. It is morally wrong and economically unwise to take massive amounts of that investment out of the economy in capital gains taxes."

HR 4132 is necessary because housing prices are up 104% since the $250,000 per single/$500,000 per couple exemption was established in 1997, and this would be the first adjustment. The new exemption amount would be $500,000 in gains for a single tax return filer, $1,000,000 for joint filers.

“With rising inflation and the sub-prime mortgage fallout softening the real estate market throughout the country, it’s time for Congress to adjust tax policy and give American homeowners some good news,” stated Congressman Paul.

The True Cost of Taxing and Spending

In November of 2007, Congressman Paul used his "Texas Talk" to discuss what he called the true cost of taxing and spending.

The True Cost of Taxing and Spending

Congressman Charlie Rangel recently unveiled a tax plan that Republicans estimate would raise taxes by $3.5 trillion over 10 years. Democrats questioned the math. Now, the Democrats on the Joint Economic Committee have released a report on the total costs of the military operations in Iraq and Afghanistan , including "hidden costs" such as interest on the money we're borrowing, and long term healthcare for vets.

The bill comes to $3.5 trillion. Republicans are, of course, questioning the math on this item. One thing taxpayers know is taxing and spending is expensive, and government cost estimates tend to be on the conservative side relative to the actual bills. However extracted and spent $3.5 trillion is an unimaginable extra burden on our economy. If $3.5 trillion is the true cost of these military adventures, $11,500 is the amount every man, woman and child in this country pays. So, a family of four would pay $46,000 just for this war.

This is an especially painful number to me, as the median household income of my constituency in Texas is just $43,000 a year. In other words, war has cost more than an entire year’s worth of income from each middle class Texas family. What about the impact of these costs on education, the very thing that so often helps to increase earnings? $46,000 would cover 90% of the tuition costs to attend a four year public university in Texas for both children in that family of four. Obviously, it would far outpace the cost of a community college degree, so vital to so many in the workforce. But, instead of sending kids to college, too often we’re sending them to Iraq , where the best news in a long time is they aren't killing our men and women as fast as they were last month.

The Heritage Foundation estimates a $3.5 trillion tax increase would be responsible for 2,200 lost jobs in my district alone, over 70,000 lost jobs across Texas . That's 70,000 Texans in unemployment lines, without health insurance for their families. Some Democrats may not want to spend $3.5 trillion on Iraq , but they do want to raise it in new taxes. And, by digging our economy into a deeper hole, they would create a lot more demand for the social programs they propose. Tax and spend policies create needs they can never satisfy. A government check does not make up for a lost job. Americans do not want more of this. Americans believe in hard work and self-sufficiency, not standing in line for government hand-outs.

We are supposed to be living in a land of opportunity, but opportunities fade fast if more tax and spend policies are enacted. The more Congress meddles in the economy, the bigger the problems get. Congress should not increase taxes by $3.5 trillion and the administration needs to end the occupation of Iraq with its costs of $3.5 trillion to taxpayers. Let the hardworking American taxpayers keep their money. Families need that $46,000 far more than government does.

Property Tax Deducation for All Act

In December of 2007, Congressman Paul released a press statement noting his support for legislation to allow a deduction for the property tax.

Congressman Paul Introduces the Property Tax Deduction for All Act

December 11, 2007

For immediate release

Washington , DC - Congressman Ron Paul is yet again chipping away at the back-breaking tax burden on middle-class Americans with his recently proposed legislation. The Property Tax Deduction for All Act would make taxes on property an “above the line” deduction, meaning that taxpayers could deduct their property taxes without having to itemize all their deductions.

This would make the deduction available to millions of homeowners who take the standard deduction.

“Americans who have lived within their means and perhaps don’t pay enough in mortgage interest to make it advantageous to itemize their deductions are missing out on this relief. We should be rewarding their wisdom, not punishing them with a higher tax burden. I urge my colleagues in the House to support this bill and allow taxpayers to treat property taxes as an above the line deduction,” stated Congressman Paul.

Lower Taxes for Stimulus

In April of 2009, Congressman Paul used his "Texas Talk" address to discuss the possibility of lowering taxes to help spur the economy.

Fewer Taxes for Real Economic Stimulus

Taxes are the issue this week as Americans struggle to make the April 15th deadline to file their returns. It is a good time to contemplate the effects of big government and what it does to our country. The income tax is one of the most egregious encroachments on our liberties today. It is a form of involuntary servitude, which was supposed to have been outlawed by the 13th Amendment.

Tax Freedom Day is defined as the day when the nation as a whole has theoretically earned enough income to fund its annual federal tax burden. For all of the days of the year before this day, you are a slave to government. For 2009, Tax Freedom Day will come on April 13th. Almost a century ago in 1910, before the mistakes of 1913-namely the inception of the Federal Reserve and our current income tax, Tax Freedom Day was January 19th, signifying a mere 5% tax burden. Somehow, our country functioned just fine.

If calculated to include government spending and the deficit, rather than just collections, Tax Freedom Day would actually fall on May 29. The annual deficit adds to the growing debt of future generations and adds insult to injury to those that struggle to make this economy work. It is a slap in the face that this is not enough to prevent this crushing governmental burden from falling on the next generation.

For months now, Washington has been desperately throwing taxpayers’ money at various programs to stimulate us out of the recession, to no avail. Seeing hard-earned money confiscated from the people and spent in such wasteful ways, such as the recent bailouts, is almost too much to bear. Getting rid of the income tax altogether, while very beneficial, may be a while in coming. In the meantime, I am fighting for every tax cut or tax credit possible.

I can think of no better economic stimulus than letting people keep their money and spend it how they see fit. For this reason, I am an original cosponsor on a bill that would give Americans a two month employment and income tax holiday, while taking unused TARP money back from the Secretary of the Treasury and putting it in the Social Security trust fund instead.

In addition, I have recently introduced the Child Health Care Affordability Act. If passed this legislation would provide parents with a tax credit of up to $500 for health care expenses of dependent children. I have also re-introduced the Tax Free Tips Act, which would make tips exempt from federal income and payroll taxes. I am also an original cosponsor of a bill that would make permanent the deduction of state and local sales taxes. My bill HR 162 exempts Social Security benefits from income tax.

These are just a few of the many tax related bills I am fighting for in Congress, but without a corresponding cut in the size of government, which I am also fighting for, we are simply adding to the future tax burden of our children.

Tax Day Speech

On April 15, 2010 Congressman Paul spoke at the Freedom Works Foundation about his desire to end the Fed and the IRS.

Homeowner Tax Credit Extension and Expansion Act

In May of 2010, Congressman Paul released a press statement noting his support for the Homeowner Tax Credit Extension and Expansion Act.

Paul Introduces Homeowner Tax Credit Extension and Expansion Act
For Immediate Release
May 25, 2010

Washington, D.C. - Congressman Ron Paul (TX-14) today introduced legislation to permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster, such as a hurricane.

The legislation also makes a number of changes to existing tax credits in order to enhance their usefulness to victims of natural disasters. Specifically, this bill makes casualty loss deductions available to taxpayers who do not itemize, and makes it available to them for five years after the disaster. This legislation also helps people who have lost their jobs because of a natural disaster by making unemployment payments provided under the Disaster Relief and Emergency Assistance Act tax free.

Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs.

The other sections of this legislation were inspired by conversations Congressman Paul and his staff had with constituents who had to purchase new homes because Hurricane Ike destroyed their prior homes. The first-time homebuyer’s tax credit could be of tremendous value to these people, yet the law denies them the credit because they are replacing destroyed homes.

“It is hard to think of a more beneficial or compassionate expansion of the first-time homebuyer tax credit than to make the credit available to those whose homes have been destroyed or damaged by natural disasters,” stated Congressman Paul. “In addition, the changes to the casualty loss provision will help more taxpayers affected by natural disasters. Providing tax relief to first-time homebuyers and to those affected by natural disasters should be one of Congress’ top priorities.”

The Income Tax

Weekly Address on Taxes

Questions during the Debate

Distorting the Tax Policy Debate

In December of 2010, Congressman Paul used his "Texas Talk" to discuss what he called distortion of the tax policy debate.

Distorting the Tax Policy Debate

George Orwell warned us about the use of “meaningless words” in politics, words that are endlessly repeated by sloganeering politicians until they have no meaning at all. Meaningless words certainly were on display during last week’s congressional debate over the latest tax bill.

Over and over again we heard trite, empty phrases like “tax cuts for the wealthiest 2%,” “tax giveaways,” “tax earmarks,” and “borrowing money to give to millionaires.” Time and time again the same falsehoods were presented as fact, and reported as such by a credulous media.

But all of these clichés about taxes are based on the presumption that government has a right to all of your income, and so government “gives” you something when it allows you to keep a portion of that income. To this mindset, tax cuts represent a “cost” to government. After all, they argue, money that really ought to go to the most noble of purposes-- wealth redistribution via taxation--is being kept by greedy people and corporations who just don’t want to pay their fair share.

Far too many Americans truly believe that tax cuts represent a government giveaway, indistinguishable from an outright subsidy or entitlement payment. To combat this mindset, we need to be clear with our language.

A subsidy, properly understood, occurs when government takes tax dollars and gives them to favored individuals, companies, or industries. A tax cut, by contrast, simply means government takes less from an individual, company, or industry. When government takes less from you, it has not given you anything; it merely has harmed you less. This is the critical distinction that has been lost in the endless, tired debate about tax policy.

Of course the bill passed last week did contain some actual spending, mostly in the form of an extension of unemployment benefits for another 13 months. The total spending in the bill amounted to about $60 billion. But the tax savings in the bill, meaning the amount of money that will remain in the hands of taxpayers rather than being sent to Washington, is approximately $850 billion. So while a clean tax bill certainly would have been preferable, the tax relief it contains is significant. It means $850 billion will be spent, saved, or invested by American citizens rather than being sent into the black hole known as the federal treasury.

The media, however, dutifully reported that opposition to the bill came from concerned members of Congress who felt the $850 billion “cost” of the bill was too high, and would add too much to the deficit. As always, they could not distinguish between government giving and government taking away. The American people already pay plenty in federal taxes; the deficit is the result of a spending problem, not a revenue problem.

Had the bill not passed, millions of Americans would have seen their paychecks shrink in January due to increased tax withholding. That is the plain and simple truth, and that is why I voted for the bill.

The Western Debate

In October of 2011, Congressman Paul participated in the Western Debate in Las Vegas. He was asked about Herman Cain's 9-9-9 plan and calls it dangerous to give the federal government another tax stream. He also states that he would like to see the income tax done away with completely.

Congressman Paul, you called his plan dangerous today.

PAUL: Oh, it is, because it raises revenues, and the worst part about it, it's regressive. A lot of people aren't paying any taxes, and I like that. I don't think that we should even things up by raising taxes.

So it is a regressive tax. So it's very, very dangerous. And it will raise more revenues.

But the gentlemen asked the question -- he didn't even ask what we're talking about. He asked the question, what are you going to replace the income tax with? And I say nothing. That's what we should replace it with.

(APPLAUSE)

PAUL: But I do want to make a point that spending is a tax. As soon as the governments spend money, eventually it's a tax. Sometimes we put a direct tax on the people. Sometimes we borrow the money. And sometimes we print the money.

And then when prices go up, like today, the wholesale price index went up 7 percent rate, and if you look at the free market, prices are going up 9 and 10 percent. So that is the tax.

So, spending is the tax. That is the reason I offered the program, to cut $1 trillion out of the first year budget that I offer.

Campaign Website Statements

Ron Paul supports the elimination of the income tax and the Internal Revenue Service (IRS). He asserts that Congress had no power to impose a direct income tax and has introduced legislation to repeal of the 16th Amendment to the Constitution, which was ratified on February 3, 1913.

An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.

To provide funding for the federal government, Ron Paul supports excise taxes, non-protectionist tariffs, massive cuts in spending.

On November 20, 2008 Ron Paul said in a New York Times / Freakonomics interview:

“I want to abolish the income tax, but I don’t want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent — over half of all revenue — comes from other sources, like excise taxes, fees, and corporate taxes.

We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to “replace” the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.”

On May 7, 2001, Ron Paul wrote the following column:

The Case Against the Income Tax

Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck. In the late 1800s, when Congress first attempted to impose an income tax, the notion of taxing a citizen’s hard work was considered radical! Public outcry ensued; more importantly, the Supreme Court ruled the income tax unconstitutional. Only with passage of the 16th Amendment did Congress gain the ability to tax the productive endeavors of its citizens.

Yet don’t we need an income tax to fund the important functions of the federal government? You may be surprised to know that the income tax accounts for only approximately one-third of federal revenue. Only 10 years ago, the federal budget was roughly one-third less than it is today. Surely we could find ways to cut spending back to 1990 levels, especially when the Treasury has single year tax surpluses for the past several years. So perhaps the idea of an America without an income tax is not so radical after all.

The harmful effects of the income tax are obvious. First and foremost, it has enabled government to expand far beyond its proper constitutional limits, regulating virtually every aspect of our lives. It has given government a claim on our lives and work, destroying our privacy in the process. It takes billions of dollars out of the legitimate private economy, with most Americans giving more than a third of everything they make to the federal government. This economic drain destroys jobs and penalizes productive behavior. The ridiculous complexity of the tax laws makes compliance a nightmare for both individuals and businesses. All things considered, our Founders would be dismayed by the income tax mess and the tragic loss of liberty which results.

America without an income tax would be far more prosperous and far more free, but we must be prepared to fight to regain the liberty we have lost incrementally over the past century. I recently introduced “The Liberty Amendment,” legislation which would repeal the 16th Amendment and effectively abolish the income tax. I truly believe that real tax reform, reform that so many frustrated Americans desperately want, requires bold legislation that challenges the Washington mind set. Congress talks about reform, but the current tax debate really involves nothing of substance. Both parties are content to continue tinkering with the edges of the tax code to please various special interests. The Liberty Amendment is an attempt to eliminate the system altogether, forcing Congress to find a simple and fair way to collect limited federal revenues. Most of all, the Liberty Amendment is an initiative aimed at reducing the size and scope of the federal government.

Is it impossible to end the income tax? I don’t believe so. In fact, I believe a serious groundswell movement of disaffected taxpayers is growing in this country. Millions of Americans are fed up with the current tax system, and they will bring pressure on Congress. Some sidestep Congress completely, bringing legal challenges questioning the validity of the tax code and the 16th Amendment itself. Ultimately, the Liberty Amendment could serve as a flashpoint for these millions of voices.

Ron Paul introduced the Liberty Amendment in 1998, 1999, 2003, 2005, 2007 and 2009. It is currently know as H. J. RES. 48 and has 2 cosponsors, Roscoe G. Bartlett (MD-6) and Don Young (AK). Here is the text of the proposed amendment:

Liberty Amendment

Section 1. The Government of the United States shall not engage in any business, professional, commercial, financial, or industrial enterprise except as specified in the Constitution.

Section 2. The constitution or laws of any State, or the laws of the United States, shall not be subject to the terms of any foreign or domestic agreement which would abrogate this amendment.

Section 3. The activities of the United States Government which violate the intent and purposes of this amendment shall, within a period of three years from the date of the ratification of this amendment, be liquidated and the properties and facilities affected shall be sold.

Section 4. Three years after the ratification of this amendment the sixteenth article of amendments to the Constitution of the United States shall stand repealed and thereafter Congress shall not levy taxes on personal incomes, estates, and gifts.’.

On April 30, 2009 Ron Paul introduced the Liberty Amendment with the following speech:

Ron Paul: Madam Speaker, I am pleased to introduce the Liberty Amendment, which repeals the 16th Amendment, thus paving the way for real change in the way government collects and spends the people’s hard-earned money. The Liberty Amendment also explicitly forbids the Federal government from performing any action not explicitly authorized by the United States Constitution.

The 16th Amendment gives the Federal government a direct claim on the lives of American citizens by enabling Congress to levy a direct income tax on individuals. Until the passage of the 16th amendment, the Supreme Court had consistently held that Congress had no power to impose an income tax.

Income taxes are responsible for the transformation of the Federal government from one of limited powers into a vast leviathan whose tentacles reach into almost every aspect of American life. Thanks to the income tax, today the Federal government routinely invades our privacy, and penalizes our every endeavor.

The Founding Fathers realized that “the power to tax is the power to destroy,” which is why they did not give the Federal government the power to impose an income tax. Needless to say, the Founders would be horrified to know that Americans today give more than a third of their income to the Federal government.

Income taxes not only diminish liberty, they retard economic growth by discouraging work and production. Our current tax system also forces Americans to waste valuable time and money on compliance with an ever-more complex tax code. The increased interest in flat-tax and national sales tax proposals, as well as the increasing number of small businesses that question the Internal Revenue Service’s (IRS) “withholding” system provides further proof that America is tired of the labyrinthine tax code. Americans are also increasingly fed up with an IRS that continues to ride roughshod over their civil liberties, despite recent “pro-taxpayer” reforms.

Madam Speaker, America survived and prospered for 140 years without an income tax, and with a Federal government that generally adhered to strictly constitutional functions, operating with modest excise revenues. The income tax opened the door to the era (and errors) of Big Government. I hope my colleagues will help close that door by cosponsoring the Liberty Amendment.

2012 Presidential Campaign Website Statements

KEEP MORE OF YOUR MONEY

The power to tax is the power to destroy, which is why Ron Paul will never support higher taxes.

Our national debt is currently over $14 trillion, with the government spending nearly $2 trillion more per year than it collects. The American people should not have to pay for Washington’s reckless and out-of-control appetite for debt.

High taxes stifle innovation, prevent saving, destroy production, crush the middle class and the poor, and discourage investment. Every American is entitled to the fruits of his labor, especially during these tough economic times.

Lowering taxes will leave you more money to take care of yourself and your family, and it will allow businesses greater opportunities to hire new workers, increase current salaries, and expand their companies.

As President, Ron Paul will support a Liberty Amendment to the Constitution to abolish the income and death taxes. And he will be proud to be the one who finally turns off the lights at the IRS for good.

Capital gains taxes, which punish you for success (and interfere with your efforts to hedge against inflation by purchasing gold and silver coins), should also be immediately repealed.

Struggling college students and those working to support their families would be greatly benefited and receive an immediate pay raise by eliminating taxes on tips.

As a congressman, Ron Paul has consistently endorsed legislation to let Americans claim more tax credits and deductions, including on educational costs, alternative energy vehicles, and health care. He also believes it is immoral to tax senior citizens twice by requiring them to include Social Security benefits in their gross income at tax time. A first step to eliminating that requirement would be to repeal the 1993 increase in taxes on Social Security benefits. Then we must abolish that tax entirely.

While a Flat Tax or a Fair Tax would each be a better alternative to the income tax system, Congressman Paul believes we would have to guarantee the 16th Amendment is repealed to avoid having both the income tax and one of these systems as an additional tax.

But there is a better way. Restraining federal spending by enforcing the Constitution’s strict limits on the federal government’s power would help result in a 0% income tax rate for Americans.

The answer to spending and debt is to return to a constitutionally limited government that protects liberty – not one that keeps robbing Peter to pay Paul.

Michigan Economic Debate

On November 10, 2011 Congressman Paul participated in the Michigan Economic Debate. He spoke there about international debt, US debt, and the housing industry. He also states that spending is a tax.

CRAMER: Congressman Paul...
(APPLAUSE)
(inaudible) to say, and I really get that. But I'm on the frontlines of the stock market. We were down 400 points today. We're not going to be done going down if this keeps going on, if Italy keeps -- the rates keep going up. Surely you must recognize that this is a moment-to-moment situation for people who have 401(k)s and IRAs on the line and you wouldn't just let it fail, just go away and take our banking system with it?

PAUL: No, you have to let it -- you have to let it liquidate. We've had -- we took 40 years to build up this worldwide debt. We're in a debt crisis never seen before in our history. The sovereign debt of this world is equal to the GDP, as ours is in this country. If you prop it up, you'll do exactly what we did in the depression, prolong the agony. If you do -- if you prop it up, you do what Japan has done for 20 years.
So, yes, you want to liquidate the debt. The debt is unsustainable. And this bubble was predictable, because 40 years ago we had no restraints whatsoever on the monetary authorities, and we piled debt on debt, we pyramided debt, we had no restraints on the spending. And if you keep bailing people out and prop it up, you just prolong the agony, as we're doing in the housing bubble.

PAUL: Right now, Fannie Mae and Freddie Mac are demanding more money because we don't allow the market to determine what these mortgages are worth. If you don't liquidate this and clear the market, believe me, you're going to perpetuate this for a decade or two more, and that is very, very dangerous.

CRAMER: Governor...

(APPLAUSE)

(inaudible) Italy's too big to fail. It's great. I'd love it if we were independent. It would be terrific to say, "It's your fault. It's your fault. It's your problem." But if this goes, the world banking system could shut down. Doesn't that involve our banks, too?

BARTIROMO: Congressman Ron Paul...
(APPLAUSE)

BARTIROMO: ... you have said you want to close down agencies. Tell us about your tax plan as well as closing agencies -- federal agencies. Where do those jobs go?

PAUL: Well, eventually they go into the private sector. Then don't all leave immediately when the plan goes into effect. But what my plan does is it addresses taxes in a little different way.

We are talking about the tax code. But that's the consequence, that's the symptom. The disease is spending. Every time you spend, spending is a tax. We tax the people, we borrow, and then we print the money and the prices go up, and that is a tax.

So you have to address the subject of spending. That is the tax. That is the reason I go after the spending.

I propose in the first year cut $1 trillion out of the budget in five departments.
(CHEERING AND APPLAUSE) PAUL: Now the other thing is that you must do if you want to get the economy going and going again is you have to get rid of price- fixing. And the most significant price-fixing that goes on, that gave us the bubble, destroyed the economy, and is preventing this from coming out, is the price-fixing of the Federal Reserve, manipulating interest rates way below market rates.

You have to have the market determine interest rates if you want a healthy, viable economy.

BARTIROMO: So you think the economy would be stronger if interest rates were higher right now?

PAUL: You would have more incentive. You would take care of the elderly. They get cheated. They get nothing for their CDs. Why cheat them and give the banks loans at zero percent? And then they loan it back to the government at 3 percent. They are ripping us off at the expense of those on fixed incomes and retirees.

BARTIROMO: Even though higher interest rates would make it much more expensive to borrow, mortgages.

PAUL: But you want is the market to determine this. Whoever thought that one person, the Federal Reserve Board chairman, knows what the money supply should be? Just in the past six months, M1 has gone up at the rate of 30 percent. That spells inflation. That spells lower standard of living and higher prices and watch out. They are coming. 

Voting Record

Alternative Minimum Tax Relief Act of 2008

The Alternative Minimum Tax was created to tax wealthy individuals who were exploiting loopholes to avoid paying taxes. It was not indexed to inflation and now affects many more families than it was intended. Congress regularly applies "fixes" to the law in the form of yearly adjustments. Sometimes they attempt to repeal it completely. In 2008, the house voted on the Alternative Minimum Tax Relief Act of 2008. The bill was had the objectives of increasing and extending through 2008 the alternative minimum tax (AMT) exemption amounts, and extending through 2008 the offset of certain nonrefundable personal tax credits against regular and AMT tax liability. This change would have brought in less revenue and that was to be offset by lowering the tax deductions for oil companies. The bill was supported by most Democrats and opposed by most Republicans. While it passed the house, it never came up for a vote in the Senate. Ron Paul voted against the Alternative Minimum Tax Relief Act of 2008.

AMT Relief Act of 2007

The AMT Relief Act of 2007 sought to apply a fix to the AMT, and offset those costs by taxing gross income from overseas companies. Most Democrats supported the legislation and most Republicans opposed it and the bill passed the house, but was not brought up for a vote in the Senate. Ron Paul cast a "No Vote"

Tax Increase Prevention Act of 2007

In 2007, congress passed legislation to apply a temporary fix. Most Democrats supported the legislation and all Republicans opposed it on the grounds that it violated PAYGO. Ron Paul cast a "No Vote"

Tax Relief and Health Care Act of 2006

The Tax Relief and Health Care Act of 2006 was passed into law in 2006 and contained a wide array of tax cut extensions for everything from making improvements to your house, to state and local sales tax exemptions, and to make improvements to DC. It also contained a provision for health savings accounts. The bill got wide support and passed the house with about 25% of Democrats opposing it. Ron Paul cast a "No Vote"

Pension Protection Act of 2006

The Pension Protection Act of 2006 addressed regulations governing employer-sponsored pensions and acted to make the portions of the 2001 act which allowed higher contributions to IRAs. with the support of both parties. The bill got wide support from both parties and passed 279-131. Ron Paul voted against the Pension Protection Act of 2006.

Tax Increase Prevention and Reconciliation Act of 2005

The Tax Increase Prevention and Reconciliation Act of 2005 extended previously lowered dividend income and capital gains through 2010, and made an increase to the AMT exemption. It also eliminated income restrictions on high-income taxpayers for converting traditional Individual Retirement Accounts (IRAs) to Roth IRAs. Most Republicans supported the legislation and about 1/3 of teh Democrats supported it. The bill passed in a 234-197 vote with the support of both parties. Ron Paul voted in favor of the Tax Increase Prevention and Reconciliation Act of 2005.

Working Families Tax Relief Act of 2004

The Working Families Tax Relief Act of 2004 extended the 10 percent bracket on income tax created in the 2001 legislation, doubled the child tax credit, extended the previous AMT exemption and the Work Opportunity Tax Credit. The legislation was widely supported and passed 339-65. Ron Paul voted in favor of the Working Families Tax Relief Act of 2004.

American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 allowed individuals to claim a deduction for state and local sales taxes paid, in lieu of deducting state income taxes. It also increased tax credits for business investment abroad, and temporarily increased the expensing provisions for corporations. The bill passed 251-178 with the support and opposition of both parties. Ron Paul voted in favor of the American Jobs Creation Act of 2004.

A bill to end the marriage penalty

In 2004, the house voted on a bill to fix the marriage penalty tax. The bill increased the standard deduction for married taxpayers and increased the deducitons for the 15 percent bracket. The bill got wide support in the vote and passed with only 1/3 of the Democrats opposing it. The bill was not brought up for a vote in the Senate. Ron Paul voted in favor of ending the marriage penalty.

Jobs and Growth Tax Relief Reconciliation Act of 2003

In the Jobs and Growth Tax Relief reconciliation Act of 2003 tax rates on realized capital gains received by individual shareholders were reduced from 10 percent (for taxpayers in tax brackets where the ordinary income tax rate was 15 percent or below) and 20 percent (for all other brackets) to 5 percent and 15 percent, respectively, through 2007 and to 0 and 15 percent in 2008. It also adjusted the AMT exemption limit, expanded the child tax credit, and accelerated some of the earlier aspects of the previous laws. The bill was supported by Republicans and opposed by Democrats, and passed in a 222-203 vote. Ron Paul voted in favor of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Job Creation and Worker Assistance Act of 2002

The main provision of the Job Creation and Worker Assistance Act of 2002 was to create a bonus depreciation. This bonus depreciation allowed firms to claim extra deductions for depreciation of a long-term physical capital investment during the early years. This reduces corporate profits and therefore taxes. The act was supported by Republicans and opposed by Democrats 85-9. Ron Paul voted in favor of the Job Creation and Worker Assistance Act of 2002.

Death Tax Elimination Act of 2001

In 2001, the house voted on legislation to end the "Death Tax", otherwise known as the Estate Tax, which applies a tax to estates large than a given amount. The bill passed the house with the support of almost all Republicans and about 1/4 of the Democrats. Ron Paul voted in favor of the Death Tax Elimination Act of 2001.

Economic Growth and Tax Relief Reconciliation Act of 2001

The first piece of legislation was passed in 2001 as the Economic Growth and Tax Relief Reconciliation Act of 2001 The act was especially sweeping. Its two most prominent changes were a phased-in reduction in income tax rates and a reduction and eventual repeal (at the beginning of 2010) of the estate tax. It also provided a wide range of tax breaks for education, families with children, married couples, and contributions to certain kinds of savings accounts. While all republicans voted in favor of this legislation, most democrats opposed it. Ron Paul voted in favor of the EGTRRA of 2001.

Marriage Tax Relief Reconciliation Act of 2000

In 2000, the house voted on a bill to fix the marriage penalty tax. The bill increased the standard deduction for married taxpayers and increased the deducitons for the 15 percent bracket. The bill got wide support in the vote and passed with only 1/3 of the Democrats opposing it. The bill was vetoed by the President.

Death Tax Elimination Act of 2000

The house also attempted to pass a repeal of the Death Tax in 2000. This time, the bill was supported by almost all Republicans and by about 1/4 of the Democrats. The bill was vetoed by the President. Ron Paul voted in favor of the Death Tax Elimination Act of 2000.

Sponsored and Cosponsored Legislation

Session-112; Bill Number-H R 547; Individual AMT Repeal Act of 2011 - Cosponsor

Amends the Internal Revenue Code to repeal the alternative minimum tax (AMT) on individuals after 2010.

Session-111; Bill Number-H R 470; Economic Recovery and Middle-Class Tax Relief Act of 2009 - Cosponsor

Makes permanent the reductions in the dividend and capital gain tax enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003.Amends the Internal Revenue Code to: (1) reduce individual and corporate income tax rates; (2) repeal the alternative minimum tax for individual taxpayers; (3) allow inflation adjustments to the basis of capital assets in determining gain or loss; (4) reduce the capital gains tax rate for corporations; (5) repeal limitations on the expensing allowance for depreciable business assets; (6) make permanent the tax credit for increasing research activities; (7) extend the carryback period for net operating losses to seven years; (8) increase the child tax credit; (9) exclude from gross income in 2009 distributions from an individual retirement plan (IRA) and exempt IRAs from mandatory distribution requirements after 2009; and (10) increase the tax deductions for tuition and related expenses and for the interest on qualified education loans.Makes 1% across-the-board rescissions in non-defense discretionary spending for FY2009.

Session-111; Bill Number-H R 1552; Start Up Expenses - Cosponsor

Amends the Internal Revenue Code to increase in taxable years beginning in 2009, 2010, or 2011: (1) the limit on the tax deduction for trade or business start-up expenditures from $5,000 to $20,000; and (2) the threshold amount for reducing such limit.

Session-111; Bill Number-H R 205; Death Tax Repeal Act - Cosponsor

Repeals the federal estate, gift, and generation-skipping transfer taxes.

Session-110; Bill Number-H R 2380; Death Tax Repeal Permanency Act of 2007 - Cosponsor

To make the repeal of the estate tax permanent.

Session-110; Bill Number-H R 2734; Tax Increase Prevention Act of 2007 - Cosponsor

To make the Economic Growth and Tax Relief Reconciliation Act of 2001 and certain other tax benefits permanent law.

Session-110; Bill Number-H R 1586; Death Tax Repeal Act of 2007 - Cosponsor

Repeals the federal estate, gift, and generation-skipping transfer taxes.

Session-110; Bill Number-H R 3818; Taxpayer Choice Act of 2007 - Cosponsor

To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.

Session-110; Bill Number-H R 4995; Middle Class Jobs Protection Act of 2008 - Cosponsor

Amends the Internal Revenue Code to: (1) reduce the maximum corporate income tax rate to 25%; (2) increase the expensing allowance for depreciable business assets to $250,000 in 2008 and 2009; (3) increase to 50% the current year bonus depreciation allowance for certain property placed in service in 2008 and 2009; and (4) allow additional carrybacks for certain net operating losses and for excess business and foreign tax credit amounts arising in 2008 and 2009.

Session-110; Bill Number-H R 5109; Economic Growth Act of 2008 - Cosponsor

Amends the Internal Revenue Code to: (1) repeal the dollar and other limitations on the expensing allowance of depreciable business assets; (2) reduce to 25% the maximum corporate income tax rate; (3) provide for an inflation adjustment to the basis of certain capital assets for purposes of determining gain or loss; and (4) reduce from 35 to 15% the alternative capital gains tax rate for corporations.

Session-110; Bill Number-H R 5908; Zero percent tax rate for the net capital gains - Cosponsor

Amends the Internal Revenue Code to establish, on a permanent basis, a zero percent tax rate for the net capital gains of individuals and corporations for purposes of the regular and alternative minimum tax. Eliminates the terminating date in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (i.e., December 31, 2008) for provisions that reduce the capital gains tax rate for individuals.

Session-109; Bill Number-H R 2121; Generate Retirement Ownership Through Long-Term Holding Act of 2005 - Cosponsor

Amends the Internal Revenue Code to provide that no gain shall be recognized on the receipt of a capital gain dividend distributed by a regulated investment company if such dividend is automatically reinvested in additional shares of the company pursuant to a dividend reinvestment plan.

Session-110; Bill Number-H R 2312; To make permanent the individual income tax rates for capital gains and dividends. - Cosponsor

Repeals the termination date in the Jobs Growth Tax Relief Reconciliation Act of 2003 for provisions reducing individual tax rates on capital gains and dividend income.

Session-109; Bill Number-H R 2631; Religious Freedom Peace Tax Fund Act - Cosponsor

To affirm the religious freedom of taxpayers who are conscientiously opposed to participation in war, to provide that the income, estate, or gift tax payments of such taxpayers be used for nonmilitary purposes, to create the Religious Freedom Peace Tax Fund to receive such tax payments, to improve revenue collection, and for other purposes.

Session-111; Bill Number-H R 2085; Religious Freedom Peace Tax Fund Act of 2009 - Cosponsor

Directs the Secretary of the Treasury to establish in the Treasury the Religious Freedom Peace Tax Fund for the deposit of income, gift, and estate taxes paid by or on behalf of taxpayers: (1) who are designated conscientious objectors opposed to participation in war in any form based upon their deeply held moral, ethical, or religious beliefs or training (within the meaning of the Military Selective Service Act); and (2) who have certified their beliefs in writing to the Secretary.

Michele Bachmann

Summary

Congresswoman Bachmann consistently supports lower taxes for all areas, and has stated that taxes are simply too high. She was a strong supporter for extending the Bush tax cuts, and has repeatedly called for ending the death tax, the AMT, and removing the tax on capital gains. 

Congresswoman Bachmann has proposed the Taxpayer Bill of Rights to put her views on taxes on the record. This bill of rights includes the rights to expect the government to balance the budget without having their taxes raised, and the right to a simple, fair tax code that they can understand.

In addition to calling for a simplification of the tax code, Congresswoman Bachmann has called for an end to the death tax. She stated that the tax was inefficient, a job killer, and discouraged saving.

In keeping with the idea of ending some taxes and simplifying the overall tax code, Congresswoman Bachman has proposed the Taxpayer Choice Act. This legislation would end the AMT, make the Bush tax rates on capital gains and dividends permanent, and create a voluntary Simplified Tax that would give individuals the option of paying under a highly simplified income tax system or under the regular income tax as it is structured now.

During the 2010 debate over extending the Bush tax cuts, Congresswoman Bachmann noted that higher tax rates do not mean higher tax revenues. She stated that higher rates or the uncertainty of a temporary extension would hamper economic growth. 

Although she has not proposed a specific tax plan, Congresswoman Bachmann has outlined steps she would take if elected President. The steps proposed included numerous tax measures, including:

1. Make all the Bush tax cuts permanent.
2. Cut the corporate tax rate of 34 percent to "single digits" to spur growth and job creation.
3. Kill capital gains taxes.
4. Zero out the death tax.
5. Cap personal income taxes at 20 percent.
6. Propose a "flatter tax" and a tax code no longer than 50-pages "double spaced, with a font size no smaller than 9-point. My guess is that even some of my Democratic colleagues would be able to read that bill."

Taxpayer Bill of Rights

In March of 2007, Congresswoman Bachmann released a statement noting her support for the taxpayer bill of rights.

Congresswoman Bachmann Attends Rally Supporting the American Taxpayer Bill of Rights

Bachmann at the American Taxpayer Bill or Rights Rally

Washington, Mar 21, 2007 -

Congresswoman Michele Bachmann spoke at a rally outside of the Capitol promoting the American Taxpayer Bill of Rights. Bachmann emphasized her commitment to pro-growth policies to foster American competitiveness through low tax policies.

“As a former federal tax attorney, I will continue to be an advocate for lower taxation and fiscal responsibility,” said Michele Bachmann. “We have seen our economy grow and produce nearly 7.6 million new jobs since significant tax relief was passed 42 months ago. I want to make sure we continue down the path of economic growth, not stifle it by increasing taxes and wasteful government spending.”

The American Taxpayer Bill of Rights establishes four basic rights to lay the groundwork for lower taxes for American taxpayers.

Taxpayers have a right to have a federal government that does not grow beyond their ability to pay for it.
Taxpayers have a right to receive back each dollar that they entrust to the government for their retirement.
Taxpayers have a right to expect the government to balance the budget without having their taxes raised.
Taxpayers have a right to a simple, fair tax code that they can understand.

Opposition to Budget Vote

In March of 2007, Congresswoman Bachmann released a statement noting her opposition to a vote for a budget that would phase out the Bush tax cuts. She also reiterated her support for the taxpayer bill of rights.

Budget Proposes Largest Tax Increase in History

Congresswoman Bachmann Launching the Taxpayers Bill of Rights

Washington, Mar 29, 2007 -

The House voted today to allow the largest tax increase in history 216-210. The proposal would allow the tax cuts of 2001 and 2003 to expire, raising taxes $392.5 billion over 5 years. Congresswoman Michele Bachmann voted against the fiscally irresponsible proposal and released the following statement:

“As a former federal tax attorney, small-business owner and mother of five, I know that higher taxes and increased government spending is not the path to continued economic success. Instead of proposing a massive tax increase of $392.5 billion, Washington should be learning to live within a budget just like Minnesota families and small business owners.

“Under the current proposal, nearly 2 million Minnesotans would see their taxes rise and more than 480,000 business owners would have less money to invest in equipment, hire new employees or offer health benefits for current employees.

“Washington doesn’t have a revenue problem, it has a spending problem. That’s why I have been leading the effort for the American Taxpayer Bill of Rights, which is guided by four principles:

Taxpayers have a right to have a federal government that does not grow beyond their ability to pay for it.
Taxpayers have a right to receive back each dollar that they entrust to the government for their retirement.
Taxpayers have a right to expect the government to balance the budget without having their taxes raised.
Taxpayers have a right to a simple, fair tax code that they can understand.

“Over the last 42 months our nation has seen unprecedented economic growth with the creation of 7.6 million new jobs. I am committed to making sure that Congress spends taxpayer dollars wisely and continues to pass policies that will promote, not stifle, job creation and competitiveness.”

Death Tax Repeal

In May of 2007, Congresswoman Bachmann released a statement noting her support for repealing the AMT.

Bachmann Calls for Death Tax Repeal

Bachmann at the American Taxpayer Bill or Rights Rally

Woodbury, Minnesota, May 21, 2007 - Congresswoman Michele Bachmann joined her colleagues, Reps. Kenny Hulshof (R-MO) and Bud Cramer (D-AL), Thursday in introducing the bipartisan Death Tax Repeal Permanency Act of 2007, legislation to permanently eliminate the death tax.

The death tax is imposed by the federal government on property left to heirs in a will, such as a family owned business or farm. Under current law, the tax is scheduled to decline every year until 2010, when it will temporarily disappear. But unless Congress acts to make that permanent, the death tax will return in 2011, subjecting the hard work of many family owned businesses to a tax rate as high as 55%.

“Dying shouldn’t be a taxable event,” said Bachmann. “The death tax hits people at the worst possible time. Just as they’re dealing with the passing of a loved one, they have to settle with the IRS.”

Aside from the issue of fundamental fairness, there are a host of economic and tax policy reasons why Congress should act to permanently repeal the federal death tax. To name a few:

• The death tax is a job killer. One study estimates that between 175,000 and 250,000 potential jobs are lost each year as a result of the death tax.
• The death tax is inefficient. Small businesses and family farms must divert resources from productive uses to engage in financial planning designed solely to avoid punitive taxation. These resources would be better used growing our economy.
• The death tax discourages savings and investment. The threat of a large tax discourages continued investment in a family business or farm operation. Not only is this a perverse incentive, it punishes a lifetime of success.

Prominent organizations representing the interests of small business and family farms, such as the American Farm Bureau Federation, Associated Builders and Contractors, the National Association of Manufacturers, have endorsed the bill, and similar legislation passed the House during the last Congress with bipartisan support.

“By repealing the death tax, we would allow the economy to create even more jobs, which would make all of us better off,” said Bachmann. “This bill is an important step toward increasing fairness in the tax code and promoting economic security for Minnesota families, farmers and business owners.”

Taxpayer Choice Act

In October of 2007, Congresswoman Bachmann released a statement noting her support for the Taxpayer Choice Act.

Bachmann Proposes Major Tax Reform

Bill would modernize the Tax Code to better-serve American families

Thousands attended the Tax Cut Coalition Rally at the State Capitol

Washington, Oct 12, 2007 -

Congresswoman Michele Bachmann (MN-06) joined three of her colleagues this week in co-authoring the Taxpayer Choice Act, a comprehensive, individual income tax reform bill.

Alongside Reps. Paul Ryan, Jeb Hensarling and John Campbell, Bachmann explained the bill’s two primary goals: First, to guarantee that middle class American families are protected from the massive tax increase that the Alternative Minimum Tax (AMT) will soon impose upon them; and, second, to provide them with the choice and opportunity to become part of a 21st Century tax system that is fair, simple, efficient and, above all, accountable.

"As a former federal tax attorney, I’m concerned that many Americans will soon feel the impact of the arbitrary AMT, and it’s time to provide these families with a real solution," said Bachmann. "The Taxpayer Choice Act is a commonsense, principled approach to ensure 25 million American taxpayers are not hit with an unfair tax burden next year."

Created almost 40 years ago, the AMT was meant to be paid by only a few people earning more than $200,000 – or $1.2 million in today’s dollars – who were eligible for tax benefits which allowed them to pay little or no federal income tax. This outdated tax has since spiraled out of control and next year will affect millions of hard-working middle-class American families.

The Taxpayer Choice Act would repeal the burdensome AMT and instead give taxpayers the ability to choose how they wish to pay federal income taxes: 1) through the regular income Tax Code as it is currently structured; or 2) through a "Simplified Tax" that has just two income tax rates: 10 percent for joint income below $100,000 and 25 percent for income above. The Simplified Tax also includes a generous standard deduction of $25,000 for married couples, or $12,500 for individuals and a personal exemption of $3,500. The combination is equivalent to a $39,000 exemption for a family of four.

"We should give taxpayers, not Washington, the power to choose which system best fits their circumstances," said Bachmann. "Unlike other AMT proposals, this plan will not increase taxes for any American. Rather, it modernizes our inefficient Tax Code to better serve the interests of American families."

Taxes and the Deficit

In July of 2007, Congresswoman Bachmann released a statement noting her belief that tax reform would lead to deficit reduction.

Bachmann: Tax Relief Leads to Deficit Reduction
Report Shows Increased Revenues without Raising Taxes

Bachmann at the American Taxpayer Bill or Rights Rally

Washington, Jul 11, 2007 - Congresswoman Michele Bachmann (MN-06) praised the government’s announcement today indicating the budget deficit would be cut in half from what it was only three years ago, falling to $205 billion by the end of September. This is nearly $40 billion lower than originally projected. A growing economy fueled by historic tax relief in 2001 and 2003 has contributed to record levels of revenue. Bachmann released the following statement:

“This reduction of the deficit exceeds expectations and further proves the importance of extending tax relief for families and small business owners. This relief has allowed taxpayers to keep more of their hard-earned money, spurring economic growth and increasing government revenues. Unfortunately, there are some in Washington who believe now is the right time to raise taxes, which would stifle the economic growth we’re seeing today.

“Washington doesn’t have a revenue problem, it has a spending problem. The Majority has already pushed to increase government spending by $23 billion this year, and has clearly shown its willingness to increase taxes on Americans to pay for it. I will continue to push for fiscal responsibility in Washington by rejecting attempts to raise taxes and reining in runaway government spending.”

Taxpayer Choice Act

In June of 2008, Congresswoman Bachmann released a statement noting legislation that she was introducing called the Taxpayer Choice Act.

Bachmann Fights for American Taxpayers
Hails Economic Agenda which Supports her ‘Taxpayers Choice Act’

Washington, D.C., Jun 11, 2008 -

Today, U.S. Representative Michele Bachmann (MN-6) scored a big win for American taxpayers when her Taxpayer Choice Act was rolled out as the centerpiece of the Republican Economic Agenda to help America’s middle class.

"With skyrocketing gas and food costs, our nation’s families are struggling to make ends meet. It’s time that Washington work to give real relief to our hard-working taxpayers and help them afford what their families need and want. I’m honored that my legislation, H.R. 3818, the Taxpayers Choice Act, is the leading legislation in the recently unveiled Republican Economic Agenda.

"Millions of American taxpayers are dramatically affected by the burdensome Alternative Minimum Tax (AMT), forcing them to send even more of their hard- earned money to Washington. I strongly believe that the AMT must be repealed and that taxpayers deserve a choice in filing their taxes. H.R. 3818 would give taxpayers the option of paying either higher tax rates with more deductions or lower tax rates with no special deductions, empowering taxpayers to choose an option that best fits their families’ needs.

"I will continue to work in Congress to see that families in Minnesota and all across the nation get help to make ends meet. This Republican Economic Agenda is just one step stone to helping the struggling middle-class get back on their feet."

The Taxpayer Choice Act (H.R. 3818), has three points:

1) Immediately, fully, and permanently repeal the current AMT;

2) Make permanent the current capital gains and dividends tax rates; and

3) Create a voluntary Simplified Tax that would give individuals the option of paying under a highly simplified income tax system or under the regular income tax as it is structured now.

AMT Relied Act of 2008

In June of 2008, Congresswoman Bachmann released a statement noting her opposition to the AMT Relief Act of 2008.

Bachmann Urges Congress to Stand up for America’s Middle Class

Washington, D.C., Jun 25, 2008 -

Today, U.S. Representative Michele Bachmann (MN-6), a former tax attorney, made the following statement regarding the Democrat leadership’s tax-happy and misnamed bill, H.R. 6275, the Alternative Minimum Tax Relief Act of 2008:

"With our nation’s hard-working Americans already feeling the pressure of our nation’s record high food and gas costs, the last thing they need is to send more of their hard-earned money to Washington. Unfortunately, that’s what Democrats in Congress are asking them to do today with their so called AMT (Alternative Minimum Tax) "relief bill" today.

"The AMT must be abolished. When creating the law in 1969 for the purpose of ensuring that "wealthy" Americans paid income taxes, Congress chose to ignore future consequences and foolishly did not index it to inflation. So today, the AMT ensnares millions of middle class taxpayers – and it will continue to trap more and more middle class families each year until Congress acts.

"The Democrat-led Congress had the ability to fix it but instead they decided to raise taxes on our nation’s hard-working families with their so-called "relief bill," making it even more difficult for many to pay their bills. This AMT legislation also arbitrarily denies a corporate tax deduction for America’s five leading oil and gas companies beginning as soon as next year. According to the non-partisan Joint Committee on Taxation, that would amount to a $13.57 billion tax increase on oil and gas companies over eleven years – a cost that would certainly be borne by consumers. The American people are already feeling the pain at the pump, the last thing they need it to have those prices increased because of a tax-happy Congress.

"Our nation’s families are hurting. It’s time for Washington to turn its focus to protecting the family budget, not increasing the federal one. Congress must take real action before the AMT destroys our middle class. This bill sorely misses the mark."

Earlier this year Bachmann introduced the Taxpayer Choice Act, H.R. 3818, which would give taxpayers an option of paying either higher tax rates with more deductions or lower tax rates with no special deductions, whichever option works better for their circumstances. H.R. 3818 would also immediately, fully, and permanently repeal the current AMT; make permanent the current capital gains and dividends tax rates; and create a voluntary Simplified Tax that would give individuals the option of paying under a highly simplified income tax system or under the regular income tax as it is structured now.

Support for a Two-Month Tax Holiday

In December of 2008, Congresswoman Bachmann released a statement noting her support for a two-month tax holiday.

Bachmann Supports Two-Month Tax Holiday
Taxpayers Deserve Help From Washington

Washington, D.C., Dec 10, 2008 -

Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee and the fiscally conservative Republican Study Committee, made the following statement in support of tax holiday legislation, H.R. 7309, which she is cosponsoring:

"In this sagging economy, our nation's taxpayers are really hurting. And, this year's marathon of bailouts hurts them more than ever. I come here today to support the Tax Holiday legislation because it's time that Washington bail out Americans, not bury them with extraordinary debt.

"Since coming to Congress, I've seen every corporate and organizational Tom, Dick and Harry hold out their tin cups, begging for billions from America's taxpayers. At some point, we must take a stand and give our taxpayers a break from handouts and bailouts. Supporting this legislation is supporting the hardworking men and women who sent us to Washington."

H.R. 7309 would convert the remaining $350 billion of Treasury Secretary Hank Paulson's bailout funds into an income and FICA tax holiday for January and February of next year. This legislation would provide taxpayers with the freedom to use their hard-earned money as they wish. Rather than being forced to bail Wall Street for its bad decision making, taxpayers would be able to pay bills, save for their children's future, decrease their debt, or make purchases of their choosing.

Savings Recovery Act

In April of 2009, Congresswoman Bachmann issued a press statement noting her introduction of the Savings Recovery Act.

Bachmann Introduces Savings Recovery Act
Legislation will help Americans rebuild their Retirement, College, and Personal Savings

Washington, D.C., Apr 22, 2009 - U.S. Representative Michele Bachmann (MN-06), member of the House Republican’s Savings Solutions Group, today introduced the Savings Recovery Act along with other members of the working group. The legislation is vital to helping struggling Americans restore and maintain their retirement, college, and personal savings.

“With economic hardships affecting Americans from coast to coast, it’s vital that citizens receive real, workable solutions to help them rebuild their nest eggs,” said Bachmann. “By introducing legislation to help restore Americans’ retirement, college, and personal savings, Republicans are demonstrating once again our commitment to commonsense solutions. We invite Congressional Democrats to join us so that the American people receive the help they so desperately need and the comfort level with our economy that they so deeply crave.”

The Savings Recovery Act, crafted by Rep. Bachmann and members of the House GOP’s Savings Solutions Group, will:

• Make it easier for Americans to save more for their retirement by increasing the contribution and catch-up limits for individuals and families.
• Restore college savings by extending the existing SAVERs Credit to contributions made to 529 college savings accounts, effectively reducing by up to half the cost of a family’s contribution to the plan.
• Increase retirement income by doubling the Social Security earnings limit from $14,160 to $28,320 and allowing more Americans to increase their income without being hit by the Social Security earnings penalty.
• Provide tax relief for investors and seniors by immediately suspending the capital gains tax on newly acquired assets for the next two years, raise and index to inflation the amount of capital losses allowed against ordinary income to $10,000, and suspend taxes on dividend income through 2011.
• Stabilize worker pensions and helping employers invest in the future by temporarily providing an increased glide path for recognizing losses and two additional years to resolve pension funding shortfalls.
• Preserve employee-controlled 401(k)s by blocking efforts to wipe out 401(k)s entirely and replace them with government-run accounts.

Response to Obama Tax Increase

In May of 2009, Congresswoman Bachmann released a press statement noting her opposition to tax increases proposed by the Obama administration.

Bachmann Statement on Obama’s $190 Billion Tax Increase
"Obama's tax overhaul is about revenue-raising, not code simplification"

Washington, D.C., May 4, 2009 - U.S. Representative Michele Bachmann (MN-06), a former federal tax attorney and member of the House Financial Services Committee, released the following statement today regarding President Barack Obama’s proposed $190 billion tax increase on American businesses:

“American companies are already burdened with one the highest corporate tax rates in the world—making it increasingly difficult to compete in a global market. And I find it ironic that less than three months after President Obama stood before the employees of Caterpillar in Peoria, Illinois to tout the need for his trillion-dollar-plus ‘stimulus’ spending bill, pointing to Caterpillar’s struggles as representative of the economic struggles our nation, he now proposes a multi-billion dollar tax hike on that very same company and many others like it. President Obama talks about closing loopholes, simplifying the tax code; but this is really about raising revenue to pay for Washington’s spending addiction.

“As a former federal tax attorney, I have witnessed first-hand how the complicated tax code burdens families and small businesses. I am glad to engage in the debate over simplifying the tax code, but I think the goal should be to make things less complicated for taxpayers and to ensure that more Americans can keep more of their hard-earned money. President Obama’s tax overhaul appears to just serve as another fundraiser for his out-of-control spending agenda,” said Bachmann.

The Value Added Tax

In April of 2010, Congresswoman Bachmann wrote an op-ed discussing the possibility of the Value-Added-Tax, and her opposition to such a measure.

Here Comes the Value Added Tax
4/16/2010 | Email Michele Bachmann | All Posts By Blogger

As workers throughout the country sent off their hard-earned money to Uncle Sam on Tax Day yesterday, word is spreading about a new, devastating tax that will do nothing but further cripple our already fragile economy. The Value Added Tax, or VAT, is a consumption tax imposed on all levels of production. While Americans are asking to be taxed less, the government may be taking more.

The Wall Street Journal explains the Value Added Tax this way:

"A VAT is essentially a national sales tax that is assessed at each stage of production, with the bill passed along to consumers at the cash register. In Europe the average rate is a little under 20%. In the U.S., a federal VAT would presumably be levied on top of state and local sales taxes that range as high as 10%. Some nations also exempt food, medicine and certain other goods from the tax.

VATs were sold in Europe as a way to tax consumption, which in principle does less economic harm than taxing income, savings or investment. This sounds good, but in practice the VAT has rarely replaced the income tax, or even resulted in a lower income-tax rate. The top individual income tax rate remains very high in Europe despite the VAT, with an average on the continent of about 46%."

With the passage of the multi-billion dollar health care bill, in addition to already high spending levels, Democrats are drowning our nation in debt. The VAT tax lures Democrat support because with a 10% VAT, a potential for one trillion in revenues could be raised. What Democrats fail to realize is that our already struggling economy will be crippled. Small business owners cannot grow if every product they need has been taxed every step of the way.

One of Obama’s closest economic advisors, Paul Volcker, who was also the former Chairman of the Federal Reserve, said last week, a “VAT should be on the table.” He also said a VAT was “not a toxic idea.”

Volcker isn’t the only notable source floating the idea. According to USA Today, Congressional Budget Office director, Doug Elmendorf, said a VAT is being studied
“as part of its ‘strategic planning’ for the future -- one in which the $1.5 trillion budget deficit and $12.5 trillion debt must be addressed by policy makers. ‘Many people in Congress are interested in it,’ Elmendorf said, without specifying who.”
The American people are taxed plenty enough as is. Our economy can only recover with fewer taxes, not more.

American Spectator Speech

In November of 2010, Congresswoman Bachmann spoke at the American Spectator Dinner. Although she has not proposed a specifically named plan at this point, she did outline 10 points that she would pursue as President.

1. Cut federal spending 25 percent, the amount she says spending has increased under President Obama.
2. Pass the "mother of all repeal bills" that will kill the Democrat's healthcare reform and regulations.
3. Get the federal government out of the bailout business, especially when it comes to Wall Street and pension plans. This includes returning all money left in the TARP program to the federal coffers to pay down debt.
4. End involvement in semi-private businesses like Freddie Mac and Sallie Mae.
5. Make all the Bush tax cuts permanent.
6. Cut the corporate tax rate of 34 percent to "single digits" to spur growth and job creation.
7. Kill capital gains taxes.
8. Zero out the death tax.
9. Cap personal income taxes at 20 percent.
10. Propose a "flatter tax" and a tax code no longer than 50-pages "double spaced, with a font size no smaller than 9-point. My guess is that even some of my Democratic colleagues would be able to read that bill."

Support for Extending Tax Cuts for All

In December of 2010, Congresswoman Bachmann released a press statement noting her support for extending the tax cuts for all people.

Bachmann Opposes Democrat Tax Vote

Washington, Dec 2, 2010 -

Congresswoman Michele Bachmann (MN-06), who was not able to be present for today’s House Floor activities due to the serious illness of a close friend, issued the following statement regarding the votes she was expected to miss:

“The proposal by House Democrat leaders to only extend tax cuts for the middle class is not sufficient for our nation’s economy and would not have my support. Our economy desperately needs new jobs, but the President and House Democrats still want to raise taxes on our nation’s job creators. Tax cuts must be extended for all.”

As a former federal tax attorney and leader in the fight against reckless spending, Bachmann also urged her colleagues in the Senate to stand firm on extending the current tax rates for all Americans.

“Additionally,” said Bachman, “I support the expected vote in the House to censure Rep. Charlie Rangel (NY-15). His colleagues found him guilty of eleven ethics violations. This is not honorable behavior for a member of Congress and Mr. Rangel should face censure.”

Reaction to Tax Compromise

In December of 2010, Congresswoman Bachmann released a press statement noting her reaction to the compromise to extend tax cuts and unemployment benefits. 

Bachmann Reacts to Tax Compromise

Washington, Dec 7, 2010 - Congresswoman Michele Bachmann (MN-06) released the following statement in light of an apparent deal struck between Republicans and the White House regarding the pending tax hikes:

“Certainty must be provided to individuals, businesses large and small, farmers, and everyone impacted by the tax code. I called for the current tax rates to be made permanent for all Americans, but it appears a compromise for a two-year extension will be the temporary solution.

“It was irresponsible for Congress to adjourn in September and hit the campaign trail without finalizing the tax rates. The American people are tired of uncertainty, and this compromise on a two-year extension for all will at least offer a foundation for job creation for the immediate future.

“As part of the compromise, the President wants to extend unemployment benefits for another 13 months. Unemployment benefits are already at a historical length of 99 weeks, and the President’s request will cost another $56 billion. The President hasn’t indicated any other spending offsets or reductions to pay for these benefits, even though he claims to be committed to reducing the deficit. Our economy doesn’t have a moment to waste and it’s vital that we stop these tax increases now, but we cannot overlook the consequences of another unfunded extension of unemployment benefits. Along with the American people, I anxiously await the final version of the bill that will bring certainty to our nation’s taxpayers.”

Ending Tax Uncertainty

In December of 2010, Congresswoman Bachmann released a statement noting legislation that she had introduced to make the rates within the Bush tax cuts permanent.

Bachmann Introduces Legislation to End Tax Uncertainty

Washington, Dec 15, 2010 - Today Congresswoman Michele Bachmann (MN-06), a former federal tax attorney, introduced legislation to make the current individual income tax rates permanent and stop the massive tax increase that will affect all taxpayers on January 1. Congresswoman Bachmann released the following statement upon introducing the End Tax Uncertainty Act of 2010 (H.R. 6522):

“Instead of providing economic certainty, Congress has been playing politics with the money that belongs in the pockets of hardworking Americans. In mere days, tax hikes will affect all earners unless Congress acts, but President Obama is insistent upon pairing a tax vote with unfunded spending.

“As a small business owner, I know job creators are hesitant to hire more employees without knowing 2011’s tax tables. Washington’s era of uncertainty has existed too long and is simply unjustified. I seek to bring certainty to job creators and American families through the End Tax Uncertainty Act of 2010.

“I am disheartened that President Obama is pushing for a so-called compromise which will only add to our deficit. Now is the opportunity for Congress to lower its deficit while helping job creators, which my bill will do. As the compromise currently stands, I cannot support it,” stated Bachmann.

Bachmann’s legislation also repeals the death tax and gift tax, prevents tax increases on the maximum tax rate for capital gains and dividends income for all Americans, permanently patches the Alternative Minimum Tax and reduces the corporate tax rate to twenty-five percent.

Hannity Appearance

In December of 2010, Congresswoman Bachmann appeared on the Hannity Shown and spoke about her desire to see the AMT repealed and her desire to see the rates established in the Bush tax cuts permanent.

Tax Code Certainty

In December of 2010, Congresswoman Bachmann wrote an op-ed discussing the tax code and the need for certainty in the structure.

Certainty through Tax Code Reform
Posted by: Michele Bachmann at 5:21 PM

Uncertainty is in the air this holiday season, as lawmakers are yet to pass legislation preventing Obama’s tax hikes from affecting all taxpayers on January 1, 2011. Even though Congress likely will vote on a tax bill in the next 16 days, more uncertainty is just around the corner.

As a former federal tax attorney, I know our nation’s current tax system is onerous and confusing. The new majority must take a cold hard look at our way of doing business. According to an article in today’s Wall Street Journal, we find ourselves in a perpetual state of temporary tax codes:

“In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so.

“Today there are 141.

“Now Congress, taking up a deal worked out between the Obama administration and Republican leaders, is poised to turn the whole personal income-tax system into something of a temporary structure. The plan embraces a broad range of provisions—an extension of Bush-era rates, a new estate-tax formula—but for only two years. A payroll-tax cut in the bill is for a single year.

“This means that if the compromise passes largely intact, the U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.

“The level of uncertainty, unusual for developed nations, complicates planning and discourages hiring and investment, many economists and corporate executives say.”

Our founding fathers never intended a larger-than-life government manipulating our very economy via the tax code. We can start to reverse this course by focusing on pro-growth measures that will provide needed certainty to businesses and families. The 112thCongress should consider cutting the corporate tax rate to make it more attractive for businesses seeking to operate in the industrialized world. I would also like to see the zeroing out of capital gains taxes. Then, let’s reduce all marginal personal income tax rates for individuals and start debate on ending the death tax. Better yet, given our nation’s dire economic situation, let’s begin a serious discussion about whether or not to scrap the current tax code and replace it with a fairer, flatter tax code. I think Americans would appreciate slashing the tax code to a fraction of its current length of more than 50,000 pages.

The American people have given Republicans a second chance. In the 112th Congress, it is my desire to see Congress bring greater simplicity to our tax policy. As a small business owner myself I know a pro-growth economy is possible and one place to start is through tax code certainty for small businesses, corporations and families.

Tax Hikes are Not the Solution

In April of 2010, Congresswoman Bachmann wrote an op-ed discussing President Obama's proposed budget and the tax increases that would result from such spending.

Obama's Tax Hikes are Not the Solution
Posted by: Michele Bachmann at 12:34 PM

When President Obama was sworn into office more than two years ago, he took out an unlimited credit card in the name of the American taxpayer and immediately proceeded to charge a trillion-dollar stimulus that failed to hold unemployment below 8 percent, as the White House promised.

In February, President Obama proposed a budget with $8.7 trillion in new spending, despite the fact our nation is already more than $14 trillion in debt and increasing daily. Instead of fulfilling a promise made while vying for the White House to cut the U.S. deficit in half in his first term, he presented a budget that kept the U.S. on the same, unsustainable fiscal road.

Last week, House Republicans introduced a real budget proposal that reduces deficits by more than $4 trillion over the next decade. It introduces real reforms to get our fiscal house in order and actually pay off the debt before our children and grandchildren are stuck with our spending bill.

But yesterday, President Obama offered empty, political rhetoric to the American people. Suddenly he’s feigning outrage against the current debt levels and the out-of-control spending. He thinks taxing those making over $250,000 will solve our budget woes and create jobs. It won’t. The President is just singing the second verse of his same old song.

If President Obama was serious about saving the taxpayer money, he would have started asking for cuts two years ago.

Higher Taxes is Not Always Higher Revenues

In April of 2011, Congresswoman Bachmann appeared on the Today Show and discussed possible tax increases. She stated that higher tax rates did not necessarily lead to higher revenues. She notes that you could confiscate all the money earned by the highest earners and still would not fund the government for more than one month.

Western Debate

In October of 2011, Congresswoman Bachmann participated in the Western Debate in Las Vegas. She was asked about whether or not she supported a fair tax and stated that she did not support giving the federal government another revenue stream. She stated that a sales tax would be or lead to a value-added tax.

QUESTION: This is for all candidates. What's your position on replacing the federal income tax with a federal sales tax?

COOPER: I'll direct that to Congresswoman Bachmann. You've been very critical of Herman Cain's 9-9-9 plan, which calls for a 9 percent sales tax, a 9 percent income tax, and 9 percent corporate tax. In fact, you've said it would destroy the economy. Why?

BACHMANN: Well, I am a former federal tax litigation attorney. And also, my husband and I are job-creators.

One thing I know about Congress, being a member of Congress for five years, is that any time you give the Congress a brand-new tax, it doesn't go away. When we got the income tax in 1913, the top rate was 7 percent. By 1980, the top rate was 70 percent. If we give Congress a 9 percent sales tax, how long will it take a liberal president and a liberal Congress to run that up to maybe 90 percent? Who knows?

What I do know is that we also have to be concerned about the hidden tax of the value-added tax, because at every step and stage of production, you'd be taxing that item 9 percent on the profit. That's the worry.

In my plan -- again, that's a tax plan, it's not a jobs plan -- my plan for economic recovery is real jobs right now. I have a tax plan. I have a jobs plan. I have an energy plan and a plan to really turn this country around and create millions of high-paying jobs.

COOPER: Mr. Cain, a lot of prominent conservatives now are coming forward saying that your 9-9-9 plan would actually raise taxes on middle-class voters, on lower-income voters.

CAIN: The thing that I would encourage people to do before they engage in this knee-jerk reaction is read our analysis. It is available at hermancain.com. It was performed by Fiscal Associates. And all of the claims that are made against it, it is a jobs plan, it is revenue-neutral, it does not raise taxes on those that are making the least. All of those are simply not true.

The reason that my plan -- the reason that our plan is being attacked so much is because lobbyists, accountants, politicians, they don't want to throw out the current tax code and put in something that's simple and fair. They want to continue to be able to manipulate the American people with a 10-million-word mess.

Let's throw out the 10-million-word mess and put in our plan, which will liberate the American workers and liberate American businesses.

...

COOPER: I want to bring in Congresswoman Bachmann since she was referenced by you.

BACHMANN: But Anderson, how do you not have a value-added tax? Because at every level of production you have a profit, and that profit gets taxed, because you produce one portion at one level, and then you take it to the next supplier or vendor at the next level, and you have an exchange. That is a taxable event.

And ultimately, that becomes a value-added tax. It's a hidden tax. And any time the federal government needs revenue, they dial up the rate and the American people think that it's -- that it is the vendor that creates the tax, but it's the government that creates the tax.

...

COOPER: Congresswoman Bachmann, you said in the last debate that everyone should pay something. Does that mean that you would raise taxes on the 47 percent of Americans who currently don't pay taxes?

BACHMANN: I believe absolutely every American benefits by this magnificent country. Absolutely every American should pay something, even if it's a dollar.

(CHEERING AND APPLAUSE)

BACHMANN: Everyone needs to pay something in this country. That's why with my tax plan, I take a page out of not theory but what's provable and what works. What is provable and what works was the economic miracle that was wrought by Ronald Reagan in the 1980s. That's the plan that I look at.

I also want to completely abolish the tax code. I want to flatten the tax for all of Americans, simplify that tax for all of Americans. And that creates job growth, which is exactly what we need to have.

Because to be able to fuel the fire for this economy, again, it is the tax code, but it doesn't end with the tax code. It's the regulatory burden that costs us $1.8 trillion every year, but it's more than that cost. It's jobs that are lost.

So we need to repeal "Obama-care," repeal the jobs and housing destruction act known as Dodd-Frank. President Obama's plan has been a plan for destruction of this economy and failure.

COOPER: Thank you.

BACHMANN: I plan to change that with real jobs right now at michelebachmann.com.

Dartmouth Debate

On October 11, 2011 Congresswoman Bachmann participated in the Dartmouth debate. She discusses her opposition to a sales tax in that it is a new revenue stream that will never go away.

GOLDMAN: But, Congresswoman Bachmann, you’re a former IRS lawyer, do you agree?

BACHMANN: I would have to say that the 9-9-9 plan isn’t a jobs plan, it is a tax plan. And I would say that from my experience being in Congress, but also as a federal tax lawyer, when you - the last thing you would do is give Congress another pipeline of a revenue stream. And this gives Congress a pipeline in a sales tax.

A sales tax can also lead to value-added tax. The United States Congress put into place the Spanish-American War tax in 1888. We only partially repealed that in 2006. So once you get a new revenue stream, you are never going to get rid of it.

And one thing I would say is, when you take the 999 plan and you turn it upside down, I think the devil is in the details.

Michigan Economic Debate

On November 10, 2011 Congresswoman Bachmann participated in the Michigan economic debate. She discussed taxes there and stated that higher taxes leads to less jobs.

BARTIROMO: Congresswoman Bachmann, same question to you. How can you create jobs as quickly as possible?

BACHMANN: Well, I think one thing that we know is that taxes lead to jobs leaving the country. All you need to know is that we have the second highest corporate tax rate in the world.

And if you go back to 1981, and you look around the world, we had a lot of high corporate tax countries. It was 47 percent on average on a lot of countries across the world.

But if you look today in the United States, we have an effective rate if you average in state taxes, with federal taxes, of about 40 percent. But the world took a clue, because capital is mobile, and capital went to places where corporate tax rates went to 25 percent and falling.

We're still stuck in a 1986 era of about a 40 percent tax rate. We have to lower the tax rate because it's a cost of doing business, but we have to do so much more than that.

Our biggest problem right now is our regulatory burden. The biggest regulatory problem we have is Obamacare and Dodd/Frank. I will repeal those bills. I have written those bills to repeal those bills that have got to go. But beyond that --

(APPLAUSE)

BACHMANN: But beyond that, we have to legalize American energy. And here is something else that we have to do that will help the economy. We have to build the fence on America's southern border and get a grip on dealing with our immigration problem. 

...

BACHMANN: Well, I would say President Obama is the one that's wrong, because President Obama's plan for job creation has absolutely nothing to do with the true people who know how to create jobs. He should really be going to job-creators if he wants to know how to create jobs. Instead, he continues to go to a General Axelrod in Chicago to look for his orders to figure out how to deal with the economy. That won't work.

We know what needs to be done. We have a real problem. When you have 53 percent of Americans paying federal income taxes, but you have 47 percent of Americans who pay no federal income taxes, you have a real problem.

And that's why in my tax plan, I have everyone paying something because everyone benefits by this magnificent country. So even if it means paying the price of two Happy Meals a year, like $10, everyone can afford to pay at least that.

And what it does is create a mentality in the United States that says that freedom is free. But freedom isn't free. We all benefit. We all need to sacrifice. Everybody has to be a part of this tax code.

Official Website Statements

Taxes

Taxes are simply too high, and American families have less money to spend on their priorities. Rather than taking money from the hands of the middle class to pay for a large, overbearing federal government, I believe in letting hard-working taxpayers keep more of what they earn. This would help strengthen our economy, stimulate job growth and force the government to make wiser spending decisions – all of which would benefit American families.

I have cosponsored several bills to provide tax relief to hard-working Americans, including bills to repeal the estate tax, reduce capital gains taxes, repeal the alternative minimum tax (AMT), extend the adoption tax credit, and, make permanent other important tax relief passed by Congress in 2001 and 2003. Families and businesses can rest assured I will continue to support efforts to reduce taxes and put more money back in the pockets of American workers.

Also, as a small business owner, I understand the need to protect our nation’s small businesses and create opportunities for growth and economic prosperity. I believe that less taxation and government regulation of private companies will continue to make America the best place in the world to do business. For instance, the devastating effects of the death tax are suffered most by family owned small businesses and their employees. Eliminating the death tax is one way Congress can help American family-owned businesses and family farms expand opportunity, create jobs and stimulate the economy.

I am also a cosponsor of legislation to create Association Health Plans (AHPs) which would allow small businesses to join together through trade associations to purchase lower cost health insurance for their workers. This legislation would increase small businesses’ bargaining power with health care providers, give them freedom from costly state-mandated benefit packages, and lower their overhead costs by as much as 30 percent. These are all benefits that many large corporations and unions already have because of their larger economies of scale, and it’s time to give this same benefit to smaller businesses.

In my work as a former federal tax attorney, I saw firsthand that our nation’s tax laws are hard to understand and undermine the country’s prosperity by imposing needlessly harsh penalties on work, savings, and investments. There are commonsense standards that should govern our nation’s tax system such as simplicity, fairness, and efficiency. Unfortunately, those standards are far from being met and the U.S. tax code continues to result in a complicated mess for taxpayers every year. Simplification of the tax code must be a priority.
 

Wasteful Spending

Each year the federal government spends trillions of dollars, billions of which are wasted on duplicative, inefficient, or ineffective government-run programs. So far this year, the House has passed more than $950 billion in new government spending. Congress simply must show the American people it is serious about protecting their hard-earned tax dollars and should adhere to more responsible budgeting that millions of Minnesota’s families practice every month.

We also must instill accountability throughout the appropriations process and shed more light on taxpayer spending for congressional “earmark” projects. I have taken a bipartisan pledge to not seek any earmarks this year and am working with like-minded Republicans and Democrats to reform this system which has become little more than a political favor factory at taxpayer expense. I am also a cosponsor of H. Res. 479 which would ensure all earmarks, including those in tax and authorizing bills, are disclosed to the public and subject to being challenged on the House floor. And I am a cosponsor of legislation which would authorize a “presidential line item veto,” a tool which would allow the President to identify wasteful and reckless spending provisions in legislation and cut them out.

I believe it is critical that we restore the faith of the American taxpayers and have introduced legislation, H.R. 3958, the Truth in Accounting Act, to require the government to fully disclose its long-term, unfunded spending obligations – money Congress has already agreed to spend in future years. In addition to the annual budget deficit, this number will tell us how much Congress must reform current policies to put us back on a sustainable fiscal track for today’s and future generations

Campaign Website Statements

Taxes and the Economy

In July 2009, our country’s budget deficit topped $1 trillion for the first time in our nation’s history. Our nation’s debt stands near $11.5 trillion – another record for Uncle Sam. Meanwhile, unemployment numbers woefully surpassed administration estimates in June and now sit at 9.5%. And to make matters worse, at the end of May 2009, the U.S. government owed China $801.5 billion.

While the White House has been successful so far in pushing through its agenda – cap and trade national energy tax, the government-run, the $1.1-trillion “stimulus” package, and the $400-billion pork-laden omnibus spending package – our economic options for addressing the recession are being quickly foreclosed.

I am a cosponsor of the REBOUND Act to reduce the deficit and promote real economic recovery. This fiscally responsible measure will recall the $460 billion in unspent “stimulus” moneys while leaving intact the package’s tax relief and unemployment benefits. Furthermore, instead of recycling money repaid from the Wall Street bailout into a new spending slush fund – as the Democrats proposed, the REBOUND Act will require all Wall Street repayments to go exclusively to debt reduction.

Every responsible American family knows that you pay back your loans before you take out new ones. Unfortunately, Washington needs to be reminded. It’s time Congress stop talking about tough decisions and start making them.

Voting Record

Alternative Minimum Tax Relief Act of 2008

The Alternative Minimum Tax was created to tax wealthy individuals who were exploiting loopholes to avoid paying taxes. It was not indexed to inflation and now affects many more families than it was intended. Congress regularly applies "fixes" to the law in the form of yearly adjustments. Sometimes they attempt to repeal it completely. In 2008, the house voted on the Alternative Minimum Tax Relief Act of 2008. The bill was had the objectives of increasing and extending through 2008 the alternative minimum tax (AMT) exemption amounts, and extending through 2008 the offset of certain nonrefundable personal tax credits against regular and AMT tax liability. This change would have brought in less revenue and that was to be offset by lowering the tax deductions for oil companies. The bill was supported by most Democrats and opposed by most Republicans. While it passed the house, it never came up for a vote in the Senate. Michele Bachmann voted against the Alternative Minimum Tax Relief Act of 2008.

AMT Relief Act of 2007

The AMT Relief Act of 2007 sought to apply a fix to the AMT, and offset those costs by taxing gross income from overseas companies. Most Democrats supported the legislation and most Republicans opposed it and the bill passed the house, but was not brought up for a vote in the Senate. Michele Bachmann voted against the AMT Relief Act of 2007.

Tax Increase Prevention Act of 2007

In 2007, congress passed legislation to apply a temporary fix. Most Democrats supported the legislation and all Republicans opposed it on the grounds that it violated PAYGO. Michele Bachmann voted against the Tax Increase Prevention Act of 2007.

Sponsored and Cosponsored Legislation

Session-112; Bill Number-H R 86; End Tax Uncertainty Act of 2011 - Prime Sponsor

Makes permanent: (1) the Economic Growth and Tax Relief Reconciliation Act of 2001; (2) provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 that reduce income tax rates on dividend and capital gains income; and (3) the repeal of the estate, gift, and generation-skipping transfer taxes. Amends the Internal Revenue Code to: (1) repeal the alternative minimum tax (AMT) on individual taxpayers; and (2) reduce to 25% the maximum income tax rate on corporations, including personal service corporations.

Session-111; Bill Number-H R 470; Economic Recovery and Middle-Class Tax Relief Act of 2009 - Cosponsor

Makes permanent the reductions in the dividend and capital gain tax enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003.Amends the Internal Revenue Code to: (1) reduce individual and corporate income tax rates; (2) repeal the alternative minimum tax for individual taxpayers; (3) allow inflation adjustments to the basis of capital assets in determining gain or loss; (4) reduce the capital gains tax rate for corporations; (5) repeal limitations on the expensing allowance for depreciable business assets; (6) make permanent the tax credit for increasing research activities; (7) extend the carryback period for net operating losses to seven years; (8) increase the child tax credit; (9) exclude from gross income in 2009 distributions from an individual retirement plan (IRA) and exempt IRAs from mandatory distribution requirements after 2009; and (10) increase the tax deductions for tuition and related expenses and for the interest on qualified education loans.Makes 1% across-the-board rescissions in non-defense discretionary spending for FY2009.

Session-111; Bill Number-H R 205; Death Tax Repeal Act - Cosponsor

Repeals the federal estate, gift, and generation-skipping transfer taxes.

Session-110; Bill Number-H R 2380; Death Tax Repeal Permanency Act of 2007 - Cosponsor

To make the repeal of the estate tax permanent.

Session-110; Bill Number-H R 2734; Tax Increase Prevention Act of 2007 - Cosponsor

To make the Economic Growth and Tax Relief Reconciliation Act of 2001 and certain other tax benefits permanent law.

Session-110; Bill Number-H R 3818; Taxpayer Choice Act of 2007 - Cosponsor

To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.

Session-110; Bill Number-H R 1366; Individual AMT Repeal Act of 2007 - Cosponsor

To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals.

Session-110; Bill Number-H R 7223; Free Market Protection Act of 2008 - Cosponsor

To suspend the capital gains tax, schedule the government-sponsored enterprises for privatization, repeal the Humphrey-Hawkins Full Employment Act, and suspend mark-to-market accounting requirements, and for other purposes.

Session-112; Bill Number-H R 86; End Tax Uncertainty Act of 2011 - Prime Sponsor

Makes permanent: (1) the Economic Growth and Tax Relief Reconciliation Act of 2001; (2) provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 that reduce income tax rates on dividend and capital gains income; and (3) the repeal of the estate, gift, and generation-skipping transfer taxes. Amends the Internal Revenue Code to: (1) repeal the alternative minimum tax (AMT) on individual taxpayers; and (2) reduce to 25% the maximum income tax rate on corporations, including personal service corporations.

Session-110; Bill Number-H R 4995; Middle Class Jobs Protection Act of 2008 - Cosponsor

Amends the Internal Revenue Code to: (1) reduce the maximum corporate income tax rate to 25%; (2) increase the expensing allowance for depreciable business assets to $250,000 in 2008 and 2009; (3) increase to 50% the current year bonus depreciation allowance for certain property placed in service in 2008 and 2009; and (4) allow additional carrybacks for certain net operating losses and for excess business and foreign tax credit amounts arising in 2008 and 2009.

Session-110; Bill Number-H R 5109; Economic Growth Act of 2008 - Cosponsor

Amends the Internal Revenue Code to: (1) repeal the dollar and other limitations on the expensing allowance of depreciable business assets; (2) reduce to 25% the maximum corporate income tax rate; (3) provide for an inflation adjustment to the basis of certain capital assets for purposes of determining gain or loss; and (4) reduce from 35 to 15% the alternative capital gains tax rate for corporations.

Session-110; Bill Number-H R 5908; Zero percent tax rate for the net capital gains - Cosponsor

Amends the Internal Revenue Code to establish, on a permanent basis, a zero percent tax rate for the net capital gains of individuals and corporations for purposes of the regular and alternative minimum tax. Eliminates the terminating date in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (i.e., December 31, 2008) for provisions that reduce the capital gains tax rate for individuals.

Session-111; Bill Number-H R 782; Taxpayer Choice Act of 2009 - Cosponsor

Amends the Internal Revenue Code to: (1) repeal the alternative minimum tax on individual taxpayers after 2008; and (2) allow taxpayers to elect an alternative income tax system. Makes permanent the capital gains and dividends rate reductions enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2001.

Herman Cain

Summary

Herman Cain supports lowering the tax rates as much as possible and simplifying the tax code. He supports lowering the corporation tax and capital gains tax rates, and supports ending the estate tax. 

In addition to lowering the tax rates where possible, Herman Cain supports ending the IRS, and replacing the income tax code and other taxes with a consumption tax known as the "Fair Tax." The fair tax would place a sales tax around 25% on all sales and end the income tax. This would greatly simplify the tax code, and end the numerous exemptions in place.

Cain has made tax reform one of the central components of his 2012 presidential campaign. He calls his plan the 9-9-9 plan. The first phase of the plan is to move the economy to a 9% personal income tax rate, a 9% tax rate on businesses, and institute a 9% national sales tax rate. The second phase of the plan would be fully installing the "Fair Tax" sales tax system and eliminate the personal income and corporate income taxes. This plan also includes the suspension of taxes on repatriated profits.

2004 Campaign Video

In a video made for his 2004 campaign ad, Mr Cain talks about his desire to end the IRS, and his desire to see the federal tax code scrapped and a new one started.

The $100 Billion Dollar Witch Hunt

In March of 2006, Herman Cain wrote an article discussing the overall concept of direct taxation and it's affects on the economy. He discusses the government's efforts in hunting down tax violators as a witch hunt.

March 8, 2006
End the $100 Billion Witch Hunt

The Internal Revenue Service (IRS) claims in a February 2006 report that for every dollar spent chasing unpaid taxes, they can recover about $4 for federal coffers. To close the expected 2005 “tax gap,” the IRS would have to spend $100 billion in an attempt to recover $400 billion. That’s $100 billion of our tax dollars spent to hunt us down for unavoidable errors trying to comply with the tax code.

It’s not enough that many of us have to write checks to the IRS this time of year. Congress wants to write the IRS a bigger check to chase down our unavoidable errors.

U.S. senators from both sides of the aisle are predictably enraged that taxpayers would dare underreport their incomes, and liberal media stories gleefully note that the tax gap could nearly pay off the federal budget deficit. There is a fairer and more inexpensive way for Congress to pay off the deficit – stop overspending. The media’s story angle conveniently avoids the fact that members of Congress – not taxpayers – write the confusing tax laws and authorize all deficit spending.

In response to the IRS report, Senator Charles Grassley (R-IA), chairman of the Senate Finance Committee, vowed to hunt down taxpayers who supposedly abuse the tax code by inflating the value of their charitable contributions and deductions.

Senator Grassley, why don’t we hunt down those in Congress who waste our tax dollars on failed entitlement programs and pork projects? Senator Kent Conrad (D-ND), ranking Democrat on the Senate Budget Committee declared, “It just leaps out at you as one of the most significant opportunities we have.” What should leap out at you is the fact that lawmakers produce deficit spending and the confusing tax code.

Alexander Hamilton, the first Secretary of the Treasury, predicted this would happen. In Federalist Paper Number 12, written in 1787, Hamilton cautioned the negative effects of a system of direct taxation. These effects included perpetual addition of new tax laws, new collection methods and the noncompliance that would necessarily follow. Mr. Hamilton was correct, to the tune of $400 billion today.

Without an income tax code, the federal government cannot as easily monitor our economic activities, and Congress cannot write new tax laws advantageous to their preferred groups. These facts were perhaps no better articulated than by Senator Hillary Clinton (D-NY), who last year stated at a fundraiser, “We’re going to take things away from you on behalf of the common good.” Translation: “We’re going to take more of your money so we can buy more votes.” It is time Congress stopped robbing us of our liberties by taxing our income and our time.

We now have a significant opportunity to replace the confusing income tax code mess with a consumption tax – an opportunity that Congress has squandered. Even Hamilton recognized the advantages of a consumption tax over a direct income tax in Federalist Paper Number 21, also written in 1787,

“The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions.”
Under a consumption tax such as a national sales tax, also called the FairTax (HR 25 and S 25), we would do away forever with automatic withholding, the alternative minimum tax and forced FICA deductions. We would, for the first time since 1913, regain our economic freedom.

Following the release of the aforementioned IRS report commissioner Mark Everson stated, “At some point you get to a tradeoff between liberties and closing that gap.” Let’s do both, by replacing the tax code with the FairTax. The $400 billion gap will go away, and our liberties will return.

Support for the Bush Tax Cuts

In March of 2006, Herman Cain wrote an article discussing his support for the Bush tax cuts and his belief that the cuts were largely responsible for the growing economy that followed.

March 29, 2006
Stop Lying About Tax Cuts

Every good liberal will tell you that low tax rates cause tax revenues to drop, hurt the economy, benefit only the wealthy and cause skyrocketing budget deficits. A Wall Street Journal article last week blew a hole in those liberal lies. The Journal reported that federal tax revenues for the first five months of fiscal year 2006 are up 10.3 percent from the same period a year ago. The 2006 revenue growth adds to a 15 percent tax revenue increase from 2004 to 2005. This good fortune for U.S. Treasury coffers is attributed to the steady and growing economy, which is largely a product of the 2003 cuts in income, dividend and capital gains tax rates.

The parallel growth in the economy and tax revenues is not a fluke and did not occur by chance. History has shown us that every time tax rates are cut, federal tax revenues rise, the economy responds positively and the wealthy pay a larger share of the tax bill.

Presidents Warren Harding and Calvin Coolidge significantly cut tax rates in the 1920s, which caused both the national economy and federal revenues to grow. Harding repealed the World War I excess profits tax, dropped the top tax rate on individuals from 73 to 58 percent and set the capital gains tax rate at 12.5 percent. Coolidge further reduced individual tax rates and inheritance taxes. The Harding and Coolidge tax rate cuts caused income tax revenues to rise 61 percent from 1921 to 1929. At the same time, the economy grew by 59 percent. Additionally, the share of taxes paid by the wealthiest Americans grew from just over 44 percent in 1921 to over 78 percent by 1928.

President John F. Kennedy introduced a plan in 1963 to lower the highest individual tax rate of 91 to 70 percent, and the top corporate rate from 52 to 48 percent. The Revenue Act of 1964, passed after Kennedy’s death, containted his proposed rate cuts and sparked considerable economic growth. Federal tax revenues rose 68 percent through 1968, and the economy grew 42 percent. The share of tax revenues paid by the wealthiest in the 1960s dwarfed the amounts paid by the middle class and poor. Tax revenues from those individuals making over $50,000 rose by 57 percent following the Kennedy rate cuts, while revenues from those making under $50,000 rose by just 11 percent.

When President Ronald Reagan came to office in 1981, the economy was mired in high interest rates, high unemployment and stagflation produced by policies of the 1970s. Reagan cut the highest individual tax rate in 1981 from 70 to 50 percent, and cut the lowest rate from 14 to 11 percent. In 1986 he further cut the top rate from 50 to 28 percent.

Reagan’s tax rate cuts helped produce the longest period of peacetime economic expansion in U.S. history. Total tax revenues grew by over 99 percent during the 1980s, and the economy grew by an average of 4 percent each year. As we saw in the 1960s, the wealthiest Americans paid the most taxes following Reagan’s rate cuts. The top 10 percent of income earners went from paying 48 percent of all taxes in 1981, to over 57 percent by 1988.

The other lie liberals perpetually tell is that low tax rates cause budget deficits. History proves just the opposite – that cuts in income, capital gains and dividends tax rates increase the amount of federal revenues available for Congress to spend. The only thing that can cause a budget deficit is when Congress spends in excess of available revenues, and the president at the time signs off on that spending. Members of Congress who blame tax cuts for causing deficits might as well argue that gun manufacturers cause homicides, fast food restaurants cause obesity and cigarette makers cause lung cancer. Surely no one would agree with that flawed logic.

Fiscal conservatives who advocate low tax rates, and even complete replacement of the income tax code with a consumption tax, can be assured that they are on the right side of history, and the right side of economic common sense. Liberals of both political parties who decry low tax rates would harm our nation’s economic infrastructure, and the poor and wealthy alike.

Nearly everyone has a chance to succeed in our dynamic economy, provided that government does not confiscate their wealth through the tax code. As former President Abraham Lincoln once stated, “That some should be rich shows that others may become rich and hence is just encouragement to industry and enterprise . . . I don't believe in a law to prevent a man from getting rich; it would do more harm than good.”

Support for Ending the Estate Tax

In July of 2006, Herman Cain wrote an article discussing numerous items that Congress was failing to address. In that article, he expressed his support for ending the estate tax.

Most recently, Senate Republicans have been unable to pass a full repeal of the estate tax, the most immoral tax in the entire tax code. A number of liberal Republicans, including Senator Snowe, have voted against full repeal. While senators continue to debate various compromise plans to eliminate the estate tax for all but the wealthiest Americans, it is doubtful any of them will pass this year.

Fiscal Reality

In March of 2007, Herman Cain wrote an article discussing his views that politicians are using false and creative statements to mask the true fiscal reality. 

March 5, 2007
Creative Rhetoric Masks Fiscal Reality

Politicians use words to inspire, cajole and convince people that their particular policy prescriptions are without fault and beneficial to both the least among us and the nation as a whole. Unfortunately, some politicians also use words to deceive people with a rhetorical frequency and intensity that overshadow reality for the uninformed voter.

Pundits often analyze a politician’s positions on the most prominent issues as distinct from his vision of sound fiscal policy. The shrewdest of lawmakers, however, seek to blur the distinctions, arguing that their brand of fiscal policy is a sure-fire cure for all of our social ills. The blurred lines are most apparent when the political rhetoric turns to discussion of taxation and government spending.

Examples abound, and politicians are careful to couch their desire for higher tax rates as benefiting some sort of common good. Presidential candidate Sen. Hillary Clinton (D-NY) recently stated that she wants to “take those profits” from oil companies to fund alternative sources of energy. House Ways and Means Committee Chairman Charles Rangel (D-NY) said last week that he wants to “rearrange” tax rates to achieve a more “equitable distribution” of the 2001 and 2003 tax rate cuts. His goal is to “offset” the “cost” of limiting or eliminating the Alternative Minimum Tax, which threatens millions of taxpayers. The website Politico.com reported last week that Democrats plan to pay for $700 million in health care for poor children with “revenue enhancements.”

Taking corporate profits, rearranging tax rates, offsetting tax rate cuts and enhancing revenue are clever rhetorical twists for advocating the same goal – raising tax rates on corporations and individuals deemed most able to pay more taxes.

The tax pushers buttress their arguments not only in terms of all the common good they plan to achieve, but in the “scoring” estimates of tax legislation produced by the Congressional Budget Office (CBO). Since the CBO was created in 1974, one of its duties is to estimate the “cost” of a proposed tax rate increase or decrease. That is, the supposed positive or negative effect of tax rates on the rate’s ability to generate federal revenues. The problem is the CBO uses what is referred to as static, instead of dynamic, scoring methods.

Static scoring estimates merely look at the proposed tax rate change and calculate a corresponding increase or decrease in federal revenues. A static CBO score would estimate, for example, that a 5 percent income tax rate reduction would reduce federal revenues by the same 5 percent. The tax pushers then argue that the 5 percent tax cut will cause a budget deficit. Therefore, Congress can’t possibly pass the tax cut because it “costs” too much and we can’t “pay for it.”

The claim that reductions in tax rates have a “cost” is ultimately an argument that we all work for the federal government. Politicians who decry the alleged cost – in their minds, a reduction in federal revenues – either do not understand the positive economic impact of low tax rates on growing the economy, personal wealth and the federal coffers, or, they want to deceive the public. I think the latter.

At the 2006 Conservative Political Action Conference, Vice President Cheney stated that the 2001 and 2003 tax rate cuts contributed to an historic surge in federal revenues. Cheney was correct. The Heritage Foundation found that capital gains tax revenues doubled following the 2003 rate cut. Tax revenues in 2006 were 18.4 percent of gross domestic product, a percentage that is above the 20-year, 40-year, and 60-year historical averages.

Though Cheney is correct, he is, in fact, making the wrong argument for low tax rates. Supporters of low to zero tax rates on income are not necessarily fans of more taxpayer dollars poured into the congressional trough.

Big government advocates focus the argument on taxation levels and not on federal spending, which is the real root cause of budget deficits. Look at your personal finances. No matter your level of income, if you spend 100 percent of your money and max out your credit cards you have a personal budget deficit. If you spend only that amount of income needed for necessities, you run a personal surplus.

The problem is not in the amount of income, but in the amount of spending. When members of Congress argue that lower income tax rates will cause budget deficits, they are acting disingenuous to say the least.

The entire 20th Century is a testament to the folly of believing that the Marxist philosophy of “from each according to his ability, to each according to his needs” can outgain or outlast a governmental form that pledges to protect individual rights and the pursuit, but not the guarantee, of happiness.

Political rhetoric around the issues of taxation and spending, the two issues from which Congress derives its power, will be with us as long as politicians have to stand for election.

Deceptive rhetoric is a reality, but it can’t distort reality for truly informed voters. We just need more of them.

Fairness in Taxation

In August of 2007, Mr Cain wrote an article discussing how our current tax system is used to encourage contradictory behaviors. He also discussed the inherent unfairness in the system, and how the fair tax would address these issues.

August 20, 2007
A Tax Break for Driving to Work? The Fair Tax Will Fix This

There is a little-known deduction in the tax code that 400,000 people know about, and by which they avoid $150 million dollars in taxes each year. The issue is not that most of us do not know about this little sneak-a-tax, or even the amount that the rest of us are picking up through a higher federal deficit.

The issue is that this is another example of how the tax code is used to encourage a desired behavior. The deduction encourages people to drive to work by subsidizing their parking costs. If you do not have to pay for parking at work you get zero deduction. At the same time, the Department of Transportation is planning to spend $354 million to encourage people to not drive to work by subsidizing their mass transit costs.

That’s right! Our tax dollars are working against each other.

This little inconsistent truth was reported in William Neuman’s article on the front page of The New York Times last Thursday, August 16, 2007, titled “Mixed Signals: Driving to work as a Tax Break.”

This is also an example of how sneak-a-taxes and special deductions for a few people at the expense of most of us get in the tax code. This deduction for parking was passed back in the 1980’s when most of us were not paying attention. Since it was so small relative to other changes being made to the tax code, it was not covered by the evening network news programs.

One such other change by Congress in the 1980s was legislation to gradually increase the retirement age for full Social Security benefits. Like most people in their 40s, I was not paying attention to a law that would affect me 20 years later, and would cause my retirement benefits to start at age 66 instead of 65. And for those born after 1960, your retirement age for full benefits is now 67, and it does not stop there as more and more baby boomers file for benefits.

The federal government was never intended to be in the business of encouraging one behavior over another, or favoring one group of people over another. This goes beyond providing assistance to the needy. And government was never intended to be in the business of taking people’s money for a retirement system, and then increasing the retirement age as the money starts to run out.

This is what’s wrong with the tax code along with its unfairness, its complexity and a long list of other anti-free-market and politics-of-envy provisions. The only solution is to replace it, and the Fair Tax is by far the best solution. The Fair Tax – a national consumption tax replacing all existing federal taxes – eliminates all inconsistencies, stimulates economic growth and liberates the poor and the needy. (See fairtax.org for more information.)

But the bureaucrats and career politicians want to keep the current system. The tax code gives them a means by which to encourage certain behaviors, and a means by which they can award tax favors to one group over another. The current system hides a plethora of sneak-a-taxes that may never be exposed.

Individually, these sneak-a-taxes may not add up to much relative to the $3 trillion dollars government spends each year. But collectively, they add up to mortgaging our national future to people who want to destroy us, and literally taxing ourselves into economic oblivion.

These competing tax dollars may seem small to big-hearted liberals, and waiting one or two more years before people can receive full Social Security benefits should be no big deal. It may not be a big deal if government can legislate two more years to a person’s life expectancy.

The insanity and inconsistencies in the tax code are not new revelations, but some of us have got to continue to sound the alarm. That is, until we have leaders who will embrace the will of the people over the will of politics.

That would be a break for all of us.

The Corporate Tax

In July of 2008, Herman Cain wrote an article discussing a number of reasons why America was having economic problems. Within that article, he discusses his support for the lowering the corporate tax rate.

... The leading cause of this foreign invasion of U.S. companies is the differential between the U.S. corporate tax rate and the prevailing corporate tax rate for the invading foreign company. The U.S. corporate tax rate is 40 percent versus a 34 percent rate in Belgium, whereas 12 years ago Belgium was also at 40 percent

In fact, according to the Cato Institute, the United States is the only major developed country out of 30 countries to have not lowered its corporate tax rate in the last 12 years.

The financial attractiveness of U.S. companies is enhanced by our weak dollar, our increasing national debt and the unlikely prospect that a Democratic-controlled Congress will even consider lowering the corporate tax rate, since they have indicated they will raise taxes by doing absolutely nothing to stop the Bush tax cuts from expiring. ...

Intimidation and Taxes

In a May 2009 article, Herman Cain discusses a number of tactics in play by the Obama administration to intimidate people into paying their taxes. He also discusses his support for lowering taxes to repatriate money made overseas.

May 11, 2009
Obama’s Intimidation Tax

Eight hundred more IRS agents, closing tax loopholes used by U.S. companies that make money in other countries, and calling businesses “tax cheats” for using the messed up tax code as it is written, is going to inspire lots of multinational companies to create more jobs here in the USA.

Not!

This plan, announced by the president and model tax patriot and Treasury Secretary Tim Geithner, will do just the opposite. And that $210 billion they expect to recoup over 10 years will be long forgotten when the money does not materialize.

Economist Dan Mitchell of the Cato Institute described the proposal this way while appearing on the Fox News Channel:

“This is a spectacularly misguided proposal,” Mitchell said. “In a global economy, you don’t saddle your companies with extra costs. No other country in the world does this kind of crazy policy.”

“What Obama’s proposal would do is it would make the double taxation they pay to the IRS even worse,” Mitchell said. “The Germans don’t do that, the Canadians don’t do that. Even the French, who love taxes, don’t do this kind of crazy policy. We are literally shooting our companies in the foot while other countries are making it easier for their companies to compete around the world.”

Liberals who believe in more heavy-handed big government will not like Mitchell’s assessment, but he is absolutely right.

Now here is an old and non-original idea the administration could have used to generate more revenue much faster. Reduce the tax on foreign profits to zero. This would generate approximately $200 billion dollars a year instead of a questionable $21 billion annually.

It worked in 2003, when the tax on repatriated profits was reduced to about 5 percent and generated more than $350 billion in two years. Maybe this was not a consideration because it worked when George W. Bush was president with a Republican-controlled Congress.

Additionally, the administration would not have to hire an additional 800 IRS agents to browbeat more companies who have tried to comply with the laws in the first place. The president’s announced plan is just one more example of using the “bully” in “bully pulpit” to try to intimidate businesses.

Another example was when a bank, TCF in the Twin Cities, wanted to return a TARP loan that it did not want in the first place. The Obama Administration would not accept the repayment under the agreement terms, without the bank making an additional concession.

Or how about the White House threatening to “unleash the full force of the White House press corps” to destroy someone’s reputation if they did not go along with concessions being demanded during the Chrysler bankruptcy negotiations.

Intimidation of businesses will backfire. It might cause a business to take it on the chin once in order to get on with their life, but it will also cause a lot of businesses to move their operations out of the United States altogether.

Incentives in a free market system always work better than intimidation. So far in the Obama Administration, we have seen very little incentives for businesses and a whole lot of intimidation.

As the late Jack Kemp would say, “If you want less of something then tax it. And if you want more of something, then un-tax it.”

U.S. businesses have to compete globally with the second-highest corporate tax rate in the world, a dysfunctional tax code and now a new “intimidation tax”.

There will certainly be a lot less tax revenue, and a lot more resentment.

Neil Cavuto Appearance

On December 24, 2010 Herman Cain appeared on Fox News's Neil Cavuto and spoke about taxes. He noted his support for the fair tax.

National Review Online Interview

In January of 2011, Herman Cain was interviewed by the National Review Online. He stated that he would lower the corporate tax rate, and the capital gains rate.

Let me give you a few examples. One of the first questions I always get when I do one of my talks or Cain coffees or town-hall meetings is, “What would you do about the economy differently?” First of all, make the tax rates permanent, because extending them for two years just extends the uncertainty hanging over this economy for two more years. Secondly, I would ask the Congress to lower the top corporate-tax rate from 35 percent to 25 percent. Why? Because we are the only developed nation in the world that has not lowered its top corporate-tax rate in the last 15 years. The other thing I would do is lower the capital-gains-tax rate, because we punish risk too much in this country. We’re never really going to stimulate the economy in a big way until we do that.

Here’s one piece of low-hanging fruit that just amazes me that Washington doesn’t do it — it’s kind of like a no-brainer. Profits that have been generated overseas by multinational corporations — if they bring those profits back to the United States in the form of repatriated profits, then, in many cases, companies are going to have to pay double taxation. So they leave the money offshore. The last time we had a tax holiday for repatriated profits, back in 2003 under President Bush, nearly $350 billion came back into the country. It’s been estimated that we now have over $800 billion that could come back into our economy.

Bush Tax Cuts

In January of 2011, Mr Cain stated at a campaign event that he would have supported making the Bush tax cuts permanent instead of a 2 year extension, lowering the capital gains tax rate, and lowering the corporate tax rate.

Support for the Fair Tax

During his CPAC speech, Mr. Cain stated his support for the fair tax. That portion of the speech was displayed during a Fox News appearance with Brett Baier.

Nevada News and Views

After the first Presidential debate, Herman Cain was interviewed by the Nevada News and Views and asked about the economy. He notes that he would lower and eliminate a number of taxes as a means to spur the economy and balance the budget.

Reporter: The biggest issue is the economy. Everyone says that they’re going to create more jobs. How are you going to do that?

Cain: First of all let’s start with my five point economic stimulus plan:

1. Lower corporate tax rates from 35 to 25% and bring individual tax rates down to a maximum top rate of 25%.

2. Take capital gains tax rates to zero.

3. Suspend taxes on repatriated properties from foreign investments generated overseas.

4. I would propose a real payroll tax holiday of 6.2%.

5. Make the tax rates permanent.

Fox News Sunday - Fair Tax

On May 22, 2011 Mr Cain appeared on Fox News Sunday and spoke about the Fair Tax and his support for the system. He discusses a Bush administration report that made erroneous assumptions and found the tax rate higher than supporting economists.

WALLACE: And, actually, we talked about this during the South Carolina debate. You say abolish the IRS, abolish the income tax, and replace it with a fair tax.

CAIN: Yes.

WALLACE: A national sales tax of 23 percent.

Now, first of all, according to the way this plan is laid out, people would have to pay a national sales tax on almost every new good or services. You buy a new home.

CAIN: Right.

WALLACE: You a mortgage payment. You pay rent. You've got to pay 23 percent national sales tax. You buy food. You get medical care. You got to pay a 23 percent national sales tax.

CAIN: Right.

WALLACE: Are you OK with that?

CAIN: Of course, because also say this, Chris, every time you describe it -- it replaces all federal income taxes. It replaces the payroll tax. In other words, that 23 percent will collect the same amount of tax revenue from federal income taxes, corporately and personally. It will also collect the amount of money that's being raised through the payroll tax. Such that when a person gets their pay stub, you won't have a federal tax deduction, you won't have a FICA deduction. It will be included the 23 percent you pay.

Now, part two of that, in addition to being a replacement tax, not on top of anything, in addition to that, there is a prebate provision that's collected in the 23 percent, such that every family will get the sales tax on basic necessities as calculated with a formula, before you have to go to the store, before you have to go to the grocery store.

WALLACE: Here's the problem with that. President George W. Bush -- he had a commission on tax reform in 2005.

CAIN: Yes.

WALLACE: They looked at the fair tax. They said it won't work. Here's why they said it won't work -- they said that to create the revenue that you're talking about, it would have to be a 34 percent tax rate. Not 23 percent.
And with the prebates you just talked about, they say it would benefit low and high-income taxpayer. But it would raise taxes. It would raise taxes for the entire middle class -- anyone making between $15,000 and $200,000.

CAIN: Chris, they were dead wrong. Here's what happens.

WALLACE: This is President Bush's --

CAIN: I know this is his commission. When I heard the commission make that assessment of the fair tax, I was screaming.

Other people who knew something about the fair tax was screaming. We never got an opportunity to explain.
What they did is that they changed some assumptions in the actual bill. This is why they come up with these outrageous numbers.

So, if you change the assumptions of what's in the bill, you have come up with some outrageous numbers like that in order to kill it and defeat it.

Go talk to the people -- talk to former Representative John Linder. If he had been given an opportunity to refute it, he would have said exactly what I said. Talk to Leo Lindhbeck (ph), one of the gentlemen who have to the research on it. There are a lot of people who say -- look, if you do it according to the assumption in the legislation H.R. 25, you don't come up with that. They changed the assumption.

South Carolina Debate

On May 5, 2011 Herman Cain participated in the Republican debate in South Carolina. He is asked about the Fair Tax and it's effects on lower income people.

Reagan Debate

In September of 2011, Herman Cain participated in the Republcian debate at the Reagan Library. He discusses the 9-9-9 plan as fairer than the current system.

HARRIS: The General Electric Corporation last year -- this is a prominent case -- made $14.2 billion in profits worldwide, but paid no U.S. taxes. Perfectly legal, but does it strike you as fair?

CAIN: This is why I proposed my 9-9-9 plan. The government needs to get out of the business of picking winners and losers. The government needs to get out of the business of trying to figure out who gets a tax break here, who gets a tax break there.

When you go to 9-9-9, it levels the playing field for all businesses. What a novel idea. And the government won't be in the business of trying to determine who's going to be able to make more money and pay no taxes and vice versa.

Secondly, this recession is the worst recession since the Great Depression. If the recovery that this administration claims would just tie for last place, we would have another 6 million jobs. If it would tie for the recovery that took place in the '80s under President Reagan, we'd have 12 million more jobs out there, which would be music to the ears of the 14 million people looking for jobs. The president simply does not understand that the business sector is the engine for economic growth.

Fox News / Google Debate

On September 22, 2011 Herman Cain participated in the Fox News / Google debate. He was asked about his 9-9-9 plan and hesitance to create a new revenue stream for the government.

WALLACE: Mr. Cain, I want to follow up on your 999 plan for economic growth. That's a 9 percent...
(APPLAUSE)

Well, they seem to already know what it is. But for the few who don't, it's a 9 percent flat corporate tax, a 9 percent flat income tax, and a new 9 percent national sales tax.

Now, conservatives usually say repeal the income tax before you impose a new tax. Isn't there a danger with your 999 plan, with these three taxes, that some government down the road after President Cain is going to increase three forms of taxation on Americans?

HERMAN CAIN, FORMER CEO OF GODFATHER'S PIZZA: No, there's no danger in that. And first, let me answer Dave's question with the 9, 9, 9 plan. Unfortunately, nobody up here answered his question. He wanted to know as a small businessman what are we going to do to help him as a small business person? I have walked in Dave's shoes.

This economy is on life support, that's why my 9, 9, 9 plan is a bold solution. It starts with throw out the current tax code and pass 9 percent business flat tax, 9 percent personal income tax, and the 9% national sales tax. This is the most important part, it eliminates, or replaces corporate income tax, personal income tax, capital gains tax as well as the estate tax.

Then it treats all businesses the same. And the people who are paying only payroll tax, 15.3, that 15.4 they don't have to pay, now they only have to pay that 9 percent.

And unlike Governor Romney's plan my plan throws out the old one.
He's still hooked to the current tax code. That dog won't hunt.

The Western Debate

In October of 2011, Herman Cain participated in the Western Debate in Las Vegas. He spoke about his 9-9-9 plan and stated that tax attorneys, CPAs, and others want a complicated plan. He opposes the idea that it is a value added tax.

COOPER: Mr. Cain, a lot of prominent conservatives now are coming forward saying that your 9-9-9 plan would actually raise taxes on middle-class voters, on lower-income voters.

CAIN: The thing that I would encourage people to do before they engage in this knee-jerk reaction is read our analysis. It is available at hermancain.com. It was performed by Fiscal Associates. And all of the claims that are made against it, it is a jobs plan, it is revenue-neutral, it does not raise taxes on those that are making the least. All of those are simply not true.

The reason that my plan -- the reason that our plan is being attacked so much is because lobbyists, accountants, politicians, they don't want to throw out the current tax code and put in something that's simple and fair. They want to continue to be able to manipulate the American people with a 10-million-word mess.

Let's throw out the 10-million-word mess and put in our plan, which will liberate the American workers and liberate American businesses.

...

COOPER: I'm going to give you 30 seconds to respond. That 84 percent figure comes from the Tax Policy Center.

CAIN: That simply is not true. I invite people to look at our analysis, which we make available.

Secondly, the -- the point that he makes about is a value-added tax -- I'm sorry, Representative Bachmann -- it's not a value-added tax. It's a single tax.

And I invite every American to do their own math, because most of these are knee-jerk reactions. And we do provide a provision, if you read the analysis, something we call opportunity zones that will, in fact, address the issue of those making the least.

COOPER: I want to bring in Congresswoman Bachmann since she was referenced by you.

BACHMANN: But Anderson, how do you not have a value-added tax? Because at every level of production you have a profit, and that profit gets taxed, because you produce one portion at one level, and then you take it to the next supplier or vendor at the next level, and you have an exchange. That is a taxable event.

And ultimately, that becomes a value-added tax. It's a hidden tax. And any time the federal government needs revenue, they dial up the rate and the American people think that it's -- that it is the vendor that creates the tax, but it's the government that creates the tax.

...

COOPER: Mr. Cain, 30 seconds.

(APPLAUSE)

CAIN: This is an example of mixing apples and oranges. The state tax is an apple. We are replacing the current tax code with oranges. So it's not correct to mix apples and oranges.

Secondly, it is not a value-added tax. If you take most of the products -- take a loaf of bread. It does have five taxes in it right now. What the 9 percent does is that we take out those five invisible taxes and replace it with one visible 9 percent.

So you're absolutely wrong. It's not a value-added tax.

Now one other quick thing.

COOPER: Your time's up, I'm sorry.

CAIN: This whole thing about --

COOPER: You'll have another 30 seconds. Trust me, they're going to go --

CAIN: Tonight?

...

COOPER: Mr. Cain, in 30 seconds?

CAIN: Once again, unfortunately, none of my distinguished colleagues who have attacked me up here tonight understand the plan. They're wrong about it being a value-added tax.

We simply remove the hidden taxes that are in goods and services with our plan and replace it with a single rate 9 percent. I invite every family to do your own calculations with that arithmetic.

COOPER: Governor Romney, you have your only 59-point plan. In the last debate, Mr. Cain suggested it was too complicated. Is simpler better?

ROMNEY: Oftentimes simpler is better. And I know we're not supposed the ask each other questions, but if you permit.

Herman, are you saying that the state sales tax will also go away?

CAIN: No, that's an apple.

ROMNEY: OK.

CAIN: We're replacing a bunch of oranges.

ROMNEY: OK.

So, then Governor Perry was right that --

CAIN: No, he wasn't. He was mixing apples and oranges.

2012 Presidential Campaign Website Statements

Chapter Two: Unleash Economic Growth

America has long been a beacon of prosperity throughout the world. The American Dream has been attained by those who were willing to think, work and sacrifice to achieve it. Each dream was different, but each dream was made possible due to the freedoms this country provides. The role of the federal government should be to encourage economic growth by ensuring conditions that will allow businesses to thrive, not just survive. That means less legislation, less regulation, lower taxes and business friendly policies.

The federal government should not be in the business of picking and choosing industries they support financially. This happens in the form of subsidies, and special tax breaks in which the government “plays favorite” with one industry and in turn, hinders the competitiveness of another. There are some exceptions, but in Washington it has become the rule. The federal government also impedes economic growth by interfering in the employer and employee relationship. While labor unions once provided a representative body to lobby for fair wages and safe working conditions for employees, they now principally serve as a political mechanism for the Left. Forced unionization through the dishonestly named “Employee Free Choice Act,” or “card check,” would drive up the costs of goods and services, cause hundreds and thousands of jobs to be lost and ultimately, a more powerful system of liberal fundraising to be maintained.

Currently, the federal government taxes too much and too often. Meaningful tax reform should be implemented immediately to alleviate that suffocating tax burden placed on businesses and individuals in America. This means across-the-board tax cuts to provide long-term relief, including reducing the capital gains tax, suspending taxes on repatriated profits and permanently eliminating the death tax.

Rick Santorum

Summary

Senator Santorum has been a consistent proponent of lowering taxes. His overall theory is that lowering the tax rate is the key for attracting jobs to the US and increasing manufacturing in the nation. He opposes lopsided taxes on those that create jobs and believes that this acts as a disincentive to start and maintain businesses.

During his time in office Senatory Sentarum was a consistent supporter of the Bush tax cuts and their extensions. He voted in favor of those bills and their extensions each time they came up for a vote. He also co-sponsored one of those pieces of legislation and touts his spearheading of that bill in his campaign literature.

Senator Santorum has consitently opposed the marriage penalty, the AMT, and the death tax. In 1997, he co-sponsored legislation to end the estate tax, the gift tax, and a generation skipping tax. In 1997, he co-sponsored a bill to require a 2/3 majority in Congress for any vote that would raise taxes. 

In the 2012 campaign, Senator Santorum discussed his opposition to Herman Cain's 9-9-9 plan by noting that a single person earning an income paid the same taxes as a married couple with children that earned the same amount. He noted that this was one of the problems with a fair tax. His 2012 plan mirrors these views by proposing to triple the exemption for each person and child. Currently, each household receives a deduction of roughly $3,700 of their taxable income for each man, woman, and child in the family. Tripling that rate for children would make the deduction $11,100 per child.

Senator Santorum has been vocal during the campaign in his desire to see a fairer, flatter system. He has stated that the current system punishes the individual, the small business, and the corporation. Most of his platform is consistent with this viewpoint and his history in calling for the elimination of a number of taxes such as the death tax and the AMT. The plan also calls for moving to two brackets of 10% and 28%, lowering the corporate tax rate and ending it for manufacturers in the US. He also calls for making the R&D tax credit permanent and making the rate for repatriated funds 5.25%.

2012 Tax Plan - The Santorum Solution

• Cut and simplify personal income taxes by cutting the number of tax rates to just two - 10% and 28% and return to Reagan era pro-growth tax rate;
• Simplify the tax code and reduce middle income taxes by eliminating the Alternative Minimum Tax (AMT);
• Simplify the tax code, encourage savings and investment, and reduces taxes by eliminating the Death Tax;
• Lower the Capital Gains and Dividend tax rates to 12% to spur economic growth and investment;
• Reduce taxes for families by tripling the personal deduction for each child;
• Reduce and simplify taxes for families by eliminating marriage tax penalties throughout the federal tax code;
• Retain deductions for charitable giving, home mortgage interest, healthcare, retirement savings, and children;
• Eliminate the cap on deductions for losses incurred in the sale of a principal residence;
• Cut the corporate income tax rate in half to make our businesses competitive around the world, from 35% to 17.5%;
• Eliminate the corporate income tax for manufacturers to spur middle income job creation in the United States and benefit from the job multiplier effect in manufacturing;
• Increase the Research & Development Tax Credit from 14% to 20% and make it permanent to spur on innovation in America;
• Eliminate the tax on repatriated taxable corporate income invested for manufacturers equipment investment, 5.25% corporate tax rate on other repatriated income invested in the USA, and 100% expensing for new business equipment;

Fox Business - Support for Bush Tax Cuts Extension

On September 7, 2010 Senator Santorum appeared on Fox Business and spoke about his support for extending the Bush tax cuts beyond the December 2010 deadline. He correctly predicted that in the end, President Obama would compromise on the Bush tax cuts and extend them all.

New Hampshire Debate

In June of 2011, Senator Santorum participated in the Presidential debate in New Hampshire. He noted the tax cuts that he was proposing to help the economy. Specifically, he notes his intention to cut the capital gains rate in half and a 5 year window where manufacturing taxes would be zero. He also proposes making the R&D tax credit permanent.

KING: OK. OK. I'll get to you in one second. I just want to show people. We're asking people watching at home also to tell us on Facebook, in Twitter what concerns them.

If you watch up here and take a look. Just look what's happened. Three most important issues this election season regardless of party, jobs, the jobless, and whether you want a job.

Senator Santorum, your state of Pennsylvania, a big industrial state that has struggled in recent years.

SANTORUM: I always am from Pennsylvania. We still make things there, and I represented the Steel Valley of Pittsburgh when I was in the Congress. And what I learned from growing up in Butler, Pennsylvania, steel town is that the broad middle of America was a broad middle of America when we had lots of manufacturing here because that's how the wealth from those who create the jobs get down.

And we've been outsourcing those jobs. So what we need to do is a lot of what was said here. I would add another thing that I'm specifically proposing. We need to cut the capital gains tax in half which others have proposed but for manufacturers we need to give a five-year window where we cut it to zero.

We want to encourage people to set up jobs here in America. Take that R&D credit, make it permanent, take that innovation and then invest that money here to create that broad middle of America and have that wealth really trickle down.

Fox News Appearance

In August of 2011, Senator Santorum appeared on Fox News and discussed numerous items that he would do to help the economy. One of the things that he cites is reducing the corporate tax rate from 35% to 0% for manufaturing in the US.

BAIER: Let's talk the economy. Let's say it's President Santorum in office right now. What specific things would you do to create jobs, increase growth, calm the markets, but with the caveat that you could get it through this divided Congress right now?

SANTORUM: You make the assumption that Rick Santorum wins the presidency, we are probably going to control the United States Senate. We're only three votes short right now, and I feel pretty good that with 23 of the 33 seats up being Democrat-held seats, we're going to pick up a few seats.

Given that as a preference, we're going to repeal Obamacare. That's the first thing. Creating a certainty in the marketplace that we're not going to put this huge new entitlement, this huge amount of taxes and burden on the business community, I think we'll do a -- go first step No. 1 to solve the problem.

Secondly, we need to do something to revitalize what I consider to be sort of the core of America, which is our manufacturing base. I've talked about this on the road really more than anybody else. I come from a little steel town north of Pittsburgh, and we believe -- I believe that if the real middle of America that has shrunk -- is because we went from about 21 percent of jobs in this country when I was a kid being in manufacturing down to 9. That's -- we lost those jobs overseas. We need to bring them back.

One big idea that I've proposed is to cut the corporate tax for all manufacturers from 35 percent to zero. You want to get jobs back in this country, you create a tax system that allows us not only to make things here and compete here and be profitable here, but one of the big impediments to manufacturing here is our tax -- our tax system doesn't match up with other tax systems around the world. As a result, it's harder to export here.

You cut the tax rate to zero, you create a real launching pad for exports here in America, so--

BAIER: But how do you -- how do you know that those companies are going to put back into the country and create those jobs if there's not something attached to it?

SANTORUM: You only get the corporate tax rate if you are manufacturing here. So I mean, it's not like you're going to cut the corporate tax for manufacturers if they manufacture in China. No, you have to manufacture here in America to get the zero percent rate. And that to me is a very, very powerful incentive.

There is other things we're going to do. Talk about energy. That's a very big part. Pennsylvania is now having a boomlet because of the Marcellus shale and the gas industry. We are going to drill 3,000 to 4,000 wells in Pennsylvania this year, gas wells. We have enormous economic activity in the rural parts of our state.

We need to do that in other areas to do two things. Number one, create jobs in the energy sector, but number two, to create a stability for the manufacturing sector. The fact that we now have stable gas prices and probably will for quite some time is a great incentive for manufacturers to come back, because they are one of the heaviest users of natural gas.

Western Debate

In October of 2011, Senator Santorum participated in the Western debate in Las Vegas. He stated his opposition to Herman Cain's 9-9-9 plan. He also talks about his tax plan that he states will allow for greater income mobility and reducing the corporate tax rates for manufacturers to zero.

COOPER: Senator Santorum, will his plan raise taxes?

SANTORUM: Herman's well-meaning, and I love his boldness, and it's great. But the fact of the matter is, I mean, reports are now out that 84 percent of Americans would pay more taxes under his plan. That's the analysis. And it makes sense, because when -- when you don't provide a standard deduction, when you don't provide anything for low-income individuals, and you have a sales tax and an income tax and, as Michele said, a value-added tax, which is really what his corporate tax is, we're talking about major increases in taxes on people.

He also doesn't have anything that takes care of the families. I mean, you have -- you have a situation where, under Herman's plan, a single person pays as much in taxes as a -- as a man and a woman raising three children. Ever since we've had the income tax in America, we've always taken advantage of the fact that we want to encourage people to -- to have children and not have to pay more already to raise children, but also pay that additional taxes -- we gave some breaks for families. He doesn't do that in this bill.

And we're going to -- we've seen that happen in Europe. And what happened? Boom, birth rates went into -- into the basement. It's a bad tax for -- again, it's bold. I give him credit for -- for starting a debate, but it's not good for families, and it's not good for low-income...

...

COOPER: Senator Santorum, does Mitt Romney have the answers for jobs?

SANTORUM: I agree with -- with all of what Governor Romney and both -- and Governor Perry said. I would add the fact that -- that I've put forward the plan that's going to allow for income mobility. That's a new term, but I've been using it for a long time, which is people at the bottom part of the income scale being able to rise in society.

Believe it or not, studies have been done that show that in Western Europe, people at the lower parts of the income scale actually have a better mobility going up the ladder now than in America. And I believe that's because we've lost our manufacturing base. No more stamp "Made in America" is really hurting people in the middle.

And that's why I focus all of the real big changes in the tax code at manufacturing. I cut the corporate rate for manufacturing to zero, repeal all regulations affecting manufacturers that cost over $100 million and replace them with something that's friendlier, they can work with. We repatriate $1.2 trillion that manufacturers made overseas and allow them to bring it back here, if they invest in plants and equipment. They can do it without having to pay any -- any excise tax.

The final point I would make to Governor Romney, you just don't have credibility, Mitt, when it comes to repealing Obamacare. You are -- you are -- your plan was the basis for Obamacare. Your consultants helped Obama craft Obamacare. And to say that you're going to repeal it, you just -- you have no track record on that that -- that we can trust you that you're going to do that.

Michigan Economic Debate

On November 10, 2011 Senator Santorum participated in the Michigan Economic Debate. He was asked about his tax plan and he discussed that and manufacturing.

HARWOOD: Senator Santorum, you proposed a zero tax on manufacturing businesses.

SANTORUM: I have.

HARWOOD: I understand the sentiment behind that. And the state of Michigan has lost hundreds of thousands of manufacturing jobs over the last few decades. Isn't that the kind of distortion in the tax code that people want to get away from in order to get rates down: flatter, simpler, fairer?

SANTORUM: I think getting the rate down to zero is down -- is pretty far down. That's good.

HARWOOD: But it's down for the manufacturing industry, as opposed to people doing other things. Isn't that picking winners and losers?

SANTORUM: It's down for a sector of the economy, not picking an individual winner or loser. It's down for an entire sector of the economy that we are getting our hat handed to us by losing jobs.
We see that here in Michigan, we see it across this country. And the reason is government has made us uncompetitive.

We need to compete on taxes. We need to compete on regulations. We need to repeal Obamacare. We need to -- I've said I'm going the repeal every single Obama-era regulation that cost businesses over $100 million. Repeal them all. We'll -- we'll send a very clear message out to manufactures in this country and all over the world that America will compete.

Some have suggested we need to go into a trade war with China and have tariffs. That just taxes you. I don't want to tax you. I want to create an atmosphere where businesses and manufacturers can be profitable. We'll lower taxes, repatriating funds, 0 percent tax if you repatriate those funds and invest them in plant and equipment.

And then, of course, an energy policy that everyone on this stage is going to agree with that says, we are going to produce energy in this country. I'm different than many of them, that I'm going to cut all the subsidies out and let the market work, as opposed to creating incentives for different -- different forms of energy that the government supports.

2012 Jobs Plan

As part of his 2012 Presidential campaign, Senator Santorum proposed an economic jobs plan called the Fight for American Jobs Plan. Part of that plan was tax reform.

• Tax Reform
  
  • Cut the corporate tax rate in half
  • Cut the tax rate to zero for all manufacturers
  • Permanently extend the Bush tax cuts rates for Capital Gains and Dividend Tax rates
  • Repeal the Death Tax
  • Repatriate taxable income outside the United States at a rate of 5%
  • Reduce the tax code for all by making the system flatter, fairer, and simpler
    
    

Creating a tax structure that does not punish, but encourages innovation and entrepreneurship

First and foremost, America must no longer have a tax regime that punishes the individual, the small business, or the corporation but encourages growth in America. Rick Santorum believes we need to reduce taxes on individuals across the board, making the system simpler, flatter, and fairer. Likewise, we must cut the corporate tax rate in half, so that we can once again be competitive with the rest of the industrialized world. However, we must go further and cut the tax rate to zero for all manufacturers irrespective of the tax paying entity so we can keep jobs in America. Manufacturing has epitomized the loss of American jobs and innovation over the past several decades, and by reinvigorating this crucial sector of our economy the multiplier effect on our entire economy will spur on economic and job growth not seen in three decades. We must also permanently extend the current Capital Gains and Dividend Tax rates, repeal the Death Tax, and repatriate taxable income outside the United States at a rate of 5% to induce job creation here in America rather than abroad. And, we must not only encourage innovation, but celebrate it by no longer holding entrepreneurs hostage year-in and year-out through the tax code's treatment of the research and development of new and promising discoveries - regardless of whether it is the next ground-breaking cancer treatment or a component for a fuel-efficient engine.

2012 Presidential Campaign Website Statements

Note: The Santorum campaign updated its tax plan not long ago. The first post is the more recent update and the second is the older position statement. This more recent statement expands on the previous plan by adding the simplification of the tax code to two rates

Defender of the Taxpayer

Rick Santorum believes that to have a strong economy, we must have strong families – because the family is the first economy. Our government must recognize this and create an environment for our families, our small businesses, and our communities to thrive. Senator Santorum believes we are a land of opportunity where all Americans have the chance to rise on their own merits and hard work. Sadly, President Obama has done just the opposite by using class warfare to divide America and limit opportunity for all.

Rick Santorum is committed to reviving our economy, restoring economic growth, and creating jobs in America again by unleashing innovation and entrepreneurship through lower and simpler taxes for American businesses, workers, and families. He also will roll back job killing regulations, restrain our spending by living within our means, and unleash our domestic manufacturing and energy potential. His vision for America is to restore America's greatness through promotion of freedom and opportunity for all. This is just the start. A plan made in America to promote America’s families and prosper its businesses.

THE SANTORUM SOLUTION

• Cut and simplify personal income taxes by cutting the number of tax rates to just two - 10% and 28% and return to Reagan era pro-growth tax rate;
• Simplify the tax code and reduce middle income taxes by eliminating the Alternative Minimum Tax (AMT);
• Simplify the tax code, encourage savings and investment, and reduces taxes by eliminating the Death Tax;
• Lower the Capital Gains and Dividend tax rates to 12% to spur economic growth and investment;
• Reduce taxes for families by tripling the personal deduction for each child;
• Reduce and simplify taxes for families by eliminating marriage tax penalties throughout the federal tax code;
• Retain deductions for charitable giving, home mortgage interest, healthcare, retirement savings, and children;
• Eliminate the cap on deductions for losses incurred in the sale of a principal residence;
• Cut the corporate income tax rate in half to make our businesses competitive around the world, from 35% to 17.5%;
• Eliminate the corporate income tax for manufacturers to spur middle income job creation in the United States and benefit from the job multiplier effect in manufacturing;
• Increase the Research & Development Tax Credit from 14% to 20% and make it permanent to spur on innovation in America;
• Eliminate the tax on repatriated taxable corporate income invested for manufacturers equipment investment, 5.25% corporate tax rate on other repatriated income invested in the USA, and 100% expensing for new business equipment;

During his time in public office, Senator Santorum was a strong advocate for a family and small business-friendly tax code, serving as the point man to pass the Bush tax cuts of 2001 and 2003 that revitalized our economy after the terrorist attacks of 9/11. For his work on reducing the tax burden on all Americans, Senator Santorum has received praise from groups ranging from the Club for Growth to Americans for Tax Reform and the National Federation of Independent Business.

Defender of the Taxpayer

From the moment he was elected to public office, Rick Santorum worked tirelessly to ensure the hard-earned tax dollars of all Americans were being spent wisely.

Along with John Boehner and Jim Nussle, Rick was a member of the “Gang of Seven” who targeted the waste and fraud of the House Post Office and Bank. This did not make Rick Santorum a popular man in an old boy’s club like the House of Representatives, but Rick knew that the only way to make a positive difference in the lives of his constituents was to challenge the corrupt norms that had seeped into the People’s Body.

Being elected to the upper-chamber of the United States Senate did not slow down Rick’s passion for government reform. Two of the first bills Rick sponsored were the “Balanced Budget Amendment” and the “Line Item Veto,” because Rick knew the importance of reigning in a government drunk on spending.

Rick Santorum knew that reforming Congress was a great start, but our nation’s entitlement programs were the cancer to the long-term fiscal health of our nation. This is why he was one of the lead sponsors of the landmark 1996 Welfare Reform law that has helped more Americans transition from the government welfare rolls to work than any legislation before or since.

In 2005, seeing our Social Security system on the brink of bankruptcy, Rick led the charge to reform the broken entitlement system. Along with South Carolina Senator Jim DeMint, Rick was one of only a handful of legislators who stuck their head out of the foxhole and fought to save the Social Security system for future generations by offering creative reforms focused on empowering the individual.

Rick also fought to ensure that all Americans kept more of their hard-earned tax dollars. He spearheaded the passage of President Bush’s tax cuts in 2001 and 2003, because he believes that reducing the tax burden on businesses and individuals is the key to spurring economic growth.

Since leaving Congress, Rick has been a vocal opponent of the Wall Street bailouts and stimulus programs instituted by both President Bush and Obama. Rick believes that by having our government choose winners and losers, both Administrations are setting America on a course to crony western European capitalism that will lead to a weaker future for our children.

Rick was rewarded for his hard work on behalf of the American taxpayer, consistently being named as a “Friend of the Taxpayer” by the National Taxpayers Union and endorsed by pro-business organizations like the National Federation of Independent Business and the United States Chamber of Commerce during his political campaigns.

Voting Record

Pension Protection Act of 2006

The Pension Protection Act of 2006 addressed regulations governing employer-sponsored pensions and acted to make the portions of the 2001 act which allowed higher contributions to IRAs. with the support of both parties. The bill got wide support from both parties and passed 93-5. Rick Santorum voted in favor of the Pension Protection Act of 2006.

Estate Tax and Extension of Tax Relief Act

In 2006, the senate voted on theEstate Tax and Extension of Tax Relief Act. This bill would have increased the estate tax exclusion to $5,000,000, effective 2015, and repealed the sunset provision for the estate and generation-skipping taxes. It would also have lowered the estate tax rate to equal the current long-term capital gains tax rate for taxable estates up to $25 million and repealed the estate tax deduction paid to states. The bill failed to pass in a 56-42 vote. Rick Santorum voted in favor of the Estate Tax and Extension of Tax Relief Act.

Death Tax Repeal Permanancy Act

In 2006, the Senate voted on legislation that would have permanantly repealed the "Death" or Estate Tax. The legislation was rejected on a 57-41 vote. Most Republicans supported the legislation and most Democrats opposed it. Rick Santorum voted in favor of ending the Death Tax.

Tax Increase Prevention and Reconciliation Act of 2005

The Tax Increase Prevention and Reconciliation Act of 2005 extended previously lowered dividend income and capital gains through 2010, and made an increase to the AMT exemption. It also eliminated income restrictions on high-income taxpayers for converting traditional Individual Retirement Accounts (IRAs) to Roth IRAs. Most Republicans supported the legislation and about 1/3 of teh Democrats supported it. The bill passed in a 66-31 vote. with the support of both parties. Rick Santorum voted in favor of the Tax Increase Prevention and Reconciliation Act of 2005.

American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 allowed individuals to claim a deduction for state and local sales taxes paid, in lieu of deducting state income taxes. It also increased tax credits for business investment abroad, and temporarily increased the expensing provisions for corporations. The bill passed 69-13 '); echo('with the support of both parties. Rick Santorum voted in favor of the American Jobs Creation Act of 2004.

Working Families Tax Relief Act of 2004

The Working Families Tax Relief Act of 2004 extended the 10 percent bracket on income tax created in the 2001 legislation, doubled the child tax credit, extended the previous AMT exemption and the Work Opportunity Tax Credit. The legislation was widely supported and passed 92-3. Rick Santorum voted in favor of the Working Families Tax Relief Act of 2004.

Jobs and Growth Tax Relief Reconciliation Act of 2003

In the Jobs and Growth Tax Relief reconciliation Act of 2003 tax rates on realized capital gains received by individual shareholders were reduced from 10 percent (for taxpayers in tax brackets where the ordinary income tax rate was 15 percent or below) and 20 percent (for all other brackets) to 5 percent and 15 percent, respectively, through 2007 and to 0 and 15 percent in 2008. It also adjusted the AMT exemption limit, expanded the child tax credit, and accelerated some of the earlier aspects of the previous laws. The conference report was agreed to in a 50-50 vote with most Republicans supporting it and most Democrats opposing it. Rick Santorum voted in favor of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Job Creation and Worker Assistance Act of 2002

The main provision of the Job Creation and Worker Assistance Act of 2002 was to create a bonus depreciation. This bonus depreciation allowed firms to claim extra deductions for depreciation of a long-term physical capital investment during the early years. This reduces corporate profits and therefore taxes. The act got wide support from both parties and passed 85-9. Rick Santorum voted in favor of the Job Creation and Worker Assistance Act of 2002.

Economic Growth and Tax Relief Reconciliation Act of 2001

The first piece of legislation was passed in 2001 as the Economic Growth and Tax Relief Reconciliation Act of 2001 The act was especially sweeping. Its two most prominent changes were a phased-in reduction in income tax rates and a reduction and eventual repeal (at the beginning of 2010) of the estate tax. It also provided a wide range of tax breaks for education, families with children, married couples, and contributions to certain kinds of savings accounts. While all republicans voted in favor of this legislation, most democrats opposed it. Rick Santorum voted in favor of the Economic Growth and Tax Relief Reconciliation Act of 2001.

The Marriage Penalty

In 2001, an amendment was put forth to expand the 15% tax bracket and eliminate the "marriage penalty". The offset would be accounted for by reducing the marginal tax rate reductions for the top two rate brackets. The amendment was supported by most of the Democrats and opposed by most of the Republicans. The amendment failed in a 44-56 vote. Rick Santorum voted against the amendment to end the marriage penalty.

Marriage Tax Relief Reconciliation Act of 2000

In 2000, the senate attempted to pass the Marriage Tax Relief Reconciliation Act of 2000. This act would have ended the marriage penalty by adjusting the 15% tax bracket accordingly. Most Republicans supported the act and most Democrats opposed it. The act passed the senate in a vote. The bill was eventually vetoed by the President. Rick Santorum voted in favor of the Marriage Tax Relief Reconciliation Act of 2000.

Sponsored and Cosponsored Legislation

Session-109; Bill Number-S 7; Jobs and Growth Tax Relief Act of 2005 - Cosponsor

Makes permanent: (1) reductions in individual income tax rates enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); (2) reductions in individual capital gains and dividends tax rates enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003; and (3) the repeal of the estate and generation-skipping transfer taxes and reductions of the gift tax enacted by EGTRAA.

Session-105; Bill Number-S J Res 9; Constitutional Amendment - Raising Taxes - Cosponsor

Requires a two-thirds vote of each House of the Congress in order to pass any bill levying a new tax or increasing the rate or base of any tax. Allows the Congress to waive that requirement during war or certain military conflict. Requires all votes under this Amendment to be by yeas and nays and the names of persons voting for and against to be entered in the Journal of each House.

Session-105; Bill Number-S 75; Family Heritage Preservation Act - Cosponsor

Amends the Internal Revenue Code to repeal the estate tax, gift tax, and tax on generation-skipping transfers.

Newt Gingrich

Summary

Congressman Gingrich has long advocated for reducing taxes as much as possible. He views obtaining the lowest possible tax burden on the population as in the best interests of  the economy, and the duty of the representative. He has advocated for the elimination of the death tax or estate tax, for the elimination of the capital gains tax, and the reduction of the business tax. He does not support raising taxes to decrease the deficit as he does not believe the increase in taxation will be met in a similar reduction in spending.

Speaker Gingrich supports the Bush tax cuts. In 2006, he argued for their extension by stating that allowing them to lapse would be the largest tax increase in history. His 2012 tax plan has the permanent extension of those cuts as one of its primary components.

In March of 2008, Speaker Gingrich began to advocate for an optional flat rate tax that people would be able to opt into if they desired. He placed the level of taxation at around 17% for all people and corporations. He claimed that roughly 42% of the nation would pay no taxes under this system. Congressman Gingrich has proposed a 15% optional flat tax as part of his 2012 tax platform. As part of this system, he also proposed replacing the current $3,700 tax exemption with  a $12,000 one.

Speaker Gingrich somewhat supports a Fair Tax consumption tax method. However, he would not support enacting such a measure until the income tax was ended so that both did not exist at the same time. He also noted that there would need to be an enforcement bureau to ensure that companies were paying the sales tax.

Speaker Gingrich has consistently argued throughout the 2012 campaign that the capital gains tax should be ended and that the corporate tax rate should be reduced by half. His 2012 tax plan mirrors these ideas.

• Stop the 2013 tax increase to promote stability in the economy. Job creation moved from stagnant to improving in the two months after Congress extended tax relief for two years. We should continue what has worked by making the rates permanent.
• Make the United States the most desirable location for new business investment through a bold series of tax cuts and regulatory reforms, including:rn
  • Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries;
  • Dramatically reducing the corporate income tax (the highes in the world) to 12.5%;
  • Allowing for 100% expensing of new equipment to spur innovation and American manufacturing;
  • Ending the death tax permanently.

The American Eleven

In September of 2006 Congressman Gingrich released an article through the Human Events website noting eleven items he believes should be pursued. One of those items was repealing the Death Tax.

Repeal the Death Tax, for Good. The American people have consistently supported the total repeal of the death tax and the House should simply pass it once a week and attach it to various Senate bills to force the Senate to deal with it again and again. Let liberals explain why they oppose something that more than 70% of the country favors.

Opposition to 2006 Bush Tax Expiration

In April of 2007, Congressman Gingrich wrote an article for Human Events discussing his opposition to allowing the Bush tax cuts to expire in 2006.

The Return of the Liberal Tax Increase
by Newt Gingrich
04/02/2007

Tax increases are personal for all of us. They take money out of our pockets and hurt the economy, destroying job opportunities for millions of Americans.

But tax increases are personal for me for another reason. Remember the Clinton tax increase of 1993? It was, at the time, the largest tax increase in history -- a whopping $240 billion of our hard earned cash went to government over five years. So it came as no surprise to most of us (except the liberal authors of the tax increase) that this raid on the taxpayers helped set the stage for an unprecedented Republican victory in 1994.

The (New) Largest Tax Increase in History

Americans take tax increases personally -- and so do I. Liberal tax-and-spend policies helped motivate Americans to elect a new center-right House majority for the first time in 40 years.

But guess what? Liberals are at it again.

Just three months into their majority, Democrats are once again proposing the biggest tax increase in history.

This month, the House of Representatives will debate the Democrats' 2008 proposed budget. If it is passed, this budget will impose the largest tax increase in history on American taxpayers -- totaling nearly $400 billion over five years. Families with children, low-income families, and small businesses all would be hit with hundreds if not thousands of dollars in increased taxes.

Just what taxes will be raised? Here are some of the specifics of the liberal proposal:

• The 10% Tax Bracket Will Become 15%: More than five million families and individuals who previously owed no taxes will become subject to taxation.
• Marriage Penalty Relief Will Be Eliminated: 23 million Americans will owe an average of $466 in additional taxes in 2011.
• The Child Tax Credit Will Be Cut in Half: 31 million Americans will pay an average of $859 more in taxes in 2011.

The Fair Tax

In 2007, Speaker Gingrich was asked about the Fair Tax system. He states that he supports the tax in theory, but that any effort to enact the measure would have to end the income tax at the same time so that Congress did not have both mechanisms to slowly raise rates. He also states that it is disengenuos to state that the fair tax system does not require an enforcement provision such as the IRS, it just shifts the enforcement from the taxpayer to the business that would collect the sales tax.

Support for Tax Reform

In March of 2008, Congressman Gingrich issued an article for Human Events noting his support for tax reform and for a possible flat tax.

Time for Real Change on the Economy and Taxes
by Newt Gingrich
03/18/2008

The news on the economy this week is increasingly unsettling.

Gas prices continue to rise, with inflationary ripple effects throughout the economy. And the bust of the subprime mortgage market has now spread throughout the credit markets to such a degree that Bear Stearns, the fifth largest American investment bank, was sold last weekend in a firesale.

Worse still, Wall Street's banks have essentially stopped lending. The appetite for any type of risk has come to a screeching stop. The problem is that a modern economy can't grow, let alone be sustained, for very long when banks stop lending. Companies use loans to finance operations, new equipment, and new acquisitions. That means if companies can't borrow, many will ultimately go out of business and thousands of people will lose their jobs.

First Step: Immediate Action Needed to Stabilize the Housing Market and Keep People in their Homes

In January, I wrote that the Washington insider "stimulus" package that was then being prepared (which subsequently passed) was "too small, too temporary and clearly inadequate for the scale of the economic problems we face."

Since then, our economic challenges have only grown. Seventy percent of economists surveyed by the Wall Street Journal believe the country is currently in recession. In February, national foreclosure filings jumped 60%, with California alone experiencing a 131% jump from the previous year. Many Americans are finding that their largest investment (their home) has lost value; many are unable to sell if they need to move; and others are finding it difficult to borrow money for a new home.

Former Fed Chair Alan Greenspan is warning that the current financial crisis could be the worst since World War II.

The marginal change provided by February's bipartisan stimulus package does not adequately address the foreclosure crisis nor does it provide long term solutions to our fundamental economic challenges.

The first necessary step is to help bring stability back to the housing market by undertaking reasonable measures to help home owners avoid foreclosure. The key for any workable plan is to distinguish between owner-occupied homes threatened by foreclosure and those owned by investor-speculators. We must make sure only to help the home owners, not the speculators. At the same time we should avoid creating new large federal bureaucracies that have the government doing things that it does not know how to do very well.

Texas Congressman Burgess Leads the Way with Real Change on Taxes With an Optional Flat Tax Plan

Fortunately, while plans for short term and temporary mortgage assistance are being drawn up, some members of Congress are offering long term economic proposals that provide real change instead of marginal change -- proposals that meet the scale of the long term economic challenges we face.

One member, Republican Congressman Michael Burgess from Texas, is offering up a proposal that has special resonance for Americans with April 15 just around the corner. It's a plan to save taxpayers time, put an end to special interest loopholes in the tax code, and provide the type of incentives that will put our economy on a course of enduring growth and prosperity: An innovative, one-page, optional flat tax.

A One-Page, Optional Flat Tax Will be Simple to Fill out and It Will Provide the Basis for an Enduring Prosperity

Before being elected to Congress in 2002, Michael Burgess had a 21-year career as a doctor delivering babies in Denton County, Texas. His campaign slogan was "We Need a Doctor in the House". Now the good Doctor Burgess has put together a one page prescription to fix our convoluted income tax system.

Dr. Burgess starts with the fundamental premise that our taxes should be simple, transparent, and low. Dr. Burgess also believes that the economic incentives in our tax code should be clear, predictable, and permanent.

The one-page, optional flat tax proposed by Dr. Burgess is just what it says -- optional. Nobody would be forced into the new system. Taxpayers could continue with their current rates and current deductions, for if they decided that the optional flat tax saved them time and money, they could elect to pay under the single rate optional flat tax system.

The Optional Flat Tax, In Four Bullet Points

Here are the elements of an optional flat tax, in four simple bullet points:

• A single rate of tax (for example, 17%) on all individual and corporate taxpayers;
• Elimination of all taxes on savings, dividends, and capital gains;
• Elimination of the death tax and Alternative Minimum Tax (AMT);
• A standard deduction, which would be above the established poverty level so that an optional flat tax would not unfairly target the poor. Approximately the lowest 42% of income earners would be exempt from paying taxes altogether, and any taxes they did pay would only be on the amount that exceeded the deduction.

 

A Good Idea that is Gaining Ground

Having a flat, single rate tax is a good idea that has been spreading around the world. Eight U.S. states and twenty nations have single rate flat tax structures.

• Indiana adopted a flat rate in 2003, and by 2007 the Hoosier state's corporate tax revenues grew by 250 per cent.
• Colorado's flat tax, first introduced in 1987, has created repeated surpluses in state tax revenue. This consistent record of success contributed to Colorado reducing the corporate tax rate in 2000 and again in 2001.
• Governor Mark Sanford of South Carolina recently proposed an optional flat tax for state income in his 2008 State of the State Address.
• The California Republican Party recently adopted the optional flat tax as part of its party platform, borrowing from the Platform of the American People, a "tripartisan" agenda developed by American Solutions.
• Most Eastern European nations have flat tax structures, including Russia, and their economies are booming. Since adopting a flat tax in 1995, Latvia's economy alone has grown by an average of twelve per cent each year.

 

What You Can Do to Learn More about the Optional Flat Tax

Congressman Burgess has recently given two speeches on the House floor detailing his optional flat tax plan. I invite you to read or watch both of them. You can view them here and here.

Dr. Burgess has also prepared this mailer that he is sending out to his constituents. It contains a mock-up of what your tax form would look like under an optional flat tax, along with information about the proposal. With this form, filing your taxes would take less than fifteen minutes.

I encourage you to share this mailer with your friends who might be interested in the idea of an optional flat tax. You can also learn more about the optional flat tax by downloading this chapter from my book Real Change. In it, I describe the benefits of a one page optional flat tax plan.

Then, write your representative and urge him or her to co-sponsor H.R. 1040, the optional flat tax bill. Be sure to let your representative know that you're one of the over 80% of Americans who favors the option of filing their taxes on a single page with one rate of taxation.

It may take time, but I am confident that we will eventually adopt an optional flat tax plan. And when we do, we will put an end to an absurdly complicated system that pits the individual American taxpayer against an army of special interest groups, each trying to advance their narrow agenda at the expense of tax fairness and simplicity. Our tax system robs individual and corporate taxpayers of billions of hours of lost productivity and dilutes the very economic incentives required to keep U.S. workers and companies as the most productive in the world. It can't be replaced too soon.

Real Change Now to Reduce U.S. Corporate Tax Rates, the Highest in the World

Even as we work to win the argument for an optional flat tax plan, we must urge immediate action on reducing America's punishing corporate tax rates. Today's U.S. federal corporate tax rate is 35% -- the second highest in the world -- with the corporate capital gains rate also at 35%. Add in state income taxes and the corporate rate in America averages 40%, making it the highest in the world.

In comparison, the average corporate tax rate in the European Union was 24% in 2007, down from 38% in 1996. How can America compete with the nations of the European Union -- not to mention the emerging economies of India and China -- with this self-defeating, high-tax rate structure?

The U.S. corporations bearing this tax burden are the ones we expect to provide working people with jobs, better incomes, and long term prosperity. If we continue to have the highest corporate tax rates in the industrialized world, we can surely expect to see more and more companies move jobs overseas. As an anti-recession and long term growth measure, Congress should immediately abolish the capital gains taxes on individual and corporate income, and sharply reduce the corporate tax rate to 12.5 %, the same corporate tax rate as in Ireland, which currently enjoys the industrialized world's lowest rate. After Ireland reduced its rate to 12.5% (from a high of 50%), its living standards and world competitiveness rose dramatically.

Good for the Stock Market, Good for Your 401(k)

Abolishing the capital gains tax on individual and corporate income, along with slashing the corporate tax rate, will lead to an immediate jump in the value of the stock market. It will also lead to an immediate jump in the value of every retiree's 401(k). More importantly, it would lead to a burst of new investments in the United States, creating the foundation for long-term economic growth.

At the same time, we should allow 100% expensing of all investments in new equipment within one year of its purchase. This would lead to a boom in equipping American workers with the best and most modern equipment so they can compete with any economy in the world.

Real Change in Economic Incentives Does not Require Offsetting Tax Increases

It's important to remember that pushing for real change in our economy with an optional flat tax and a lower corporate income tax will be met with howls of derision. Some will complain that it will bust the budget. Others will insist that these changes be coupled with offsetting tax increases.

Both will be wrong. The unwillingness or inability of the bureaucrats at the Joint Tax Committee, Congressional Budget Office, and the Office of Management and Budget to foresee the growth caused by previous tax cuts is inexcusable. These same bureaucrats will surely once again underestimate the pro-growth effects and pro-tax revenue effects of fundamentally changing our tax system.

We must take this fight head on with two approaches. First, we must point out again and again how wrong government bureaucrats have been in the past about the pro-growth impact of positive changes to tax incentives.

Second, we must commit ourselves to reducing spending wherever we can. Those of us who support pro-growth tax reform must relentlessly challenge both Republicans and Democrats to eliminate current wasteful spending and to stop proposals for new spending that will prevent us from realizing the powerful long term benefits of fundamental tax reform.

Exactly Wrong Economy

In May of 2009, Congressman Gingrich wrote an article for his bog titled "Exactly Wrong Economy." In that article, he discusses the need to lower the business tax.

The U.S. Has the Second Highest Business Taxes in the World

Concentrating more power in Washington politicians and bureaucrats means government dictating what it deems are the “right” choices to individuals and businesses, rather than giving them the freedom and incentive to make their own choices.

For example, in his address to the joint session of Congress last week, the President announced his intention to punish “corporations that ship our jobs overseas.”

The United States imposes the second highest business taxes of any industrialized nation in the world. While countries like Ireland tax corporations at 12.5%, and even our neighbor Canada is moving its national business tax rate to 15% (the lowest among the G-7 countries), the United States taxes businesses at a whopping 35%. And a number of states have corporate income taxes on top of that.

Inevitably, high taxes in the U.S. cause some businesses to locate some or all of their business in lower tax countries overseas.

Don’t Punish Businesses for Locating Overseas. Encourage Businesses to Come to America to Create American Jobs

But if President Obama were serious about wanting to create jobs, he wouldn’t be thinking up ways to punish companies for wanting to relocate overseas.

If President Obama were serious about creating and keeping American jobs he would be thinking of ways to make companies want to bring their jobs and capital to America -- and keep them here.

Americans Solutions has created 12 American Solutions for Jobs and Prosperity. Our No. 3 recommendation for jobs and prosperity is for America to match Ireland’s 12.5% business tax.

That would do more than anything in the President’s budget to accomplish his often-repeated goal of “creating and saving” American jobs.

Opposition to Tax Increases

On January 22, 2009 Congressman Gingrich appeared on Fox News and spoke about his opposition to tax increases in balancing the budget.

Arguments for Ending the Capital Gains Tax

On August 13, 2009 Congressman Gingrich wrote an article in which he described the history of the capital gains tax, and then makes a series of arguments for ending the captal gains tax.

Capital Gains Tax: An Argument for Repeal

By Newt Gingrich and Emily Renwick 

President Obama recognizes the powerful positive economic impact a capital gains tax cut would have for small business owners—so why not give it to every American family and business in order to encourage growth and success? 

President Barack Obama’s budget for 2010 presented a number of tax cuts to spur economic growth. Most notably, his budget called for a reduction of the capital gains tax for small businesses. Apparently, President Obama recognizes the powerful, positive economic impact a capital gains tax cut would have for small business owners. 

Since the cut would be good for small businesses, why would President Obama not give it to other businesses too? Businesses large and small across the United States are struggling in the current economy. Businesses large and small are cutting jobs because of unfavorable economic conditions made worse by burdensome government policies like the capital gains tax. President Obama should extend this pledge to eliminate the capital gains tax on small businesses to every American family and business in order to encourage economic growth and competitiveness. 

The capital gains tax is an unequivocal burden on the capital we need to grow, prosper, and compete in a 21st century global economy. Any American or business that sees an appreciation of the value of their income (capital) must pay up to 39.6 percent in additional taxes on this appreciation (depending on the length of the investment and the marginal tax rate of the individual or business). Considering inflation, the effective rate paid on investments is even higher. As we are coming out of the recession, the United States should do everything within its power to create a financial environment that allows businesses to rapidly grow and prosper. 

Part of our economic problem is that the United States has one of the highest tax rates on capital gains in the world. Many industrial countries have no taxes on capital gains including Austria, Belgium, Germany, Greece, Luxembourg, Mexico, New Zealand, Portugal, and Turkey. Countries that do not impose capital gains taxes on stocks include Argentina, China, Greece, Hong Kong, Israel, Malaysia, Mexico, the Netherlands, Pakistan, the Philippines, Poland, Singapore, Spain, Sri Lanka, Taiwan, and Thailand. In order to compete with economic growth in Shanghai, America must match China’s 0 percent capital gains rate. 

Moreover, the actual revenue received from a capital gains tax is disproportionate to the burden imposed. The Congressional Budget Office (CBO) reports that in 1990 capital gains tax receipts totaled $32 billion, making up just 6.8 percent of total individual income tax receipts. By 2000, this number rose to $119 billion, making up 11.8 percent of the total. Notwithstanding the current economic meltdown, CBO estimates that for 2008, capital gains tax receipts will be close to $106 billion, making up 9.2 percent of the individual income tax receipts. While discouraging economic growth and driving investors across the Atlantic, receipts from the capital gains tax are barely making a dent in government revenue. 

Given the current economic problems, we call on Congress to immediately eliminate the capital gains tax. In this article, we describe the historical and present-day impact that the capital gains tax has on federal revenue. We will then discuss the main benefits of zeroing the capital gains tax rate, including the positive influences upon economic growth and job creation, capital formation, and venture capital funding. Finally, we describe the immediate advantages a capital gains tax cut would have for the average American. 

History of Capital Gains Tax Legislation

Originally capital gains were taxed as regular income at each individual taxpayer’s income tax bracket. In response to the higher income tax rates in World War I, legislators in 1922 introduced lower tax rates of 12.5 percent on capital gains on assets held for more than two years. This was to offset the reduction in capital gains revenue generation resulting from the higher capital gains tax rate. During the 1930s, legislation was passed to allow taxpayers to exclude percentages of their capital gains from being taxed. Specifically, “in 1934 and 1935, 20, 40, 60, and 70 percent of gains were excluded on assets held 1, 2, 5, and 10 years, respectively. Beginning in 1942, taxpayers could exclude 50 percent of capital gains on assets held at least six months or elect a 25 percent alternative tax rate if their ordinary tax rate exceeded 50 percent,” wrote Gerald Auten of the Urban Institute.

The capital gains tax was increased in the Tax Reform Acts of 1969 and 1976. In 1978, however, the tax rate was reduced to 28 percent. In 1981, more tax rate reductions lowered the rate to a maximum of 20 percent. The Tax Reform Act of 1986 raised the maximum capital gains tax rate back up to 28 percent by repealing the exclusion of long-term gains. Specifically, taxpayers were no longer allowed to exclude 50 percent of their capital gains on assets they had held for more than six months. The capital gains tax rate for the highest income brackets was cut to 20 percent as part of the Taxpayer Relief Act of 1997, which also exempted the sale of a personal residence of up to $250,000 for singles and $500,000 for married couples who filed jointly. The act created multiple tax rates based upon the type of capital asset and the length of holding time.

One year later, under the Republican majority, we introduced the Economic Growth Act of 1998, which would have further cut the capital gains tax to 15 percent. In arguing for this tax decrease, I said at the time, “the capital gains tax is in fact a tax on job creation . . . cutting the capital gains tax rate helps anyone who is preparing for retirement, starting a business, saving for college tuition, or planning to buy a house.”

The capital gains tax rate was once again lowered in 2003. Former President George W. Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003, better known as the “Bush tax cuts.” In this act, Congress reduced the lowest level from 8 percent to 5 percent; and the highest level for an investment held more than one year from 20 percent to 15 percent. In 2008, the act removed the capital gains tax entirely for individuals in the lowest two income brackets. The Bush tax cuts must be renewed by 2011, otherwise the capital gains tax rate will once again go back to the pre-2003 rates of 20 percent and 10 percent on most capital gains, and 18 percent and 8 percent for property purchased in or after 2001 and held for more than five years.

Economic Arguments for Eliminating the Capital Gains Tax

Past efforts to decrease the capital gains tax rate have been influenced by convincing evidence that a cut would increase economic growth. The investor class is integral to a functioning economy and investors’ decisions are influenced by the tax system in which they operate. Likewise, assets are in part priced with the calculation that if the stock is sold, the investor will have to pay tax on realized capital gains. As a result, buyers, knowing that they have to pay taxes, reduce the price that they are willing to pay for assets, thus driving down stock prices.

With a capital gains tax cut, the value of the stocks will see an immediate boost. This increase in value is known as “the capitalization effect.” The capitalization effect then explains how a capital gains tax cut will increase the stockholders’ after-tax returns on traded assets. Leading economists, such as Douglas Shackelford, have found that the capitalization effect would set in almost immediately after a capital gains tax cut, meaning that prices for investments would rise as investors capitalize on the reduced tax rate.

Some analysts have suggested that the immediate increase in stock values would be offset by an economic principle known as the “lock-in effect.” This effect occurs when investors, recognizing that they have to pay taxes on their gains, will lock in and hold rather than sell their assets. After a capital gains tax cut, we could see a potential sell-off of stocks, increasing trading volumes and leading to a temporary fall in asset values. However, we have seen through market observances that the capitalization effect is likely to have a more permanent impact than the lock-in effect. In other words, the lasting impact of a capital gains tax cut is likely to be an increase in asset values.

Additionally, because investors have to pay a tax on their gains, they often are penalized for diversifying their investment portfolio with a wide range of investment products. The capital gains tax distorts what the investors’ pre-tax optimal allocation of assets would be, potentially creating more challenges in investment for Americans. Taxing investment gains clearly raises the opportunity cost of asset transactions, leading to various inefficient outcomes.

Given the capitalization and lock-in effects, the current tax regime is distorting the true value of assets. Of course, there may be other unknown factors that could influence the prices of stocks, but our research indicates that the overarching impact of a capital gains tax cut would be an increase in stock values.

Philosophical Arguments against the Capital Gains Tax

Proponents of the capital gains tax argue that the tax is another way for the government to obtain revenue. These advocates argue that any income gained from investments should be taxed the same way that wages and gross yearly income are taxed. The problem with this argument is that in most cases capital gains are not traditional income. And in effect, the income that will give rise to the capital gains will be taxed as income and so the capital gains tax is a second level of tax. In other words, a higher capital gains tax rate discourages saving and investment.

In fact, Americans who set aside a portion of their after-tax income for savings in investments are the main victims of a capital gains tax. Individuals may intend to draw on these gains to finance the purchase of a new home or automobile, to pay for college tuition, or to supplement their Social Security income during retirement.

As a result, many economists refer to the capital gains tax as a “double tax.” Economist Bruce Bartlett argues that this penalizes many stockholders:

The fact is that capital gains arise only in the case of an income-producing asset. The value of the asset is simply the discounted present value of the future flow of income associated with that asset (rent in the case of real estate, interest in the case of bonds, and corporate profits in the case of stocks). Thus, if the income stream (rent, interest, profits/dividends) is taxed, then any additional tax on the underlying asset (real estate, bonds, stocks) must necessarily constitute a double tax on the same income.

A double tax is a destructive and unfair way for the government to gain additional revenue. Moreover, in some cases, the capital gains tax unfairly taxes investment gains that may not be gains at all. The capital gains tax, as written, does not account for changes in the price level. The result of this is that an individual may be unfairly taxed on gains that merely reflect the rise in the general price level, or may even reflect a real loss of value on an investment. To illustrate, consider an example where an individual purchases property for $100 in 1950 and proceeds to sell it for $500 in 2000. Looking at this without any other factors, the government would tax the $400 profit at a rate of 15 percent. The problem is that in these 50 years, the investor actually lost money on this investment because the inflation rate over 50 years was much higher than the 400 percent increase in the value of the property. That is, the $100 in 1950 would have grown to $714.61 in 2000 due to inflation. Thus, we can see that the investor is penalized for investing by both losing real purchasing power and by being taxed due to a nominal increase in income. While taxing individuals at progressively higher rates for higher income is a controversial topic, this act of taxing people even when they have a real negative income from investment is clearly unfair.

Empirical Benefits of Eliminating a Capital Gains Tax

Beyond the theoretical justifications for cutting the capital gains tax, how much wealth would actually be added to the economy? The Treasury Department conducted a study examining the economic consequences if we preserved President Bush’s tax cuts by ensuring that capital gains were taxed at 15 percent. The Treasury’s study found that if we made Bush’s tax rate permanent on capital gains and dividends, we would see an increase of national income of 0.4 percent. If we went one step further and eliminated the capital gains tax, we could potentially see an increase in gross domestic product of twice that amount. Dustin Chambers of Salisbury University argues that the increase in stock prices would be profound, ranging from an increase of 9.2 percent to 20.5 percent.

The exact size of the increase in the return in investments is uncertain, since it is based on forecasts. What is certain, however, is that when the cost of investment falls, as it does with the elimination of the capital gains tax, the net return on investment will rise. Most importantly, the short-term and long-term wealth of the U.S. economy will unambiguously improve. As Former Federal Reserve Chairman Alan Greenspan once observed, if you want the highest economic growth rate the best capital gains tax rate is zero.

Conclusion

Since the collapse of the economy in the fall of 2008, policy officials have been looking for a quick way to jump-start the economy. If we were to immediately eliminate the capital gains tax we would see a drastic improvement in job creation and economic growth.

First and foremost, businesses would have more of an incentive to invest capital in all areas of their business, including labor, capital, and research and development. Moreover, businesses would be able to finance their debt at a lower cost if capital gains were not taxed. In today’s market, businesses seek out new stocks or bonds to finance their investments. Those assets will be more desirable if investors do not have to pay the capital gains tax on the revenue gained from the investment. As these corporate assets become more appealing, this will drive down the cost of capital for companies, facilitating investment by companies so that they can grow and hire more employees.

In addition to facilitating development for small businesses and corporations, a capital gains tax cut would also have a significant stimulative affect on venture capital funding. As Stephen Moore and Phil Kerpen contend:

Venture capital funds are the economic lifeblood of high-technology companies in industries that are of critical importance to the U.S. international competitiveness: computer software, biotechnology, computer engineering, electronics, aerospace, pharmaceuticals, and so forth. The high capital gains tax rate appears to have contributed to the drying up of funding sources for those promising new frontier firms.

Likewise, J.R. Johnson, an entrepreneur and the co-founder of virtualtourist.com, argued that Congress should encourage investment by the private sector through a decrease in the capital gains tax rate:

No longer standing around, testing the water by dipping a toe into the pool, entrepreneurs would be cannonballing into the deep end—rushing to create jobs before the exemption ends. This will build some of the companies that will carry us out of these difficult economic times. Rather than rely so heavily on government to spend our way out of this recession, let’s fully encourage people who create small businesses to do it for us.
 

Additionally, research points to an increase in corporate acquisitions, as a decrease in capital gains taxes leads to lower transaction cost, more attractive stock portfolios, and more appealing corporate investment packages for potential shareholders.

Given the budding economic growth, Congress should immediately pass legislation that eliminates the capital gains tax. While this legislation would have an insignificant impact on federal revenue, zeroing the capital gains tax would have an immediate and significant impact on renewing economic growth and spurring individual prosperity. Congress cannot afford to wait any longer to eliminate the tax. Our jobs and our economic prosperity depend on it.

5 Ways to Create Job

In May of 2010, Congressman Gingrich spoke at the Latino coalition and stated that he supported 5 tax cuts. These cuts were 

• 50% reduction is social security and medicare taxes for both the employer and the employee
• 100% for all new equipment
• make the capital gains tax rate 0%
• make the corporate tax rate 12.5% (as in Ireland)
• abolish the death tax (estate tax)

Palmetto Forum

In September of 2011, Speaker Gingrich participated in the Palmetto Forum in South Carolina that was hosted by Senator Jim DeMint. He outlines five points for his tax and economic plan. First, he would repeal Dodd-Frank. Second would be replacing the EPA with an environmental solutions agency. Third would be the repeal of Sarbanes-Oxley. Fourth would be a reform of the FDA. He then states that for taxes he would have no tax increase in 2013, 0 the capital gains rate, go to a 12.5% corporate tax rate, go to 100% expensing for farms and factories to compete with China, end the death tax permanently, and create an "American Energy Tax plan."

TEA Party Debate

In September of 2011, Congressman Gingrich participated in the TEA Party debate for the Republican primary. He spoke about current tax cuts and subsidies.

BLITZER: Thank you, Governor.

Speaker Gingrich, some of the biggest companies in the United States, the oil companies, they got -- I guess some would call government handouts in the form of tax breaks, tax exemptions, loopholes. They're making billions and billions of dollars. Is that fair?

GINGRICH: You know, I thought for a second, you were going to refer to General Electric, which has paid no taxes.

(APPLAUSE)

You know, I -- I was -- I was astonished the other night to have the president there in the joint session with the head of G.E. sitting up there and the president talking about taking care of loopholes. And I thought to myself, doesn't he realize that every green tax credit is a loophole...

(APPLAUSE)

... that everything he wants -- everything General Electric is doing is a loophole? Now, why did we get to breaks for ethanol, breaks for oil and gas, et cetera? We got to them because of this idea, which the young man just represented. If we make you -- if we make it possible for you to keep more of your own money, you will do more of it.

We have a simple choice. We can depend on Saudi Arabia, Iran, Iraq, Venezuela, or we can encourage development in the United States of manufacturing, as Rick said. We can encourage development of oil and gas. We can do it by saying we're going to let you keep more of your money if you create more of what we want. I'm for an energy- independent America, and that means I favor people who create energy.

(APPLAUSE)

BLITZER: But I just want to follow up, Mr. Speaker. If you eliminate some of those loopholes, those exemptions, whether for ExxonMobil or G.E. or some other companies, there are those who argue that is, in effect, a tax increase and it would violate a pledge that so many Republicans have made not to raise taxes.

GINGRICH: Yes, a lot of people argue that. They're -- they're technically right, which is why I'm -- look, I'm cheerfully opposed to raising taxes. This government -- we have a problem of overspending. We don't have a problem of undertaxing.

And I think that it would be good for us to say, we're not going to raise any -- which is why I'm also in favor of keeping the current tax cut for people who are working on Social Security and Medicare. I think trying to raise the tax on working Americans in the middle of the Obama depression is a destructive policy. So I don't want to have any tax increase at any level for anyone. I want to shrink government to fit income, not raise income to try to catch up with government.

Western Debate

In October of 2011, Congressman Gingrich participated in the Western Debate on CNN. He was asked about tax reform and specifically Herman Cain's proposal of 9-9-9. He states that he supports more specific tax cuts and reform.

Michigan Economic Debate

In November of 2011, Congressman Gingrich participated in the Michigan economic debate. He discussed his views on taxes and the need for lower regulation.

BARTIROMO: Speaker Gingrich, Federal Reserve Chairman Ben Bernanke has called unemployment in this country a national crisis due to the amount of days people are out -- months that people are out of work and the number of people out of work. Many of you have come up with tax reform plans. Why is tax reform the path to job creation? And if it's not the only path, what else can you implement to get people back to work?

GINGRICH: Well, first of all, I think Ben Bernanke is a large part of the problem and ought to be fired as rapidly as possible.

(APPLAUSE)

GINGRICH: I think the Federal Reserve ought to be audited and we should have all the decision documents for 2008, '09 and '10 so we can understand who he bailed out, why he bailed them out, who he did not bail out, and why he did not bail them out.

(APPLAUSE)

GINGRICH: So, I'm glad that Ben Bernanke recognizes some of the wreckage his policies have led to.

The reason we follow -- I think most of us are for tax policies that lead to jobs is because we have had two cycles in my lifetime, Ronald Reagan, and the Contract with America, both of which had the same policy: lower taxes, less regulation, more American energy, and have faith in the American job creator as distinct from the Saul Alinsky radicalism of higher taxes, bigger bureaucracy with more regulations, no American energy, as the president announced again today in his decision on offshore, and finally class warfare.

So I would say that all of us on the stage represent a dramatically greater likelihood of getting to a paycheck and leaving behind food stamps than does Barack Obama.

2012 Presidential Campaign Website Statements

JOBS & THE ECONOMY
"Creating jobs and getting back to 4% unemployment is the most important step to a balanced budget." -- Newt Gingrich

America only works when Americans are working. Newt has a pro-growth strategy similar to the proven policies used when he was Speaker to balance the budget, pay down the debt, and create jobs.

The Gingrich Prosperity Plan

1. Stop the 2013 tax increase to promote stability in the economy. Job creation moved from stagnant to improving in the two months after Congress extended tax relief for two years. We should continue what has worked by making the rates permanent.
2. Make the United States the most desirable location for new business investment through a bold series of tax cuts and regulatory reforms, including:rn
   1. Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries;
   2. Dramatically reducing the corporate income tax (the highes in the world) to 12.5%;
   3. Allowing for 100% expensing of new equipment to spur innovation and American manufacturing;
   4. Ending the death tax permanently.
3. Repeal Sarbanes-Oxley to remove burdensome financial regulation that is holding companies back from taking risks and making new investments.
4. Implement an American energy policy that creates jobs in the United States versus the Obama plan which borrows money from China to give to Brazil to drill for oil and to then sell to Americans.
5. Enforce the fiscal responsibility Americans deserve by controlling spending, implementing money saving reforms, and replacing destructive policies and regulatory agencies with new approaches.
6. Repeal and replace Obamacare with a pro-jobs, pro-responsibility health plan that puts doctors and patients in charge of health decisions instead of bureaucrats. 

The Gingrich Jobs and Growth Plan

America only works when Americans are working. Newt has a pro-growth strategy similar to the proven policies used when he was Speaker to balance the budget, pay down the debt, and create jobs. The plan includes:

1. Stop the 2013 tax increases to promote stability in the economy. Job creation improved after Congress extended tax relief for two years in December. We should make the rates permanent.
2. Make the United States the most desirable location for new business investment through a bold series of tax cuts, including: Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries; Dramatically reducing the corporate income tax (among highest in the world) to 12.5%; Allowing for 100% expensing of new equipment to spur innovation and American manufacturing; Ending the death tax permanently.
3. Move toward an optional flat tax of 15% that would allow Americans the freedom to choose to file their taxes on a postcard, saving hundreds of billions in unnecessary costs each year. This optional flat tax system will preserve deductions on charitable giving and home ownership, and create a new personal deduction of $12,000 for every American. This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor.
4. Strengthen the dollar by returning to the Reagan-era monetary policies that stopped runaway inflation and reforming the Federal Reserve to promote transparency.
5. Remove obstacles to job creation imposed by destructive and ineffective regulations, programs and bureaucracies. Steps include: Repealing the Sarbanes-Oxley Act, which did nothing to prevent the financial crisis and is holding companies back from making new investments in the U.S; Repealing the Community Reinvestment Act, the abuse of which helped cause the financial crisis; Repealing the Dodd-Frank Law which is killing small independent banks, crippling loans to small businesses and crippling home sales; Breaking up Fannie Mae and Freddie Mac, moving their smaller successors off government guarantees and into the free market; Replacing the Environmental Protection Agency with an Environmental Solutions Agency that works collaboratively with local government and industry to achieve better results; and Modernizing the Food and Drug Administration to get lifesaving medicines and technologies to patients faster.
6. Implement an American energy policy that removes obstacles to responsible energy development and creates jobs in the United States.
7. Balance the budget by growing the economy, controlling spending, implementing money saving reforms, and replacing destructive policies and regulatory agencies with new approaches.
8. Repeal and replace Obamacare with a pro-jobs, pro-responsibility health plan that puts doctors and patients in charge of health decisions instead of bureaucrats.
9. Fundamental reform of entitlement programs with the advice and help of the American people.

Sponsored and Cosponsored Legislation

This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.

Mitt Romney

Summary

In numerous interviews, debates, and political literature, Governor Romney has stated that he opposes any and all tax increases and that he favors the lowest tax rate possible. Governor Romney supported the Bush tax cuts and making them permanent. In 2008, he stated that the Bush tax cuts helped get our economy going again when we faced the last tough times.

One item that Governor Romney has consistently supported is allowing families making below a certain amount to save their money for retirement without being taxed on it. The usual amount quoted by Governor Romney is around a family earning less than $200,000 to $250,000.

In the 2008 and 2012 elections, Governor Romney was asked about his support for the Fair tax system. He noted that a consumption tax did have a lot going for it in a number of areas, but he does not support the system. The main reasons for his opposition were the high rate needed to bring in the approprate amount of revenue and the application of the tax on items like new houses and not on already built houses. He notes that this would be devasting for the housing market.

2008 Tax Plan

Governor Romney's 2008 tax plan promised a specific set of tax cuts for individuals and businesses that mirrored his statements in debates and op-eds. The pledges included:

• Permanently Reduce The Lowest Income Tax Bracket to 7.5%
• Permanently Eliminate Payroll Taxes On Employees Over The Age Of 65
• Make Middle-Class Savings Tax Free
• Make the Bush Tax Cuts permanent
• End the Death Tax
• Patch or permanently end the AMT
• Make The Research And Development Tax Credit Permanent
• Oppose Any Increase In Social Security Taxes
• Reduce The Corporate Tax Rate To 20% Over Two Years

2012 Tax Plan

Governor Romney's 2012 tax plan is less specific. The plan calls for the elimination of the estate tax, the lowering of the corporate tax rate to 25%, and making the Bush tax cuts permanent. However, beyond that it promises only a flatter system with corporate taxes moved to a territorial system.

• Individual Taxes
  
  • Maintain marginal rates at current levels
  • Further reduce taxes on savings and investment
  • Eliminate the death tax
  • Long term goal - pursue a flatter, fairer, simpler structure
• Corporate Taxes
  
  • Lower the corporate income tax rate to 25%
  • Transition to a "territorial" tax system

Fox News Appearance

In March of 2007, Governor Romney appeared on Fox News and spoke about his support for lower overall taxes, and his support for the Bush tax cuts. He stated that he would like to see zero taxes on capital gains and dividends. (comments start at 3:05)

South Carolina Debate

In May of 2007, Governor Romney participated in the South Carolina Presidential debate. He noted during that debate that he would not raise taxes.

WENDELL GOLER (Fox News): Gentlemen, we have a series of questions on the economy, the budget, taxes and entitlements. And I have one for each of you, starting with you, Governor Romney.

Your critics have called you "flip-flop Mitt" for, among other things, your decision to take the "no new taxes" pledge this year after refusing to do so in 2002. Tell me why your decision to take the pledge shouldn't be seen as a blatant appeal to the party base, sir?

MR. ROMNEY: I want to make it very clear that I'm not going to raise taxes.

As governor of Massachusetts, I made it very clear there, and I did not raise taxes. We faced a huge budget gap, and I went in and said, you know, what? I know some people want to raise taxes, but that's going to hurt working families and scare away jobs. I recognize that raising taxes could also lead to a slowdown in our economy, and so we didn't do it. We balanced our budget, and that's exactly what I'll do with the federal government.

They key thing you have to consider, as you look at what's happening in the federal government, is that Washington is broken. We need to have fundamental change in the way business in Washington is carried out. What that means is we're going to have to have leadership that can reorganize the government. We're going to have about 40 percent of the government employees turn over in the next couple of terms. And if we can -- we can reduce the employment there, but more importantly, is to go through all the agencies, all the departments, all the programs and cut out the unnecessary and the wasteful.

We're also going to have to do something we talk about on in Iraq. We all talked about benchmarks. Well, how about benchmarks in Washington? Let's lay out what we're going to get done, and instead of just talking about the same old same old, let's streamline and make Washington more efficient.

Iowa Presidential Debate

In August of 2007, Governor Romney participated in the Presidential Debate in Iowa. When asked about the Fair Tax, Governor Romney states that he opposes the measure, and gives a number of reasons why.

ROMNEY: There are a lot of features that are very attractive about a fair tax. Getting rid of the IRS is something we’d all love. But the truth is, we’re going to have to pay taxes. We are the largest economy in the world. We’ve added -- during the time Europe added 3 million jobs, we’ve added about 50 million jobs in this country. And so completely throwing out our tax system and coming up with an entirely new one is something we have to do very, very carefully. The president’s commission on taxation -- tax reform -- looked at this and said: Not a good idea. Some of the reasons...

HUCKABEE: They didn’t look at that...

(CROSSTALK)

ROMNEY: Let me -- hold on, let me complete. Some of the reasons are the fair tax, for instance, charges a 23 percent tax, plus state sales tax, on a new home, when you purchase a new home. But if you buy an old home, there’s no tax. Think what that might do to the construction industry. We need to thoroughly take it apart before we make a change of that nature. That’s why my view is, get rid of the tax on savings and let middle-income people save their money tax-free.

Des Moines Register Interview

In December of 2007, Governor Romney was interviewed by the Des Moines Register and stated that he was opposed to any tax increases and that he would support tax simplification, but that establishing a fair or flat tax was not feasible.

I am very much, very much and ademately opposed to tax increases. The answer is not to increase taxes. That has a doubly negative effect. It not only is depressing to the individuals that pay higher taxes, but it's depressing on the economy.

I'm probably not going to be recommending throwing out the code and starting over. We all can dream about a much simpler, fairer, flater system. There are people who love the fair tax as a consumption tax. That has a lot of positive features associated with it and I would love to emulate some of those.

There are people who talk about the flat tax, but one person's flat tax is another person's unfair tax depending on which type of income gets taxed. So, I look to say "can we make the tax rate lower for all Americans, can we make the tax on savings, particularly for middle income americans disappear."

I propose that people of middle-incomes ... and you probably want to know exactly what level that is and I haven't set it yet because we are working on the economics. People of middle income in my view ought to be able to save money and not have to pay taxes on interest, dividends, and capital gains. Because I would like to encourage savings and I would like to get tax rates down. That has a feature that sounds something like the flat tax, but that's not something that applies to the very, very wealthy.

I'd also like to see us look at our corporate tax structure. Right now, we have the second highest corporate income tax in the world, right after Japan. That's a problem for corporations deciding to grow or expand in our country and I'd like for it to be comparable. We don't have to be the lowest, but I don't want to be the highest.

So I would look at our policies to see if we can't lower our rates to make it cheaper and easier for people to save for having a simpler, flater tax system.

CNN Interview

In a January 2008 interview on CNN, Governor Romney was contrasting himself against Senator McCain. He noted that Senator McCain opposed the Bush Stimulus while he supported it, and Senator McCain opposed the Bush tax cuts and Governor Romney supported it.

ROMNEY: Well, Senator McCain is a fine man and an honorable and courageous individual. But he has been in Washington all of his career. And I don't think you're going to see change in Washington by somebody who's been such a part of it all of these years.

I think people recognize that, particularly with the challenges we face in our economy, it's essential to have somebody who's had a job in the economy, who knows how the economy works and can fight to bring good jobs for middle-income Americans.

There are other differences, of course. He opposed the Bush tax cuts. Even now, with the stimulus being proposed, he apparently is not in favor of that.

I proposed a very bold stimulus program to get our economic working again. You know, having a strong economy is key to great jobs and key to a lot of good things that happen in this country.

...

BLITZER: Last Sunday, Mitt Romney was on "Late Edition," Gene Sperling, and I asked him, if he were president, what he would do immediately to deal with this potential of a recession, the fears of a recession. Listen to what he told me.

(BEGIN VIDEO CLIP)

MITT ROMNEY, REPUBLICAN PRESIDENTIAL CANDIDATE: Immediately I'd go to try and get a reduction on taxes on middle-income Americans. Specifically, I proposed having people who earn under $200,000 a year be allowed to save their money tax-free. It means no tax on interest, dividends or capital gains.

(END VIDEO CLIP)

California Debate

In January of 2008, Governor Romney participated in the Presidential debate in California at the Reagan Library. When asked, Governor Romney did acknowledge that he raised fees on business expenses.

COOPER: Governor Romney?

ROMNEY: OK, I got a little work to do here. Let me help you with the facts here, Senator.

First of all, my lieutenant governor, Kerry Healey, endorsed me, and is supporting me, and is working all over the state for me. My predecessor in office, Governor Swift, Governor Swift is supporting you.

ROMNEY: When you say that our state ranked number three in job creation, the study you're relying upon is a study that included her term in office. And during her term in office, 141,000 jobs were lost.

During my term in office, we added jobs. And from the lowest point we added 60,000 new jobs. So that study, unfortunately, included the wrong data.

With regards to fees, we raised fees $240 million. Not $730 million. Facts are stubborn things. We audited our fee increase, because, of course, we cared.

Now, why did we raise fees $240 million? We had a $3 billion budget shortfall, we decided we were not going to raise taxes, and we found that some fees hadn't been raised in as many as 20 years. These were not broad-based fees for things like getting your driver's license or your license plate for your car, but instead something like the cost of a sign on the interstate and how much it was going to cost to publish a McDonald's or a Burger King sign on the interstate. We went from, like, $200 a sign to $2,000 a sign to raise money for our state in a way that was consistent with the what the market had done over the ensuing years.

And let's see -- with regards to my health care plan, you know, a lot of people talk about health care. I'm the only one that got the job done.

I got health insurance for all our citizens. We had 460,000 people without insurance. We got 300 of them -- 300,000 of them signed up for insurance now. I'm proud of what we accomplished.

The bill that I submitted to the legislature didn't cost $1 more than what we were already spending. However, the legislature and now the new Democratic governor have added some bells and whistles, and they're willing to pay for them.

I wouldn't do that if I were governor. I would veto the items they put in place there, but they're entitled to make changes if they want to.

They're still running a balanced budget. I wouldn't have added the money they did. And by the way, no debt was left. I left a rainy day fund of over $2 billion.

Facts are stubborn things. I'm proud of my record.

...

JIM VANDEHEI, POLITICO: The first question from the readers, Governor Romney, is from Jonathan Rubin (ph) in Fairfax, Virginia.

"As governor of Massachusetts, Senator McCain just pointed out you raised hundreds of millions of dollars in additional revenue through so-called fees and loophole closings. You passed a health care bill forcing individuals to buy insurance on the threat of a fine. How do you reconcile that policy with your claim to be the authentic conservative?"

ROMNEY: Well, let's talk about each.

I mentioned fees, and I think it's appropriate if the state is providing a service to someone that's not a requirement to have a car or a driver's license, but instead, let's say, we're going to be taking out an oil tank from your back yard because it's leaking into the ground and the state's going to provide that service. But to charge a fee sufficient to do so makes a lot of sense.

And so the fees ought to be adjusted from time to time to compose the amount of what the cost is of providing that service. And if there hasn't been a fee raised in a couple of decades, you probably have some inflation in there you ought to adjust for.

Florida Debate

In January of 2008, Governor Romney participated in the Presidential debate in Boca Raton, Florida. When asked about the Bush tax cuts, Governor Romney stated that he did support them when they passed and that he would support making them permanent.

Russert: Governor Romney, you've criticized Senator McCain for opposing the first two Bush tax cuts. You've criticized Mayor Giuliani for going to court to try to retain a commuter tax on people coming to the city of New York.

Do you trust Senator McCain and Mayor Giuliani on the issue of being tax cutters?

Romney: I trust these two gentlemen and I respect them greatly. We do have differing views and over time our record with regards to taxes has been somewhat different.

But I think all of us on this stage want to see taxes brought down and want to see spending brought down. I have a sound record of doing that. I came into a state that faced an extraordinary series of challenges.

Massachusetts was in a ditch. We had about a $3 billion budget shortfall. Everybody thought we're going to have to raise taxes to solve the problem.

And I went to work to get Massachusetts back on track. Working with Democrats across the aisle, we were able to do that without raising taxes. And that was critical, because it said to the business community "You don't have to worry about Taxachusetts coming back again. You're going to see Massachusetts live within its means."

We balanced the budget every one of four years. We also put in place a surplus of over $2 billion to help make sure that we have the kind of resources that would be needed if there were a rainy day.

Now, I also support the Bush tax cuts. Senator McCain voted against them originally. He now believes they should be made permanent. I'm glad he agrees they should be made permanent.

I think he should have voted for them the first time around and that's just a difference of viewpoints. The Bush tax cuts helped get our economy going again when we faced the last tough times, and that's why right now, as we face tough times, we need to have somebody who understands -- if you will, has the private sector, has the business world, has the economy in their DNA.

I do. I spent my life in the private sector. I know how jobs come and I know how they go and I'll make sure that we create more good jobs for this nation. And one way to do that is by holding down taxes and making those tax cuts permanent.

New Hampshire Debate

In January of 2008, Governor Romney participated in the Presidential debate in New Hampshire. He states that Democrats would raise taxes while he would lower them and he reasserts his views that tax rates on capital gains and dividends should be lowered.

WALLACE: Governor Romney, you have taken the pledge.

WALLACE: You like to say that you don't just talk about pledges, that, in fact, you actually had to operate one as government of Massachusetts.
But according to the National Conference of State Legislatures, in your first year as governor, you raised fees and fines by $500 million, including fees paid by the blind, by gun owners, by those seeking training against domestic violence, and even by used car shoppers.
In fact, the Associated Press says you earned a nickname back then in Massachusetts. It was "Fee-fee".

(LAUGHTER)

How do you respond, sir?

ROMNEY: Well, that's the first I've ever heard that, Chris, but it's pretty good -- as a matter of fact, a little exaggeration. The total fees raised were $260 million, and that's a big number.
We had a $3 billion budget gap. The Democrats -- you probably know that Massachusetts is a bit of a Democratic state -- the Democrats wanted to raise taxes. I said, "No way."
And in fact we did not raise taxes on our citizens, and we lowered them across that state time and again. We put an investment tax credit permanently in place. We provided help to senior citizens on real estate taxes. We changed the capital gains tax increase to a capital gains tax refund.

ROMNEY: I'm proud of what we were able to do to lower taxes. I'm also going to lower taxes for the American people, and that's the key thing.
Right now, you can listen to the Democrats. Their pledge is clear. They're going to raise taxes. I want to lower them. Make the Bush tax cuts permanent. Kill the death tax once and for all.

(APPLAUSE)

And a savings plan -- a savings plan for middle income Americans. If you earn less than $200,000 a year, the new tax rate on interest, dividends and capital gains ought to be absolutely zero.
And by the way...

(APPLAUSE)

... John Edwards has his own savings plan for the middle class. He says you can save $250 a year tax-free. Whoopty-doo. That's not going to buy you retirement, it's not going to buy you a house, and someone yelled out it's not going to buy him a haircut, either.

Campaign Commercial

One of Governor Romney's 2008 campaign commercials dealt exclusively with taxes. Governor Romney pledged to end the estate tax, roll back all tax rates, and remove taxes on interest, dividends, and capital gains.

ATR Pledge

While running for the Presidency in 2008, Governor Romney signed the taxpayer protection pledge. This pledge simply stated that he would not raise the marginal rates for individuals and/or businesses, and that he would oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

2008 Economic Plan

In January of 2008, Governor Romney put forth an economic plan as part of his 2008 Presidential campaign. The plan consisted of tax reform for individuals and businesses, and relief for homeowners.

• Individuals
  
  • Permanently Reduce The Lowest Income Tax Bracket to 7.5%
  • Permanently Eliminate Payroll Taxes On Employees Over The Age Of 65
  • Make Middle-Class Savings Tax Free
  • Make the Bush Tax Cuts permanent
  • End the Death Tax
  • Patch or permanently end the AMT
  • Make The Research And Development Tax Credit Permanent
  • Oppose Any Increase In Social Security Taxes
• Business
  
  • Institute Immediate 100% Expensing Of New Equipment Purchased By A Business For A Two-Year Period Retroactive To January 1, 2008
  • Reduce The Corporate Tax Rate To 20% Over Two Years
• Homeowners
  
  • Reform And Expand Federal Housing Administration (FHA) Loan Portfolio Limits

STRATEGY FOR A STRONGER AMERICA : THE ROMNEY ECONOMIC STIMULUS PLAN

Governor Romney's Economic Stimulus Plan – Washington Must Act Now:

Governor Romney's Economic Stimulus Plan Would Provide Much-Needed Relief To Taxpayers, Businesses And Homeowners. Today, our economy is facing unprecedented challenges both here at home and abroad. Our economy needs pro-growth stimulus, but Governor Romney believes any stimulus package should return money to American taxpayers, not increase already out-of-control government spending. To promote economic growth, Governor Romney is proposing an economic stimulus plan that would lower taxes on individuals, reduce taxes for businesses and help homeowners through the current housing crisis.

• Individuals: Governor Romney would permanently reduce the lowest income tax bracket, permanently eliminate payroll taxes on seniors and make middle-class savings tax free.
• Businesses: Governor Romney would institute immediate 100% expensing of equipment for two years and permanently reduce the corporate tax rate.
• Homeowners: Governor Romney would reform and expand Federal Housing Administration (FHA) loan portfolio limits to allow larger loans to homeowners.

Governor Romney Urges Our Leaders To Work Together And Immediately Debate, Pass And Sign A Stimulus Package For The American People. If our representatives in Washington can work together and demonstrate the leadership that the American people deserve, Governor Romney is optimistic that we can still turn this economy around. Washington must get to work immediately and pass a bill no later than February 19, a month from today, in order to stimulate our economy.

INDIVIDUALS: Governor Romney's Economic Stimulus Plan – Pro-Growth Tax Cuts For Individual Taxpayers:

Permanently Reduce The Lowest Income Tax Bracket to 7.5%. Permanently cutting taxes for all taxpayers will put more money in workers' pockets and stimulate consumer confidence and spending.

• Cutting The Lowest Tax Rate From 10% To 7.5% Will Provide Up To A $400 Tax Cut To Each American Taxpayer.
• Governor Romney Proposes Providing An Immediate Retroactive Tax Credit Reflecting The Lower 7.5% Tax Rate For 2007 Earnings To Employees Who Earned Less Than $97,500 In 2007. This tax cut would immediately stimulate the economy as taxpayers with the highest propensity to consume receive their increased 2007 tax refunds.
• Permanently Reducing The Lowest Bracket Is A Pro-Growth Tax Cut For The Tens Of Millions Of Americans In The Lowest Income Tax Bracket.

Permanently Eliminate Payroll Taxes On Employees Over The Age Of 65. It is not fair that seniors that have worked their whole life and earned their full Social Security benefit continue to owe payroll taxes to the federal government.

• In This Uncertain Economic Environment, More And More Seniors Are Returning To The Workforce. Governor Romney's proposal will provide an immediate tax cut to working seniors.
• Governor Romney Believes That Seniors Have Already Earned Their Full Social Security Benefit And Should Not Owe Additional Payroll Taxes For Income Earned After Age 65.

Make Middle-Class Savings Tax Free. Governor Romney's plan will allow middle class Americans to save tax free by changing the tax rate on interest, capital gains and dividends to absolutely 0%. By helping more Americans save and invest, we can meet the challenges of an aging population and ensure the financial security of America .

• Allow Over 95% Of American Families To Save And Invest Tax Free: Any taxpayer with Adjusted Gross Income under $200,000 would pay a tax rate of absolutely 0% on all of the income they earn from their savings, capital gains and dividends.
• Expand The Investor Class: In recent years, over half of adult Americans have participated in the stock market either directly or through pension plans and mutual funds. Tax-free savings will encourage more families to build wealth by saving, investing and participating in the stock market, which will help grow the economy.

BUSINESSES: Governor Romney's Economic Stimulus Plan – Pro-Growth Tax Cuts For Businesses:

Institute Immediate 100% Expensing Of New Equipment Purchased By A Business For A Two-Year Period Retroactive To January 1, 2008. This plan would allow both large and small businesses to immediately invest in new equipment and capital improvements, which would immediately stimulate the economy and create new jobs.

• Boost U.S. Manufacturers And Vendors: Accelerating and increasing capital investment in equipment and other qualified assets in the U.S. will immediately provide a boost to U.S. manufacturers and vendors.
• Encourage Additional Business Investment: Entrepreneurs and small businesses, such as S corps and LLCs, which often face cash flow difficulties, will benefit greatly by the reduced cost of investment in equipment under this plan. Additional investment and expansion by these growing businesses will drive economic growth.

Reduce The Corporate Tax Rate To 20% Over Two Years. Governor Romney believes we should immediately act to reduce the corporate rate to 25% for 2008 and 20% in 2009. A permanent U.S. corporate tax rate of 20% will attract capital, stimulate investment, and increase American competitiveness with the rapidly growing economies of the world.

• A More Competitive Corporate Tax Rate: Governor Romney has spoken throughout the campaign about the need to reduce our corporate income tax rate in order to compete more effectively against other countries with lower rates. The United States currently has the second-highest corporate tax rate in the Organization for Economic Co-operation and Development.
• Encourage New Capital Flows Into The United States : Cutting the corporate tax rate will cause new capital to flow to the U.S. and make our U.S. companies more competitive by providing additional funds for research, development, innovation, and hiring of additional employees.

HOMEOWNERS: Governor Romney's Economic Stimulus Plan – Helping Homeowners:

Reform And Expand Federal Housing Administration (FHA) Loan Portfolio Limits:

• Lower The Amount Of Upfront Down Payment A Borrower Must Make, Allowing FHA To Help Nonprime Borrowers Who May Not Be Able To Meet The Current Requirement.
• Raise The Maximum Loan Amount Eligible For FHA Insurance, Allowing FHA To Serve More Borrowers In Higher-Priced Areas.
• Expand NeighborWorks America 's Foreclosure Avoidance Initiative: Governor Romney proposes expanding NeighborWorks America 's Foreclosure Avoidance Initiative to help American homeowners stay in their homes. NeighborWorks America assists homeowners by offering foreclosure counseling and identifying refinancing opportunities for U.S. homeowners.

Governor Romney's Pro-Growth Tax Agenda:

Governor Romney's Economic Stimulus Plan Is In Addition To His Tax Proposals Which Will Provide A Sound Economic Framework For Long-Term Growth:

• Make The Bush Tax Cuts Permanent: Making the Bush Tax Cuts permanent is the first step to ensuring that Americans are able to keep more of their hard-earned money.
• Roll Back Tax Rates For All Americans: As President, Governor Romney will cut marginal tax rates across the board, allowing all Americans to save more money.
• Kill The Death Tax: It is unfair to tax Americans three times: first when they earn their money; second when they invest it and receive income from those investments; and third when they die.
• Make The Research And Development Tax Credit Permanent To Encourage Capital Investment And Innovation: Governor Romney believes that we must encourage companies to invest more in research and development to produce the innovations our companies need to win in the global economic competition.
• Oppose Any Increase In Social Security Taxes: We can strengthen Social Security without resorting to higher Social Security taxes that will impact all Americans. Governor Romney will oppose any proposed increase in Social Security. taxes.
• Prevent The Alternative Minimum Tax (AMT) From Hurting More American Families: At the very least, Congress must pass a patch to the AMT that will prevent this tax from affecting more and more families in America.

Tax Deal, Bad Deal

In December of 2010, Governor Romney wrote an op-ed in USA Today in which he stated that the recently struck deal to extend the Bush tax cuts along with unemployment benefits was a bad deal because the temporary extension of lower taxes only adds uncertainty.

Mitt Romney: Tax deal, bad deal

Death and taxes, it is said, are life's only two certainties. But in the wake of President Obama's tax compromise with congressional Republicans, only death retains the status of certainty: The future for taxes has been left up in the air. And uncertainty is not a friend of investment, growth and job creation.

The deal has several key features. It reduces payroll taxes, extends unemployment benefits and keeps current tax rates intact. So far, so good. But intermixed with the benefits are considerable costs of consequence. Given the unambiguous message that the American people sent to Washington in November, it is difficult to understand how our political leaders could have reached such a disappointing agreement. The new, more conservative Congress should reach a better solution.

The deal keeps current tax rates from rising to pre-Bush era levels for two years. But in 2013, unless Congress acts again, rates will increase dramatically.

Extension temporary

Of course, delay now is better than an immediate tax hike. But because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost. When entrepreneurs and employers make decisions to start or expand an enterprise, uncertainty about tax rates translates directly into a reduced propensity to invest and to hire. With only a two-year extension, investors know that before their returns are realized, tax rates may be jacked up to the levels favored by President Obama. So while the tax deal will succeed in temporarily putting more money in the hands of consumers, it will fail to deliver its full potential for creating lasting growth.

It will also add to the deficit. In many cases, lowering taxes can actually increase government revenues. If new businesses, new investments and new hiring are spurred by the prospects of better after-tax returns, the taxes paid by these new or growing businesses and employees can more than make up for the lower rates of taxation. But once again, because the tax deal is temporary, a large portion of this beneficent effect is missing. What some are calling a grand compromise is not grand at all, except in its price tag. The total package will cost nearly $1 trillion, resulting in substantial new borrowing at a time when we are already drowning in red ink.

Part of the tax deal is a temporary reduction in payroll taxes. The president was insistent, however, that only the employee's payroll taxes be reduced — the portion paid by the employer is to remain the same. Again, the president is looking to get more money into the hands of the consumer to boost near-term spending. But by refusing to lower the cost of hiring a new employee, he fails to encourage what the American people want even more than lower taxes — more good jobs. Like the income tax deal, the payroll tax deal will add to the deficit.

For those without jobs, the tax compromise extends unemployment benefits for 13 months. A decent and humane society must have a strong safety net for the unemployed. I served for 15 years as a lay pastor in my church and saw the heartbreak of joblessness up close; a shattering loss of faith in oneself is but only one of many forms the suffering can take. Nonetheless, the vital necessity of providing for those without work should not be used as an excuse to ignore the very real problems of our unemployment system.

In this, as in so many other arenas of government policy, unemployment insurance has many unintended effects. The indisputable fact is that unemployment benefits, despite a web of regulations, actually serve to discourage some individuals from taking jobs, especially when the benefits extend across years.

Iowa Debate

In August of 2011, Governor Romney participated in the Republican debate in Ames, Iowa. He was asked about raising taxes in Iowa and stated that he never saw a reason to raise taxes.

YORK: Thank you, Bret. We're going to start with Governor Romney.

Governor, in 2005, when you were the governor of Massachusetts, you successfully appealed to Standard & Poor's to upgrade your state's credit rating. You said you used a combination of spending cuts and new revenues to put Massachusetts on a more sound financial footing. You even approvingly cited a tax increase passed by the Democratic state legislature.

YORK: Doesn't this show that sometimes raising taxes is necessary?

ROMNEY: No. I don't believe in raising taxes. And as governor I cut taxes 19 times and didn't raise taxes. Let's step back and talk about the first part what you said. I was fortunate enough to be a governor that got an increase in the credit rating in my state. At the same time we got a president who got a decrease in the credit rating of our nation. And that's because our president simply doesn't understand how to lead and how to grow an economy.

I was very proud of the fact that Republicans and Democrats worked together in Massachusetts to cut spending. I came in, we had a huge deficit. I went to the legislature and I said I want expanded powers to unilaterally be able to cut spending not just slow the rate of growth but to cut spending and they gave it to me and I did. We cut spending.

Every single year I was governor we balanced the budget. And by the end of my term we had put in place over a two billion dollar rainy day fund. That kind of leadership is what allowed us to get a credit upgrade from Standard & Poor's. And that's the leadership we finally need in the White House.

Reagan Debate

In September of 2011, Governor Romney participated in the Republican debate at the Reagan debate. He talks about his general tax policy, and his plan to allow those making less than $200,000 to save their money tax free.

ROMNEY: You know, I must admit, I have a bit of a hard time with the idea that there are people who don't feel like they're supporting our troops by contributing tax revenue through -- through the income tax or through other tax vehicles.

I don't want to raise taxes on the American people, but I think everybody ought to feel that they're part of this effort and that they're providing for our military, providing for our roads, providing for our schools. That ought to be part of what -- what every American experiences.

But right now, the question is not the people at the -- that are not paying taxes at the low end. The question is not the people who are very, very rich. The question is, how about middle-income Americans?

Who are the people most hurt by the Obama economy? And the answer is the middle class. The great majority of Americans are having a very, very difficult time. And our effort has to be to find ways to reduce to burden on those people.

And that's why I've proposed that anybody who's earning $200,000 a year and less ought to be able to save their money tax-free, no tax on interest, dividends, or capital gains. Let people save their money, invest in America, and not have to give more money to the government. The middle class needs our help.

TEA Party Debate

In September of 2011, Governor Romney participated in the TEA Party debate and was asked about the whether or not he supports the FAIR Tax. He states that while the system has a lot going for it, it is flawed in that it disproportionately affects lower income earners.

QUESTION: Hello. My question is, would any of you be willing to support the fair tax?

BLITZER: Governor Romney? A fair tax basically is a national sales tax.

ROMNEY: Yeah. Yeah. The -- the idea of a national sales tax or a consumption tax has a lot to go for it. One, it would make us more competitive globally, as we send products around the world, because under the provisions of the World Trade Organization, you can reimburse that to an exporter. We can't reimburse our taxes right now. It also would level the playing field in the country, making sure everybody is paying some part of their fair share. But the way the fair tax has been structured, it has a real problem and that is it lowers the burden on the very highest income folks and the very lowest and raises it on middle income people. And the people who have been hurt most by the Obama-economy are the middle class.

And so my plan is to take the middle class individuals and dramatically reduce their taxes by the following measure. And that is for middle income Americans, no tax on interest, dividends or capital gains. Let people save their money as the way they think is best for them, for their kids, for their future, for their retirement. We're taxing too much, we're spending too much and middle income Americans need a break and I'll give it to them.

Believe in America Plan

On September 6, 2011, Governor Romney came out with his Believe in America economic plan. The 160 page plan had a 5 page summary. Governor Romney's plan consists of 5 bills that he would call for upon assuming office, and 5 executive orders that he would give after assuming office. These bills would include lowering the corporate income tax rate, implement free trade agreements, greater domestic energy production, cut non-security discretionary spending by 5 percent, and return retraining programs to the states.

The five orders that Governor Romney would issue on his first day as President would be the ending of Obamacare, a reduction in regulation started by President Obama, rapid issuance of drilling permits to developers with established safety records, sanctions on China for unfair trade policies, and reversing unfair labor practices put in place by President Obama.

• Tax Policy
  
  • Individual Taxes
    
    • Maintain marginal rates at current levels
    • Further reduce taxes on savings and investment
    • eliminate the death tax
    • Long term goal - pursue a flatter, fairer, simpler structure
  • Corporate Taxes
    
    • Lower the corporate income tax rate to 25%
    • Transition to a "territorial" tax system
• Regulatory Policy
  
  • Repeal and replace Obamacare and Dodd-Frank
  • Review and eliminate Obama-era regulations
  • Cap new regulatory costs at zero dollars
  • Require Congress to approve all major regulations
  • Reform legal liability system
• Trade Policy
  
  • EXPANDED MARKETS
    
    • Implement pending Free Trade Agreements
    • Conclude Trans-Pacific Partnership and pursue additional agreements
    • Create Reagan Economic Zone
  • CONFRONTING CHINA
    
    • Increase enforcement of existing law
    • Impose punitive measures if unfair trade practices continue
• Energy Policy
  
  • SIGNIFICANT REGULATORY REFORM
    
    • Streamline and fast-track approval processes
    • Amend Clean Air Act to exclude regulation of carbon
  • INCREASED PRODUCTION
    
    • Conduct comprehensive survey of the nation’s reserves
    • Open reserves to exploration and production
  • RESEARCH AND DEVELOPMENT
    
    • Focus investment in basic research
    • Utilize DARPA-like funding mechanisms
• Labor Policy
  
  • Appoint experienced and even-handed arbiters to the NLRB
  • Guarantee businesses the right to allocate capital as they choose
  • Protect right of workers to choose whether to unionize
  • End funding of union political campaigns through paycheck deductions
• Human Capital Policy
  
  • RETRAINING WORKERS
    
    • Consolidate unwieldy sprawl of federal programs
    • Return authority, responsibility, and funds to states for retraining programs
    • Support private-sector participation in the process
  • THE BEST AND THE BRIGHTEST
    
    • Raise visa caps for highly skilled foreign workers
    • Give permanent residency to eligible advanced-degree recipients
• Fiscal Policy
  
  • Cut federal spending and cap it at 20 percent of GDP
  • Block grant Medicaid and pursue further entitlement reform
  • Reduce the federal workforce
  • Restructure the federal government
  • Pursue a Balanced Budget Amendment

Day One Job One

When Mitt Romney says that fostering job creation through economic growth will be his top priority from his first day in office, he means it. While some elements of his plan will take time to set in motion, much can be done from a running start. On Inauguration Day, he will submit a jobs package to Congress consisting of at least five major proposals and will demand that Congress act on the package within 30 days, using every power at his disposal to ensure its passage. He will also take immediate and specific steps within his sole authority as president by issuing a series of executive orders that gets the U.S. government out o f the economy’s way. The goal: restore America to the path of robust economic growth necessary to create jobs.

FIVE BILLS FOR DAY ONE

The American Competitiveness Act

• Reduces the corporate income tax rate to 25 percent

The Open Markets Act

• Implements the Colombia, Panama, and South Korea Free Trade Agreements

The Domestic Energy Act

• Directs the Department of the Interior to undertake a comprehensive survey of American energy reserves in partnership with exploration companies and initiates leasing in all areas currently approved for exploration

The Retraining Reform Act

• Consolidates the sprawl of federal retraining programs and returns funding and responsibility for these programs to the states

The Down Payment on Fiscal Sanity Act

• Immediately cuts non-security discretionary spending by 5 percent, reducing the annual federal budget by $20 billion

FIVE EXECUTIVE ORDERS FOR DAY ONE

An Order to Pave the Way to End Obamacare

• Directs the Secretary of Health and Human Services and all relevant federal officials to return the maximum possible authority to the states to innovate and design health care solutions that work best for them

An Order to Cut Red Tape

• Directs all agencies to immediately initiate the elimination of Obama-era regulations that unduly burden the economy or job creation, and then caps annual increases in regulatory costs at zero dollars

An Order to Boost Domestic Energy Production

• Directs the Department of the Interior to implement a process for rapid issuance of drilling permits to developers with established safety records seeking to use pre-approved techniques in pre-approved areas

An Order to Sanction China for Unfair Trade Practices

• Directs the Department of the Treasury to list China as a currency manipulator in its biannual report and directs the Department of Commerce to assess countervailing duties on Chinese imports if China does not quickly move to float its currency 

An Order to Empower American Businesses and Workers

• Reverses the executive orders issued by President Obama that tilt the playing field in favor of organized labor, including the one encouraging the use of union labor on major government construction projects 

Mitt Romney's PLan for Jobs and Economic Growth

The book released by the campaign underscores President Obama’s failed approach to each policy area crucial to turning around the economy, and lays out precisely how Mitt Romney will address the issues as president

TAX POLICY

Mitt Romney will push for a fundamental redesign of our tax system. He recognizes the need to simplify the system. He also recognizes the need both to lower rates and to broaden the tax base so that taxation becomes an instrument for promoting economic growth. As president, Romney will hold the line on individual income tax rates and eliminate taxes on interest, dividends, and capital gains for low- and middle-income taxpayers. He will eliminate the estate tax. And he will pursue a conservative overhaul that applies lower and flatter rates to a broader tax base.Romney will also reform the corporate tax system. He will immediately lowe rthe corporate income tax rate, and then explore opportunities to further lower the marginal rate while broadening the tax base. He will also begin the process for transitioning to a territorial corporate tax system. A territorial system must be designed to encourage multinational companies to bring their profits back into the U.S. and it must avoid the creation of incentives for outsourcing.

Rick Perry

Summary

The state of Texas pays for its operations through a state sales tax which is set at 6.25% with an allowance for an additional 2% to be added by the local municipalities.  The state gets between 35% to 45% of its revenue from taxes, 30%-45% from federal funds, and the rest from investments and other sources.

As a state legislator, Rick Perry voted for the largest tax increase in Texas history in 1987. The legislation took the sales tax from from 5 1/4 cents per dollar to 6 cents per dollar, increased corporate franchise taxes, and levied a new $110 annual "occupation tax" on 12 professional groups.

In 2004, Governor Perry opposed the possible creation of a state income tax, calling it a job killer. He stated that restructuring the property tax and bringing in more jobs would solve the state education funding problems and not the creation of an income tax.

Governor Perry strongly supported House Bill 3 in 2006, which was the eventual solution to reforming the franchise tax system. This legislation changed the manner in which business entities are taxed in Texas by (i) broadening the classes of business entities subject to the Texas franchise tax, (ii) replacing the manner of calculating the tax base using taxable capital or earned surplus with a "taxable margin," and (iii) changing the rate applied to the tax base.

The Franchise Tax no longer based on a taxable entity's net taxable capital or net taxable earned surplus, but rather on the taxable entity's "taxable margin." "Taxable margin" was to be calculated by determining a taxable entity's "margin," apportioning the margin to Texas, and then subtracting any permitted deductions. "Margin" is the lesser of (i) 70% of the taxable entity's total revenue on its entire business or (ii) the taxable entity's total revenue on its entire business minus either (a) its cost of goods sold or (b) its compensation. 

The Franchise Tax is calculated by multiplying a taxable entity's taxable margin by the tax rate of 1%, or 0.5% for retailers and wholesalers. No tax is owed if the tax due is less than $1,000 (raised from $100) or if the taxable entity's total revenue from its entire business does not exceed $300,000 (raised from $150,000) subject to adjustment based on changes in the consumer price index. 

In addition to HB3, Governor Perry supported and signed House Bill 1. This legislation stated that school districts can raise the tax rate only 4 cents one time. Beyond that, if local leaders want more money from taxpayers, they have to get voter approval. Even with voter approval, a 6 cent raise was the maximum.

In 2007, Governor Perry responded to a problem that he referred to as appraisal creep. Governor Perry noted that many municipalities were increasing the values of the houses in their districts to increase revenue so that they would not have to increase the tax rate to increase property tax revenue. He made a number of suggestions to prevent the appraisal creep. These suggestions included changing the constitution to lower the residential appraisal cap on city and county taxes from 10% to 5%, doubling the local property tax homestead exemption to $6,000, and allowing local governments the option of conducting an election to enact a half-cent countywide sales tax constitutionally dedicated to property tax reduction.

Governor Perry has signed the Americans for Tax Reform “Taxpayer Protection Pledge.” In signing the pledge, Governor Perry stated that left unchecked, governments too often surrender to the temptation to raise taxes as a way to solve every problem.

Govoernor Perry's 2012 Presidential tax plan consisted of a total makeover of the tax system. He proposed allowing people to move to a flat tax of 20% or stay within the current framework. Under the new system, some deductions such as charitable donations and mortgage exemption would still remain.

• Allow Individuals to Choose Between Existing Tax Code or New Flat Tax Systemrn
  • 20%
  • Preserve Deductions for Mortgage Interest, Charity, and State/Local Taxes
• Eliminate Tax on Social Security Benefits
• No Federal Sales Tax or Value-Added Tax
• Eliminate Tax on Qualified Dividends and Long-Term Capital Gains
• Eliminate the Death Tax
• Eliminate Corporate Loopholes and Special-Interest Tax Breaks
• Reduce Corporate Income Tax Rate to 20% to Enhance American Competitiveness
• Enhance American Competitiveness by Transitioning to a Territorial Tax System
• Allow Locked-Up Overseas Capital to be Brought Back to the U.S. at a Reduced Tax Rate

State Income from Taxes

The state of Texas receives it's revenue from a number of taxes. These include a sales tax, hotel tax, gas tax, and others. The state gets between 35% to 45% of its revenue from taxes, 30%-45% from federal funds, and the rest from investments and other sources.

1987 Tax Increase

In July of 1987 Rick Perry was serving as a Democrat in the Texas State Legislature when they passed what the Texas Taxpayers and Research Association called the largest tax increase ever passed in modern Texas. The bill raised the state sales tax from 5 1/4 cents per dollar to 6 cents per dollar, increased corporate franchise taxes, and levied a new $110 annual "occupation tax" on 12 professional groups.

The bill was supported by a majority of Republicans in the Legislature and opposed by most Democrats. It passed 78-70 with 56 Republicans voting in favor. Perry, a Democrat at the time, voted in favor of the tax increase. 

State Income Tax is a Job Killer

In May of 2004, Governor Perry warned against the possibility of using a state income tax to shore up funding for Texas schools. He stated that such a provision would be a job killer for the state.

Gov. Rick Perry Warns Legislators: Payroll Tax Will Kill Jobs in Texas
Monday, May 03, 2004 • Press Release

AUSTIN - As the Texas House prepares to begin debate on a school finance plan, Gov. Rick Perry today warned legislators about the job-killing impact that a proposed payroll tax would have in Texas.

"As the Texas House debates a school finance plan, I want them to hear publicly what I have already told Speaker Craddick and many legislators privately: I cannot support placing a higher tax burden on Texas workers and their wages," said Perry. "The only permanent solution to school finance is job creation."

Speaking at an Austin restaurant, Perry was joined by Texas Workforce Commission chair Diane Rath and several small-business employers who echoed the governor's concerns.

"As I have said on many occasions for many months, we cannot succeed in funding our schools and reducing property taxes if those goals are achieved at the expense of Texans' jobs. That is too high of a price to pay," Perry said. "A payroll tax and a Business Activity Tax will lead to the elimination and exodus of Texans' jobs and will greatly hamper our state's ability to attract new employers in the future."

A House committee last weekend voted on a school finance bill that includes a tax on employers' payroll. The bill is expected to be debated on the floor of the House this week.

Perry said if a payroll tax were imposed, it would mean many employers who operate on a small margin or are labor-intensive businesses would face difficult choices of laying off employees, reducing health care and other benefits, losing jobs to other states, or even closing down.

"Legislators don't have to cast a vote to send jobs out of state," Perry said. "They don't have to risk our economic fortunes and stop the migration of jobs and companies coming to Texas. I have offered them a plan that increases funding for education by $2.5 billion in new dollars, reduces property taxes initially by $3.2 billion, and protects not only the pocketbooks, but also the jobs, of the folks back home."

"We need a property tax cut that isn't financed on the backs of Texas workers, and at the expense of their jobs."

Perry added that the 68,000 new net jobs added in Texas over the past six months show that the Texas economy is moving in the right direction.

The legislature, he added, can provide additional property tax savings fueled by economic growth without adopting tax policies that constitute an economic u-turn.

Property Taxes and Education Funding

Throughout early 2004, Governor Perry and the state legislature dealt with budget issues in attempts to fund education appropriately while not increasing the state sales tax or instituting an income tax. Governor Perry proposed a four part plan to ensure that local municipalities did not overtax through property taxes. This included limiting the amount a the property tax could increased to 3% instead of 10%, limiting the amount of revenue local entities can raise from property taxes to the amount raised the previous year plus an inflation and population growth factor, and establishing appraisal district boards. He spoke about this plan in Houston, and Dallas and noted that a phenomenon known as appraisal creep was being used as a backdoor tax by increasing the values of home to increase the property tax.

Gov. Rick Perry Calls for 'True Property Tax Relief'
Proposals Will Protect Homeowners, Employers by Capping, Controlling Taxes

Thursday, March 11, 2004 • Press Release

HOUSTON - Gov. Rick Perry today proposed a series of measures that will provide Texans with real property tax relief and protect them against skyrocketing property tax increases in the future.

"We must learn from past experience that it is not good enough to just provide property tax relief. We must also provide appraisal relief," Perry said.

"Texans were told a property tax cut was on the way in 1997, but when they opened their bill many found that their rate cuts were offset by appraisal hikes. I want a tax cut to be a tax cut, not a sleight of hand where the end result means Texans pay more."

The governor's four-part plan will:

• Limit property appraisal increases for homesteads to 3 percent per year - significantly more protection compared to the current 10 percent cap.
• Limit the amount of revenue local entities can raise from property taxes to the amount raised the previous year plus an inflation and population growth factor.
• Require mandatory sales price disclosure for real property.
• Establish appraisal district boards of five elected officials who will be accountable to taxpayers.

Perry's plan also gives local taxpayers a stronger voice in their taxing destiny by requiring local taxing entities to get voter approval to exceed the revenue cap.

Perry noted that the median sales price of a Texas home is just under $129,000 and the annual property tax bill on that home is just over $3,500. Under current law, even without a property tax rate hike, that Texas homeowner could see his or her bill increase $350 in one year, and by even more in succeeding years.

"It's a phenomenon called appraisal creep and it is nothing less than a tax hike by any other name," Perry said.

The governor also noted the revenue cap on local taxing entities that he is proposing is similar to what is done in about half the other states. The proposal to tie property tax revenue to inflation and population growth will allow local governments to expand in proportion to rising costs and population.

"Fast-growth communities with high enrollment growth and large volumes of new construction will have more room in their budgets to keep up with growth," he added. "My plan allows for budgetary growth, but it doesn't fund bigger government just for bigger government's sake."

Perry emphasized that his plan will allow cities, counties, schools and special taxing districts to raise additional revenues beyond the caps, but only if they first get approval of a simple majority of voters.

A revenue cap on property taxes is important, he added, because it will make government more accountable to the people by requiring additional spending to be justified. Perry also said the state cannot allow a school property tax cut to be swallowed up by ever-increasing valuations, or tax hikes levied by cities, counties and special taxing districts.

"When we reduce school taxes, it will be very tempting for other taxing entities to fill the void," Perry said. "But Texans deserve a property tax cut, not a property tax charade."

Perry said he is joining the chorus of people all across the political spectrum who are seeking property tax relief. But he added homeowners are naturally skeptical of promises for property tax relief because of their experiences in 1997 - when the legislature approved a $1 billion biennial property tax cut and then saw it taken away by local jurisdictions that raised rates and appraisals.

"Had we implemented a revenue cap in 1997 tied to inflation and population growth, Texans could be paying about 20 percent less in property taxes today," Perry said.

To ensure property appraisal fairness and accuracy, Perry said, Texas also should require disclosure of real property sales prices - as some Texas appraisal districts and 35 other states already do.

Perry said his plan also addresses local entities' budget concerns by promising an end to unfunded mandates from the state.

The governor also said taxpayers will see increased accountability with restructured appraisal boards consisting of the county judge, the mayor of the largest city in a county, the mayor of another city selected by all other cities, the president of the largest school board, and the county tax assessor-collector.

"Those who spend our tax dollars should not only be accountable for how the money is spent, but how the money is raised," he said.

Perry also said he agrees with legislative leaders in calling for a cut in property taxes, but he said leaders continue to review options to determine how much of a tax cut might be achieved.

Perry also acknowledged that big-government, big-spending advocates will likely denounce his plan.

"They should keep in mind that when they show contempt for my property tax control plan, they are not just thumbing their nose at me, but at millions of homeowners and employers who have been under siege by skyrocketing property tax rates and valuations," Perry said.

2006 - HB3

On May 18, 2006 Governor Rick Perry signed HB3 into law. The legislation change the manner in which business entities are taxed in Texas by (i) broadening the classes of business entities subject to the Texas franchise tax, (ii) replacing the manner of calculating the tax base using taxable capital or earned surplus with a "taxable margin," and (iii) changing the rate applied to the tax base.

The Franchise Tax is no longer based on a taxable entity's net taxable capital or net taxable earned surplus, but rather on the taxable entity's "taxable margin." "Taxable margin" is calculated by determining a taxable entity's "margin," apportioning the margin to Texas, and then subtracting any permitted deductions. "Margin" is the lesser of (i) 70% of the taxable entity's total revenue on its entire business or (ii) the taxable entity's total revenue on its entire business minus either (a) its cost of goods sold or (b) its compensation. The election to subtract cost of goods sold or compensation is made by the taxable entity on its Franchise Tax report, and the election is valid for that report only. This approach allows the taxable entity to select the method that will produce a lower Franchise Tax liability.

The Franchise Tax is calculated by multiplying a taxable entity's taxable margin by the tax rate of 1%, or 0.5% for retailers and wholesalers. No tax is owed if the tax due is less than $1,000 (raised from $100) or if the taxable entity's total revenue from its entire business does not exceed $300,000 (raised from $150,000) subject to adjustment based on changes in the consumer price index.

Any increase in the tax rates must be approved by the voters in a referendum held specifically on the issue of raising the tax rates. The Legislature may decrease a tax rate without voter approval. However, any increase in the rate thereafter—even a return to the original rate—must be approved by the voters in a referendum. Governor Perry released a press statement noting the legislation.

Gov. Perry Signs Landmark Business Tax Reform
Legislation Makes Business Tax Fairer and Helps Deliver $15.7 Billion in Property Tax Cuts

Thursday, May 18, 2006 • Press Release

BROWNWOOD – Gov. Rick Perry today signed into law House Bill 3, legislation that provides comprehensive business tax reform but also helps deliver the largest property tax cut in the state’s history.

“Today I am proud to sign into law landmark business tax reforms that will provide greater fairness for employers, reliable funding for our school classrooms and revenue that will help deliver a record $15.7 billion property tax cut for the people of Texas,” Perry said.

Perry thanked state Rep. Jim Keffer, R-Eastland, who authored the legislation and participated in the bill signing, for shepherding the bill through the Texas House. Sen. Troy Fraser, R-Marble Falls, also attended the bill signing.

Perry noted that the old tax system has gaping loopholes that allow businesses with good accountants to avoid paying their share while other employers got stuck carrying an unfair tax load and schools struggled as revenue from the business tax steadily dwindled… and millions of homeowners who have been forced to make up the difference with skyrocketing local property taxes.

“When I put my signature on House Bill 3, that will all change,” he said. “Employers will benefit with a tax system that is fairer, a tax base that is broader and a tax rate that is substantially lower than the one we have today.

“And as the centerpiece of our school finance plan, House Bill 3 will help us lower school property taxes by 33 percent for every homeowner and every other property owner in Texas.”

House Bill 3:

• Rewards employers for creating jobs and investing in employee benefits. Every time a business puts a Texan to work, pays for health insurance or invests in a pension plan… their tax liability will go down.
• Protects small employers so that they can continue to drive Texas’ economic growth.
• Exempts sole proprietors and general partnerships from the tax, as well as businesses whose gross receipts total $300,000 or less, and those whose tax bill is less than $1,000.
• Rewards employers that create jobs and contribute to our economy, but also mandates that. Businesses that hire illegal immigrants will pay the price with higher taxes.

House Bill 3 is one of five bills in a package of legislation that provide the largest property tax reduction and the most comprehensive education reforms in decades.

Over the next three years, the owner of an average-priced home will see their property tax bill go down by nearly $2,000, Perry noted.

“This is tax relief that Texans can count on for more than just a year or two,” he said. “Every new dollar raised from tax reform will go straight back to the people in property tax cuts. And taxpayers will have more power to stop tax increases passed at the local level.”

School finance legislation passed by the legislature will:

• Reward every Texas teacher with a $2,000 pay increase and provides the largest teacher merit pay program in the nation.
• Invests millions of new dollars into dropout prevention and college readiness efforts.
• Guarantees a historic level of funding equity, and significantly reduces the impact of Robin Hood.
• Lowers Texans’ overall tax burden by some $7 billion.

Perry said that none of these achievements would have been possible without the historic reforms of House Bill 3, which were not only passed by bipartisan majorities in the House and Senate but supported by virtually every major employer association in the state.

“If you search the pages of Texas history, you will find no other tax reform plan that has been endorsed by manufacturers and service providers, retailers and realtors, education leaders and taxpayer advocates, the state’s largest business association, the chambers from every major Texas city, and thousands of large and small entrepreneurs across the state,” Perry said.

2006 - HB1

On May 31, 2006 Governor Perry signed HB1 into law. There were two main taxpayer provisions in the legislation. The first was that School districts could only raise the tax rate 4 cents one time. Beyond that, if local leaders want more money from taxpayers, they have to get voter approval. Previously, local school boards could raise tax rates by 6 cents every year without giving voters any say at the ballot box.

The second provision stated that if appraisal creep yields more revenue than voters have authorized, school districts must automatically seek voter approval to keep it. Governor Perry stated that he supported a lowering of the cap on appraisal increases, but the provision instead capped the amount of money school districts can receive from higher appraisals without a vote of the people. Governor Perry released a press statement after signing the law, calling it the largest tax cut in Texas history.

Gov. Perry Signs Largest Tax Cut in Texas History into Law
HB1 Provides $15.7 Billion Property Tax Cut, Gives Teachers More Money, Improves Schools

Wednesday, May 31, 2006 • Press Release

HOUSTON – Gov. Rick Perry today signed into law House Bill 1, which provides the largest tax cut in Texas history, a $2000 across-the-board pay raise for teachers, and major education reforms. “I wholeheartedly believe this is one of the most significant legislative accomplishments for Texas in a generation, because it is one of the most significant steps we have ever taken to improve opportunity for the next generation,” Perry said.

Perry thanked Senator Florence Shapiro of Plano and Representative Rob Eissler of Magnolia, who were present at the bill signing, for their work to secure the votes to pass House Bill 1. The measure passed with an overwhelming margin of 167-8 votes in the Texas Legislature.

“Because of their leadership, homeowners and businesses will save $15.7 billion on school property taxes over the next three years – enough to lower rates by 33 percent – and make the dream of homeownership more affordable for millions of Texas families,” Perry said. “And this is a tax cut Texans can take to the bank, and count on in the years to come.”

Taxpayer protections included in HB 1:

• School districts can raise the tax rate only 4 cents one time. Beyond that, if local leaders want more money from taxpayers, they have to get voter approval. Under current law, local school boards can raise tax rates by 6 cents every year without giving voters any say at the ballot box. (HB 1)
• If appraisal creep yields more revenue than voters have authorized, school districts must automatically seek voter approval to keep it. This provision will not lower the cap on appraisal increases – something Perry strongly supports – but it caps the amount of money school districts can receive from higher appraisals without a vote of the people.

“I have often said that Texans not only want more money for education, they want more education for their money. House Bill 1 achieves both of these important goals,” Perry said. “Teachers are the heart of any successful education effort, and their salaries should reflect the outstanding job they are doing to prepare our children for a lifetime of success. And those who have the greatest impact in the classroom should be rewarded even more.”

Education reforms included in HB 1:

• A $2,000 Pay Raise for Teachers: Legislators passed a $2,000 across-the-board pay raise for teachers, restoring the full amount of the teacher health stipend and building on the positive trend in teacher compensation that has seen salaries increase by $11,700 for teachers in the classroom since 1999.
• Performance Pay for Excellent Teachers: The legislation will create the largest performance pay plan in the nation to reward classroom excellence. With $260 million for bonuses of up to $10,000 per teacher for locally-designed incentive programs, and another $100 million for the Governor’s Educator Excellence Awards Program, Texas will take the national lead in rewarding educational excellence and attracting top-performing teachers to struggling campuses.
• Improving High Schools: HB 1 provides more than $1 billion over three years to reform Texas high schools and further the goals of the governor’s high school initiative, which are to reduce the dropout rate, replicate successful school models and prepare more students for college.
• Raising the Bar: Legislators strengthened the curriculum by requiring four years of math and science to better prepare students for the high-tech economy.
• Robin Hood Relief: By 2008, close to $1 billion in local property tax revenues will remain in local districts to be spent on local students instead of being exported to other areas of the state.
• Greater Funding Equity: The state will make a historic commitment to funding fairness, achieving up to 94 percent funding equity on enrichment dollars.
• Teacher Mentoring: Millions of dollars will be dedicated to teacher mentoring programs to keep young educators in the classroom.
• More Money for Schools: With $1.8 billion to fund teacher pay increases and classroom excellence initiatives, as well as funding provided last session, legislators have increased school funding by $3.4 billion in the current fiscal biennium.
• State Share Increases Dramatically: By next year, the state share of education funding will increase to 50 percent, reversing a trend scheduled to take us to 34 percent in FY2007 if nothing had been done.

“This session was a tremendous success. We passed a historic property tax cut, implemented business tax reforms supported by dozens of employer associations and chambers of commerce, and raised salaries for Texas teachers, even while lowering the overall tax burden by $7 billion,” Perry said. “And because of House Bill 1, school finance is now out of the courthouse, and back on constitutional footing.”

Appraisal Creep

Many districts in Texas were increasing their property tax revenues by increasing the value of the homes instead of increasing the tax rates. Governor Perry refers to this as appraisal creep. Governor Perry appointed a Task Force on Appraisal Reform which recommended five statutory changes and two constitutional changes which Perry supported.

• Require voter approval for any local taxing entity (excluding schools) to charge or collect revenues from ad valorem taxes in excess of the approved prior year’s budgeted tax revenue plus 5%.
• Improve fairness and consistency in the appraisal process. Appraisal boards would be comprised of five members, including two taxpayer representatives, and taxpayers would have new options in challenging property valuations.
• Change the comptroller’s property valuation study, which is used to equitably distribute state funding to schools, as well as provide uniformity in local property appraisal practices.
• Prohibit the state from passing unfunded mandates to local governments in the future.
• Require sales price disclosure.
• Change the constitution to allow taxpayers the option of calculating their property taxes using a 5-year rolling average of the property’s appraised value.
• Change the constitution to lower the residential appraisal cap on city and county taxes from 10% to 5%, double the local property tax homestead exemption to $6,000 and allow local governments the option of conducting an election to enact a half-cent countywide sales tax constitutionally dedicated to property tax reduction. The appraisal cap could be lowered to five percent only in counties that vote for a half-cent countywide sales tax increase.

Perry Praises Appraisal Reform Plan
Proposal will empower taxpayers, improve fairness and stop runaway appraisal growth

Tuesday, January 23, 2007 • Press Release

AUSTIN - Gov. Rick Perry today praised members of the Task Force on Appraisal Reform for their work and said he strongly supports their plan to reform Texas’ broken property appraisal system.

“Today’s recommendations provide better protections for taxpayers from silent tax hikes, more accountability through elected representation on appraisal review boards and greater tax predictability for homebuyers,” Perry said. “Taken together, this package will improve the accuracy of appraisals, prevent future unfunded state mandates on local government, and ensure taxpayers are no longer rendered powerless in stopping large tax and spending increases that often occur without even a vote of their local representatives.”

The Task Force’s report recommends that lawmakers pass five key statutory changes and two constitutional changes:

• Require voter approval for any local taxing entity (excluding schools) to charge or collect revenues from ad valorem taxes in excess of the approved prior year’s budgeted tax revenue plus 5%.
• Improve fairness and consistency in the appraisal process. Appraisal boards would be comprised of five members, including two taxpayer representatives, and taxpayers would have new options in challenging property valuations.
• Change the comptroller’s property valuation study, which is used to equitably distribute state funding to schools, as well as provide uniformity in local property appraisal practices.
• Prohibit the state from passing unfunded mandates to local governments in the future.
• Require sales price disclosure.
• Change the constitution to allow taxpayers the option of calculating their property taxes using a 5-year rolling average of the property’s appraised value.
• Change the constitution to lower the residential appraisal cap on city and county taxes from 10% to 5%, double the local property tax homestead exemption to $6,000 and allow local governments the option of conducting an election to enact a half-cent countywide sales tax constitutionally dedicated to property tax reduction. The appraisal cap could be lowered to five percent only in counties that vote for a half-cent countywide sales tax increase.

“There is nothing fair about property tax bills increasing 233 percent across Texas in less than 20 years, or a forty-six percent increase on residential homesteads in major metropolitan areas from 2000 to 2004,” Perry said. “If Texans are going to be taxed every year on the same property, there at least needs to be a belief among the public that every precaution is being taken to keep their tax bills from rising any faster than needed.”

“By making sales data available to appraisers, requiring elected officials to review the appraisal rolls and giving voters greater authority over total tax bills, we can protect Texans from skyrocketing tax bills, provide local governments the room for growth they need, and ensure that tax relief passed last year results in greater savings,” Perry said.

Call for Constitutional Amendments

In January of 2010, Governor Perry issued a press statement noting his desire to see two amendments made to the Texas Constitution. The first would require a 2/3 majority in the state legislature to raise taxes. The second would require the Legislature to ensure spending growth does not exceed the combined growth rates of inflation and our population here in Texas.

Gov. Perry Calls for Constitutional Amendments to Protect Texas Taxpayers
* Note: Gov. Perry frequently departs from prepared remarks.
Wednesday, January 06, 2010 • Fort Worth, Texas • Speech

Thank you, [REP] Kelly [Hancock] for that introduction and thank you to the folks here at M.L. Leddy's for having us here today.

You can't get much more Texas than the boot & saddle room here and you'd be hard-pressed to find a better example of the small businesses that form the foundation of our state's economy.

I want to thank everyone here for taking part in an essential conversation about the future of our state.

We're here today to talk about one of the core elements of the relationship between government and citizens: trust.

I believe that government is bound by a sacred trust with the consent of the governed to ensure the rights and freedoms of citizens are never trampled in the rush to be all things to all people.

It is time to take specific steps to guard that trust specifically when it comes to the dollars that go from taxpayers' pockets into public coffers.

Here in Texas, we have a history of maintaining that trust making tough choices in the pursuit of fiscal discipline while others freely increased taxes and spending.

Back in 2003, when we faced a $10 billion budget deficit we heard the calls to raise taxes but we opted to follow the same approach required of a family or a business when times are tough we rolled up our sleeves and got to work.

We ranked our priorities and made tough decisions choosing to find dollars through spending cuts instead of massive tax increases.

We caught our share of flak for some of those decisions but the tough choices we made set the stage for years of prosperity and our state's current status as the nation's economic leader

As the national economy has spiraled downward our low taxes, predictable regulations, and fair legal system have enabled us to weather the storm better than most, if not all, of our fellow states. In fact, last year, while other states were scrambling to make ends meet, we were able to balance our budget protect billions in our Rainy Day Fund and give major tax relief to 40,000 small business owners.

Here in Texas, we are fortunate to have fiscally conservative leaders who will make the tough calls instead of pushing the hard choices down the road.

When government resorts to endlessly expanding its programs or throttling economic growth by raising taxes everyday citizens pay the price.

As that particular mindset holds sway over Washington DC, it is more important than ever that we take clear steps to protect our citizens from the excesses of unrestrained government at every level.

That's why I'm proposing two new amendments to the Texas Constitution. The first will require a two-thirds vote of the entire Texas Legislature to raise any taxes.

This sets a nice high hurdle for lawmakers inclined to raise taxes requiring broader support for decisions of this magnitude.

The second would require the Legislature to ensure spending growth does not exceed the combined growth rates of inflation and our population here in Texas.

This would allow the state to keep pace with a growing population and account for the upward pressure exerted by inflation while protecting the hardworking Texas families from those who want to raise their taxes and expand the size, reach and power of government in their lives.

These two sensible amendments will essentially engrave our proven fiscal disciplines into the bedrock of state law expressing our commitment to taxpayer protections in the clearest terms while increasing the stability and predictability that set Texas apart. This brings me to my third proposal to protect taxpayer dollars and strengthen the public trust.

Over the years, we have taken important steps to better prevent, detect, and eliminate waste, fraud and abuse in state government.

Whether you're a state agency or do business with the state we have made it clear you must exercise the highest integrity and maintain the clearest accountability when it comes to taxpayer dollars.

One of the best examples is our Health and Human Services Commission whose Office of Inspector General was created by the legislature in 2003 in a bill authored by Rep. Wohlgemuth.

Since its establishment, that office has closed more than 420,000 investigations against healthcare providers and clients and recovered or saved more than $4.6 Billion. These are real dollars we're talking about real tax dollars and we need to steward them wisely.

At agencies like the Health and Human Services Commission, Inspectors General have provided strong, independent oversight wisely exercised their authority to launch investigations and recovered taxpayer dollars in the process.

Following this example, we should establish a statewide Office of Inspector General working across state agencies to identify and investigate fraud and abuse.

This statewide OIG will provide strong, independent oversight of agencies and help our hardworking state employees be even more efficient and effective when it comes to taxpayer dollars.

These three proposals give us the best chance to strengthen our state's fundamental taxpayer protections and sustain that essential trust relationship with our citizens no matter what the future holds.

Discussion on Taxes

Common Sense Debate - Property Taxes

In the Common Sense debate, Governor Perry states that he supports a national sales tax that replaces the income tax, but opposes replaces property taxes with a higher state sales tax.

No Tax Pledge

Gov. Perry Signs Americans for Tax Reform “Taxpayer Protection Pledge”

October 1, 2009

Joins ATR President Grover Norquist in commitment to oppose tax increases in Texas

AUSTIN – Gov. Rick Perry today joined Americans for Tax Reform President Grover Norquist to sign the “Taxpayer Protection Pledge” where he committed to opposing any efforts to raise taxes while governor of Texas.

“Left unchecked, governments too often surrender to the temptation to raise taxes as a way to solve every problem,” Gov. Perry said. “Unfortunately, we have a ringside seat to that process as the folks in Washington leave no stone unturned in their search for ways to tax and spend more. Without sensible limits in place, government will continue moving toward that tempting flame of raising taxes. This pledge helps deter that movement, and it is my pleasure to sign it today.”

Gov. Perry has been a longtime champion of efforts to maintain low taxes, which have been a key component to upholding Texas’ strong economy in the midst of the national recession. In an endeavor to bring more fiscal discipline to the legislative process, Gov. Perry this week proposed a constitutional amendment requiring a two-thirds vote of the Texas legislature before raising taxes on Texans. In his remarks, the governor also pointed to the state’s recent accomplishment of cutting taxes for more than 40,000 small businesses by raising the business franchise tax revenue exemption to $1 million. Earlier this week, he announced a proposal to make that tax cut permanent.

"Governor Perry's dedication to conservative principles and fiscal responsibility has facilitated the Lone Star State's tremendous economic growth during his tenure,” said Norquist. “At a time when lawmakers in Washington are considering Cap & Trade legislation that is estimated to cost families an upwards of $4,000 per year and a health care bill that will levy thousands of dollars in higher taxes on millions of families, Governor Perry's assurance that taxes won’t be raised at the state level under his watch is as important as ever. Americans for Tax Reform applauds Gov. Perry for making this important commitment and encourages all candidates for office to sign the Pledge."

Gov. Perry is the first governor since World War II to sign a budget cutting general revenue spending which he has done twice; when Texas faced a $10 billion shortfall in 2003, he led the charge to balance the budget by cutting discretionary spending instead of raising taxes; in 2006, Gov. Perry signed a $15.5 billion property tax cut for home and business owners, the largest tax cut in state history; he has also championed greater truth-in-budgeting and budget transparency practices by calling to reduce budget diversions, spending tax dollars on the purpose for which they are collected, and post agency spending online so Texans can see how their tax dollars are spent.

The Taxpayer Protection Pledge was created by Americans for Tax Reform in 1986 in an effort to hold candidates and incumbents accountable to keeping their campaign promises not to raise taxes. The pledge solemnly binds candidates to opposing any and all tax increases and is considered binding as long as an individual holds the office for which he or she signed the Pledge. Today the Taxpayer Protection Pledge is offered to every candidate for state office and to all incumbents. To date, 34 U.S. Senators and 172 members of the U.S. House of Representatives have signed the Pledge. Additionally, seven governors and over 1,100 state legislators have signed the Pledge. 33 members of the Texas legislature have taken the Pledge.

To view Gov. Perry’s remarks from the event, visit www.RickPerry.org/taxpayer-protection-pledge

Texas Taxes

The state of Texas does not have an income tax. The state pays for it's operations using an income tax and to a much lesser extent, a franchise tax. The property tax is a local item that is dealt with at the county or municipal level. The state’s current sales tax rate is 6.25 percent and is imposed on all retail sales, leases and rentals of goods purchased in the state, and taxable services. Each local district is allowed to add up to 2 cents per dollar for local costs. This makes the total payable sales tax throughout the state %8.25. There are a handful of goods and services exempt from taxation, including food for home consumption, over the counter medicine, and legal and medical services.

During the 2008-09 biennium, Texas changed the method by which state franchise taxes were collected. Through 2008, the franchise tax was collected on the basis of the amount of capital and earned surplus from a business. Starting in 2009, franchise taxes were collected on the basis of taxable margin. The franchise tax is a levy on doing business in the state of Texas. Businesses that earn more than the threshold of revenue set by the Texas Legislature are required to pay a one percent tax on the smallest value of either: 70 percent of total revenue, total revenue minus cost of goods sold, or total revenue minus total compensation plus benefits. The current threshold is $1 million for 2010 and 2011, and $600,000 thereafter. (Text taken from source)

 

Texas Taxes and Rates

911 Emergency Service Fee	$.50 per month
911 Equalization Surcharge	One percent (1%) of the customer's intrastate long-distance charges each month
911 Prepaid Wireless Emergency Service Fee	Two percent (2%) of the purchase price of each prepaid wireless telecommunications service
911 Wireless Emergency Service Fee	$.50 per month
Automobile Burglary and Theft Prevention Authority (ABTPA) Assessment	$1 per motor vehicle year (imposed on insurance company)
Automotive Oil Sales Fee	one cent per quart of automotive oil imported or sold in Texas
Bank Franchise	1.0% (.01) for most entities 0.5% (.005) for qualifying wholesalers and retailers* 0.575% for those entities with $10 million or less in Total Revenue
Battery Sales Fee	$2 per battery of less than 12 volts. $3 per battery with a capacity of 12 volts or more.
Boat & Boat Motor	6 1/4% (.0625) of sales price minus any trade-in allowance. 6 1/4% (.0625) use tax less credit for taxes paid to another state.
Cement Production	$.55 per ton or $0.0275 for each 100 pounds or fraction of 100 pounds of taxable cement.
Cigarette	Permits: Cigarette permits: distributors, manufacturers with representation in Texas, and bonded agents - $300 per annual permit year from March 1 through last day of February of following year; wholesalers - $200 per annual permit year from March 1 through last day of February of following year. Distributors and wholesalers who sell cigarettes and tobacco products must obtain a permit for each vehicle used - $15 per annual licensing period. There is no fee for an importer permit and no fee to register as a manufacturer with no representation in Texas. Retailers - $180 for a two-year period of June 1 through May 31 of even-numbered years. Fees For a conventional package of 20 cigarettes, the tax is $1.41 cents per pack. For a package of 25 cigarettes, the tax is $1.7625 cents per pack.
Cigar, Tobacco Products	Cigars one cent per 10 or fraction of 10 on cigars weighing three pounds or less per thousand; $7.50 per thousand on cigars that weigh more than three pounds per thousand, sell at factory list price, exclusive of any trade discount, special discount, or deal, for 3.3 cents or less each; $11 per thousand on cigars that weigh more than three pounds per thousand, sell at factory list price, exclusive of any trade discount, special discount, or deal, for more than 3.3 cents each and contain no substantial amount of non-tobacco ingredients; and $15 per thousand on cigars that weigh more than three pounds per thousand, sell at factory list price, exclusive of any trade discount, special discount, or deal, for more than 3.3 cents each and contain a substantial amount of non-tobacco ingredients.
Cigarette/Tobacco Advertising Fee	10% (.10) of the gross sales price of any outdoor advertising of cigarettes or tobacco products in Texas
Coastal Protection	1.333 cents per barrel of crude oil or condensate
Coin-Operated Machines Tax	Registration certificate: $150; occupation tax permit: $60; general business license: $200 for 50 or fewer machines, $400 for 51-200 machines, $500 for 201 or more machines; import license: $500; repair license: $50.
Controlled Substances	Marijuana: $3.50 per gram, 4 oz. minimum; Other Substances: $200 per gram, 7 g. minimum; $2000 per 50 dosage units, 50 minimum, 50 unit increment. A partial gram or increment is treated as a whole.
Crude Oil	Oil production tax: 4.6% (.046) of market value of oil. Reduced Oil Production Tax Rates for Certified Exemptions: Enhanced Oil Recovery Exemption (EOR) 2.3% (.023) of market value of oil; Incremental Production Exemption 2.3% (.023) of market value of oil; Co-Production Project Exemption 2.3% (.023) of market value of oil; Three Year and Two Year Inactive Well Exemptions 0.0% (.000) of market value of oil. Regulatory Tax: 3/16 of a cent ($.001875) per barrel. Regulatory Fee: 5/16 of a cent ($.003125) per barrel for report periods prior to September 2001. For report periods September 2001 and later, 5/8 of a cent ($0.00625) per barrel
Diesel Fuel	Twenty cents ($.20) per gallon on diesel fuel removed from a terminal, imported, blended, sold to an unauthorized person, or other taxable use not otherwise exempted by statute.
Fireworks	2% (in addition to sales tax)
Franchise	1.0% (.01) for most entities, 0.5% (.005) for qualifying wholesalers and retailers*, 0.575% for those entities with $10 million or less in Total Revenue
Gasoline	Twenty cents ($.20) per gallon
Hotel	6% (.06) of the cost of a room
Inheritance	No Inheritance Tax after 2005
Insurance Maintenance Tax - Workers' Compensation Research	Variable
Insurance Maintenance Taxes - Texas Department of Insurance	Variable
Insurance Maintenance Tax - Division of Workers Compensation/Office of Injured Employees Counsel	Variable
Insurance Premium Tax - Independently Procured	4.85% (.0485) of taxable premiums - A tax is imposed on insurance policies that are negotiated outside the state of Texas and are procured from a non-licensed insurance company.
Insurance Premium Tax - Licensed Insurers	Life, Accident and Health insurers: 1.75% (.0175) Property and Casualty insurers: 1.6% (.016) Reciprocal or Interinsurance Exchanges: 1.7% (.017) Title insurers: 1.35% (.0135)
Insurance Premium Tax - Surplus Lines/Purchasing Groups	4.85% (.0485) of taxable premiums
Insurance Premium Tax - Unauthorized Insurance	4.85% (.0485) of taxable premiums
International Fuel Tax Agreement (IFTA)	Tax rate is set by each of the member jurisdictions.
Liquefied Gas	Fifteen cents ($.15) per gallon.
Loan Administration Fee	$.50 of each administrative fee charged for a secondary mortgage loan. $1.00 of each administrative fee charged for a non-real property loan.
Local Property	Varies Locally
Local Sales and Use	Up to 2% for a combined total of 8.25%
Manufactured Housing	5% of 65% or .0325 of the sales price stated on invoice.
Miscellaneous Gross Receipts	Percentage of gross receipts from business done in incorporated cities and towns, according to population: 1,001 to 2,499 = .581% (.00581) 2,500 to 9,999 = 1.07% (.0107) 10,000 or more = 1.997% (.01997)
Mixed Beverage Tax	14% (.14) of gross receipts.
Motor Fuels Transporters	Quarterly report required
Motor Vehicle - Gross Rental Receipts	10% (for contracts of 1-30 days) of gross receipts
Motor Vehicle - Local Sports and Community Venue Sales and Use	Houston - Harris County - .0500 of the rental cost City of Euless - .0500 of the rental cost Bexar County - .0500 of the rental cost Hill Country Village - .0200 of the rental cost
Motor Vehicle - Sales and Use	Sales: 6 1/4 % (.0625) of sales price, minus any trade-in allowance. The taxable value of private-party purchases of used motor vehicles maybe based on the Standard Presumptive Value. Use: Texas residents — 6 1/4 % (.0625) of sales price, less credit for sales or use taxes paid to other states, when bringing a motor vehicle into Texas that was purchased in another state. New residents — $90 new resident fee due in lieu of use tax on a vehicle brought into Texas by a new resident, if the vehicle was previously registered in the new resident's name in another state or foreign country. Even Exchange: $5 Gift: $10
Motor Vehicle - Seller-Financed Sales	6 1/4 percent (.0625) of gross receipts.
Motor Vehicle - Texas Emissions Reduction Plan (TERP) Registration Surcharge	10% of the total fees due for the registration of the truck-tractor or commercial motor vehicles.
Motor Vehicle - Texas Emissions Reduction Plan (TERP) Surcharge	The rate for model years 1996 and earlier is 2.5 percent of the total consideration paid for the vehicle, while the rate for model years 1997 and later is one percent.
Natural Gas	Gas: 7.5% (.075) of market value of gas. Condensate Production Tax: 4.6% (.046) of market value of gas. Regulatory Fee: For report period prior to September 2001, 1/30 of a cent (.000333) for thousand cubic feet of gas produced. For report periods September 2001 and later, .000667 for thousand cubic feet of gas produced.
Office of Public Insurance Counsel (OPIC) Assessment	Property and Casualty insurers: $.057 per policy in force at year end Life, Accident, and Health insurers: $.057 per initial policy or certificate of coverage placed in force during the year Health Maintenance Organizations: $.057 per initial policy or certificate of coverage placed in force during the year Title insurers: $.057 per new owner policy written during the calendar year
Oil & Gas Well Servicing	2.42% (.0242) of taxable services
Oyster Sales Fee	$1 per 300lb-barrel of oysters taken from Texas waters.
Pari-Mutuel	Horse and Greyhound 1% for live pools in excess of $100 million but less than $200 million 2% for live pools in excess of $200 million but less than $300 million 3% for live pools in excess of $300 million but less than $400 million 4% for live pools in excess of $400 million but less than $500 million 5% for live pools in excess of $500 million Simulcast: 1% same species simulcast pools 1.25% cross species simulcast pools
Petroleum Products Delivery Fee	$ 3.75: Less than 2,500 $ 7.50: 2,500 but less than 5,000 $11.75: 5,000 but less than 8,000 $15.00: 8,000 but less than 10,000 $ 7.50: Each 5,000 gallon increment on 10,000 gallons or more
Property Tax	Determined Locally
Public Utility Gross Receipts Assessment	1/6 of 1% (.001667) of gross receipts from rates charged to the ultimate customers in Texas.
Retail Charge Account Delinquency Fee	Fifty cents ($.50) for each delinquency charge in excess of $10
Retaliatory Tax	If the aggregate tax, assessment, and fee burden of another state exceeds the aggregate burden in Texas based on the same amount of premium writings, a retaliatory tax is imposed equal to the difference between the states.
Sales & Use	State - 6 1/4% (.0625) City - 1/4% (.0025) - 2% (.02), depending on local rate. County - 1/2% (.005) - 1.5% (.015), depending on local rate. Transit - 1/4 % (.0025) - 1% (.01), depending on local rate. Special Purpose Districts - 1/8% (.00125) - 2% (.02), depending on local rate.
School Fund Benefit	$.04875 per gallon on commercial passenger vehicles
Sexually Oriented Business Fee	$5 for each entry by each customer admitted to the business.
Sulphur	$1.03 per long ton of sulphur produced
Texas Emissions Reduction Plan (TERP) - Off Road Heavy Duty Diesel Equipment Surcharge	2% on the sales or lease price
Telecommunications Infrastructure Fund (Repealed)	1.25% (.0125) of receipts from taxable telecommunications services that are subject to sales tax.
Volunteer Fire Department Assistance Fund Assessment	Assessment is set based on the premium volume each year to generate $30 million in revenue.

 

The Western Debate

In October of 2011, Governor Perry participated in the Western Debate in Las Vegas. He spoke about his opposition to Herman Cain's 9-9-9 plan and Governor Romney's plan.

COOPER: Governor Perry, in your state, you have a 6.25 percent sales tax. Would taxpayers pay more under the 9-9-9 plan?

PERRY: No.

Herman, I love you, brother, but let me tell you something, you don't need to have a big analysis to figure this thing out. Go to New Hampshire, where they don't have a sales tax, and you're fixing to give them one.

They're not interested in 9-9-9. What they're interested in is flatter and fairer. At the end of the week, I'm going to be laying out a plan that clearly -- I'll bump plans with you, brother, and we'll see who has the best idea about how you get this country working again.

And one of the ways, right here in Nevada you've got 8-plus percent. You want nine cents on top of that, and nine cents on a new home -- or 9 percent on a new home, 9 percent on your Social Security, 9 percent more?

I don't think so, Herman. It's not going to fly.

Michigan Economic Debate

In November of 2011, Governor Perry participated in the Michigan economic debate. While speaking about the economy, he discussed his tax plan and his support for a flatter tax and a fair tax.

CRAMER: Governor Perry, 30 seconds to you.

Do you think that companies can both be profitable and be able to create jobs? Do you think it's a dichotomy? Do you think they can do it?

PERRY: There better be. And that's the reason the tax plan that I laid out, a 20 percent flat tax on the personal side and a 20 percent corporate tax rate, that will get people working in this country. We need to go out there and stick a big old flag in the middle of America that says "Open for business again."

...

LIESMAN: But, Governor -- Governor Perry, every quarter I get to report the GDP figures, and it's a negative number for housing, and we've lost some 2 million construction jobs. Housing creates jobs, as well, doesn't it?

PERRY: Not a negative number in Texas. And one of the reasons is because we have put policies into place that follow my plan to get America back working again.

LIESMAN: OK, so translate that plan to America.

PERRY: When -- when you look at what I've laid out, whether it -- the energy side and getting the energy industry going -- and Rick Santorum is absolutely correct on that, is let's get our energy industry freed up, federal lands, federal waters, pull back all of those regulations. Everybody on this stage understands it's the regulatory world that is killing America.

(APPLAUSE)

The tax side of it, yeah. Have a flat tax. Have a corporate flat tax in there, as well. But the real issue facing America are regulations. It doesn't make any difference whether it's the EPA or whether it's the federal banking -- the Dodd-Frank or Obamacare. That's what's killing America.

And the next president of the United States has to have the courage to go forward, pull back every regulation, since 2008, audit them for one thing: Is it creating jobs, or is it killing jobs? And if that regulation is killing jobs, do away with it.

Campaign Website Statements

Tax and Budget Reform

Property Tax Reform

Governor Perry supports the recommendations of the Texas Task Force on Appraisal Reform on how to address Texans’ continuing concerns over skyrocketing property appraisals. The following measures currently before the Legislature will provide better protections for Texas taxpayers and put a stop to runaway appraisal creep:

• Voter approval required for any property tax revenue increases that exceed 5 percent.
• Elected representation on appraisal review boards.
• Prevent future unfunded state mandates on local government.
• Require sales price disclosure to increase appraisal accuracy.
• Greater tax predictability for homebuyers.
• Better protections for taxpayers by giving local communities the ability to

lower the appraisal cap to 5% and double the homestead exemption.

Taken together, this package will improve the accuracy of appraisals, prevent future unfunded state mandates on local government and ensure taxpayers are no longer rendered powerless in stopping large tax and spending increases that often occur without even a vote of their local representatives.

State Budget Reform

Governor Perry has proposed a series of budget reforms that establish a new, higher standard for fiscal responsibility and truth-in-budgeting while meeting key priorities for Texas. The governor’s budget slows government growth, provides $15 billion in property tax relief, invests in healthcare and higher education, eliminates accounting gimmicks, and grows the Rainy Day Fund to more than $4 billion:

• Stricter state spending cap tied to the average of inflation and population growth, which during this session would be 3.5 percent lower than the current limit.
• Apply the spending cap to all state funds.
• Exclude property tax relief from the spending cap because it is illogical that the limit—which was intended to protect taxpayers from excess government spending—actually ends up harming taxpayers by constraining tax relief.
• Eliminate flawed budget gimmicks through one-time adjustments and give the taxpayers the honest transparent budget they deserve.
• Eliminate, return, or use dedicated funds as promised. Governor Perry believes a tax or fee collected for a specific purpose should be used for that purpose, or returned.

In a time of record revenues, there is a temptation to spend more than we can sustain in the years to come. That is why it is critical for the legislature adopt these budget reforms now and exercise spending restraint. Governor Perry believes the principles of disciplined governance, fiscal responsibility and truth-in-budgeting must be embodied in the state budget.

Gov. Perry - A Fiscal Conservative

As the national and global economies struggle to recover from their financial woes, Texas is displaying strength that is built on conservative fiscal discipline.

Overcame Budget Shortfall. Back in 2003, Texas overcame a $10 billion budget hole without raising taxes by making tough choices to effectively prioritize and cut spending. Six years later, our Rainy Day Fund is on its way to $8 billion.

Reducing Spending. There have been only two state budgets since World War II that cut general revenue spending in Texas, and Gov. Perry signed them both. Gov. Perry has line-item vetoed more than $3 billion in unnecessary spending from state budgets, more than all other Texas governors combined.

Cutting Business Taxes. During the 81st Legislature, Gov. Perry called for and signed HB 4765, which exempts small businesses with less than $1 million in gross revenues from the state’s franchise tax, up from $300,000. This is expected to spare 40,000 small local employers from paying any franchise tax, saving them $172 million in taxes, money which now can go to paying employees, expanding their businesses and otherwise bolstering the Texas economy. In 2006, Gov. Perry also signed legislation, which has to date saved Texans an estimated $16.4 billion in property taxes.

Gov. Perry on Economic Development in Texas

Texas has consistently been ranked as one of the best places to do business in the nation under Gov. Perry’s leadership.

Aggressive Job Creation. Since July 2003, Texas has created more than 1 million net new jobs. In 2008, more than half of the jobs created in the entire nation were created in Texas. In October and November of 2009, Texas gained 70,000 jobs while the nation as a whole lost 122,000 jobs. The Texas Enterprise Fund, the largest job creation fund of its kind in the nation, began under Perry in 2003 and is generating more than 55,000 new jobs and $15 billion in capital investment for Texas.

Record Property Tax Reductions. Gov. Perry championed $15.5 billion in property tax reductions, which resulted in a 33 percent decrease in school property tax rates for Texas homeowners and businesses.

Texas is Succeeding. Click here to see the dozens of accolades and awards Texas has received for its strong economy and friendly business climate.

2012 Tax Plan

FIX THE TAX CODE

America’s tax code is broken. American families and businesses spend more than 6 billion hours and hundreds of billions of dollars each year attempting to comply with the filing requirements of our nation’s increasingly complex tax code.1 One study estimates that annual tax compliance costs will reach $483 billion by 2015 if no fundamental reforms are made to the tax code.2 The Internal Revenue Service’s (IRS) own Taxpayer Advocate Service testified before Congress that the current tax code imposes excessive compliance burdens, is filled with special tax breaks, creates opportunities for abuse, and promotes non-compliance. Over the last decade the federal tax code has been changed 4,428 times – an average of more than once a day – including 579 new changes in 2010 alone.3 The current tax code is more than 3 million words long; the mere instructions accompanying the 1040 form exceed 100 pages.4

It is no wonder that 60 percent of all individual income tax filers are forced to hire professional tax preparers to help them navigate the tax code.5 But unfortunately for the individual taxpayers being represented, the professional tax preparers even have issues: a Government Accountability Office (GAO) on-site investigation of professional preparers found evidence that the professionals did not always know what they were doing either.6 “Tax payers relying on paid preparers to provide them with accurate, complete, and fully compliant tax returns may not get what they pay for,” GAO wrote.7 “Nearly all of the returns prepared for us were incorrect to some degree, and several of the preparers gave us very bad tax advice[.]”

Innocent taxpayers are being held hostage by a monstrous system of taxation that only grows worse with each passing year. American families deserve a system that is low, flat and fair. They should be able to file their taxes on a postcard instead of a massive novel-length document.

Changes are also needed for the nation’s corporate tax system to make America once again the best place in the world to start and grow a business. At 39.2%, the combined federal-state corporate tax rate in the U.S. is the second-highest overall rate in the world among OECD nations.8 And while statutory rates have been falling worldwide for the past two decades, corporate tax rates in the U.S. have not, as 2011 marks the twentieth straight year in which the U.S. corporate tax rate has exceeded the average of other OECD nations.9 The disparity in corporate tax rates between the U.S. and the rest of the world has put the U.S. at a distinct competitive disadvantage. Because the higher tax rates increase the cost of capital and required return on new investments, many corporations choose to invest elsewhere, costing the U.S. valuable jobs and revenue.10 America needs to send the message to the rest of the world that the U.S. is open for business.

Compliance Costs Broken Status Quo

The corporate tax code is also riddled with loopholes and special-interest tax breaks that are not available to hard-working individual taxpayers. While many families struggle to pay their tax bills, some billion-dollar corporations find a way to avoid paying any federal taxes at all. While individual Americans struggle every year with tax compliance, large companies spend billions on tax avoidance. Special-interest corporate tax breaks and loopholes need to be eliminated so that small businesses and large corporations can compete on a level playing field.

Tax complexity also makes it possible for some individuals and businesses to entirely avoid paying taxes they owe. The National Taxpayer Advocate testified that reducing complexity and simplifying the tax would “improve compliance by taxpayers” and that “complexity creates opportunities for abuse that can be exploited by those who want to avoid their tax obligations.”11 The gap between what is owed and what is collected in tax revenue could be as high as $345 billion each year.12 Non-compliance by some individuals and businesses increases the tax burden on the millions of Americans who jump through hoops to follow the law and pay their taxes on time.

The American tax code is too big, too complicated, and too riddled with loopholes and special interest tax breaks that increase compliance costs and impede economic growth. Tinkering around the edges of the code will do nothing to provide families and job creators with the long-term certainty they need to make new investments or hire new workers.

High Cost of Tax Code Compliance

Implementing a simple flat tax plan that protects lower- and middle-income families and eliminates special-interest corporate tax breaks is the best way unleash economic growth and free the country’s entrepreneurs and job creators from the shackles of an incomprehensible tax code.
Institute Individual Flat Income Tax Rate of 20%

By implementing a simple and optional flat tax that will allow Americans to file their taxes on a postcard, up to $483 billion a year could be saved by American families and businesses in reduced compliance costs alone.13 A simpler, flatter tax code – free from the dozens of individual carve-outs that make the code so incomprehensible – will remove the disincentives to work, entrepreneurial risk-taking, and investment that form the foundation of a strong and vibrant economy.

Lower- and middle-income families will be able to take advantage of an optional 20% flat tax rate that includes generous standard exemptions of $12,500 for individuals and their dependents, as well as deductions for mortgage interest, charitable contributions, and state and local taxes.

Nearly two dozen countries worldwide have adopted flat tax systems, with thirteen of them transitioning to the new system within the last decade.14 Estimates by the non-partisan Tax Foundation show significant taxpayer savings from reduced compliance costs alone. If given the option of a simple, postcard-sized tax return, individual taxpayers could save thousands of dollars each year in tax compliance costs.15 And by removing the myriad distortions in the current tax code that impede the efficient allocation of capital, economic growth will be unleashed across the country, creating new jobs and higher incomes for all Americans.

The new flat individual income tax system will be designed so that federal individual income tax receipts will be equal to approximately 8% of the country’s gross domestic product (GDP), in line with the historical share of federal individual income tax revenue relative to the size of the economy 16 The cumulative tax changes proposed, including those to the corporate income tax system, will be designed so that total federal revenues average 18% of GDP, the 50-year U.S. average for federal tax receipts.17 The federal payroll tax will not be affected by the new flat tax system.

Allow Individuals to Choose Between Existing Tax Code or New Flat Tax System

Under the new flat tax system, taxpayers will have the ability to opt-in to the new system or remain under the existing tax code. Those families or small business owners who made investment decisions years ago based upon the structure of the existing tax code will have the freedom to remain in the current system if they so choose. And taxpayers who desire a simpler, less expensive system are free to move into the optional new flat tax system and take advantage of a postcard-sized tax return that could be filled out in minutes.

Preserve Deductions for Mortgage Interest, Charity, and State/Local Taxes

Although the proposed flat tax system will not include most special tax credits or deductions embedded within the existing system, families and business that made investment decisions years ago based on the existence of those deductions or credits will still have the option to take advantage of those deductions and credits by remaining within the existing tax system. However, the new optional flat tax system will also include deductions for mortgage interest, charitable contributions, and state and local taxes.

Eliminating the deduction for mortgage interest payments could potentially drive housing prices down even further, while eliminating the deduction for charitable contributions could potentially reduce private funding for non-profits that provide vital services to the less fortunate in the midst of a severe economic downturn. And because interest expenses are taxable when received by the lender, the mortgage interest deduction at the personal level maintains overall tax neutrality for the expenditure. Federal taxpayers should also not be punished for tax decisions imposed on them by their state or local governments. Since families are never able to actually use the income they pay in taxes to state and local governments, it makes sense to also retain the deduction for state and local tax payments.

Eliminate Tax on Social Security Benefits

Because the Social Security system is structured as a pay-as-you-go system where current workers largely provide benefits to current retirees, it makes little sense to tax the benefits of current retirees in order to provide benefits to current retirees. Approximately 17 million Social Security beneficiaries, the vast majority of whom make less than $50,000 each year, are currently forced to pay income taxes on their benefits.18 Today’s senior citizens who paid into the Social Security system for generations should not be taxed yet again on their Social Security benefits. For over 40 years Social Security income was earned-tax free; it was not until 1983 that Congress changed the law and explicitly authorized a new tax on Social Security benefits.19 Under the optional flat tax system, the original tax treatment of Social Security benefits will be restored Social Security income will again be tax-free.

No Federal Sales Tax or Value-Added Tax

The new flat tax system will have no federal sales tax or business value-added tax (VAT). When added to existing federal income taxes and state and local income sales taxes, a national sales tax would be highly regressive. Low-income families spend a much higher percentage of their incomes on food and gas than do those with considerable wealth. For example, a household earning $25,000 each year would spend roughly 40% of its income on food, utilities, and health care, while a household earning $130,000 each year would pay less than 15% of its income on those three items.20

The federal sales tax and the VAT also obscure the true costs of federal taxes by embedding them in the prices of every day goods. When the true cost of taxation is hidden from the taxpayer, it becomes easier for politicians to raise taxes. “[I]n practice the VAT has rarely replaced the income tax, or even resulted in a lower income-tax rate,” the Wall Street Journal noted on tax day in 2010.21 “Of the 10 major OECD nations with VATs or national sales taxes, only Canada has lowered its rate.” For example, although Denmark originally initiated a VAT rate of only 9%, its rate today is 25%.22

Administrative and compliance costs would also increase under a VAT. According to the Tax Policy Center, “Adding a VAT on top of the existing income tax system would add to total costs of administration for the entire system because businesses would face additional reporting requirements and the IRS would have to administer an entire new tax, without shedding responsibility for other taxes.”23

Eliminate Tax on Qualified Dividends and Long-Term Capital Gains

America's Built In Tax DisadvantageThe quickest way to spur economic growth is to leave money in the hands of the American people and to encourage the movement of capital. Eliminating the tax on qualified dividends and long term capital gains will free up literally hundreds of millions of dollars the American people currently are sitting on to avoid a tax on the gain – a tax that is a “second” tax on their money. Between the economic recession, housing market collapse, and decline of the stock market in recent years, American families have lost trillions of dollars worth of their hard-earned savings. As big banks received billions in taxpayer bailouts and watched their profits soar, working Americans watched helplessly as the value of their homes, retirement accounts, and stock portfolios dwindled. By eliminating the tax on qualified dividends and long-term capital gains, entrepreneurs and small business owners can unleash capital to spur economic activity and the growth of the American economy.

Eliminate the Death Tax

The federal estate tax is defined by the Internal Revenue Service as “a tax on your right to transfer property at your death.” Under current law, the tax is temporarily set at the rate of 35 percent with an exemption of $5 million. On January 1, 2013 the estate tax is set to return at a top marginal rate of 55 percent (with an additional 5% surtax for certain estates) on all assets above a $1 million exemption amount. The estate tax is paid by the recipients of an inheritance and is due within 9 months of the decedent’s death. If the heirs do not have sufficient cash, personal property and business assets must be sold to pay the tax. In the case of family business owners and farmers, the tax often exceeds the ability of the family to pay. These heirs are consequently forced to sell off part, if not all, of their enterprise in order to pay the tax. Eliminating the death tax is necessary to protect family businesses, farms and jobs.

Eliminate Corporate Loopholes and Special-Interest Tax Breaks

Many Americans are rightly outraged by news stories that corporations like GE somehow pay nothing in taxes after earning more than $14 billion in profits.24 Due to the mind-boggling complexity of the tax code, large corporations can implement the most effective tax avoidance strategies money can buy, while American taxpayers are forced to send thousands of dollars to the federal government instead of spending it on their families. And unlike small businesses that cannot afford to house an army of lawyers and tax accountants, large and sophisticated corporations have the means to find and use every tax avoidance strategy that lies buried in the tax code. The myriad tax breaks, loopholes, and so-called tax expenditures available within the corporate tax code need to be phased out over time to ensure a level playing field for family-owned small businesses and multi-national corporations.

Reduce Corporate Income Tax Rate to 20% to Enhance American Competitiveness

The U.S. has the second-highest corporate tax rate in the developed world. Over the past 13 years, 30 countries within the OECD have lowered their corporate tax rates to increase their global competitiveness, while the U.S. corporate tax rate remained unchanged.25 According to aggregates of more than a dozen estimates of effective tax rates across the world, the U.S. effective corporate tax rate of 28% exceeds the average rate of most other nations by nearly 8%. Bringing the U.S. tax rate more in line with America’s global competitors will increase incentives for companies to locate their new factors or hire new employees in the U.S.

Enhance American Competitiveness by Transitioning to a Territorial Tax System

The current “worldwide system” of corporate taxation used by the U.S. creates significant incentives for American companies with foreign subsidiaries to leave profits overseas instead of investing them in the U.S. The worldwide system of taxation taxes overseas income first at the tax rate in the country where the income is earned and then a second time when profits are brought back to the U.S. In essence, income earned in a foreign tax jurisdiction can be tax-deferred until it is brought back to the U.S. Under a territorial system, corporate profits would be taxed only once – in the country where the income is earned. When combined with a lower corporate tax rate, transitioning to a territorial system of taxation would make the U.S. far more competitive with other countries, increasing economic growth and creating more jobs for American workers.

Allow Locked-Up Overseas Capital to be Brought Back to the U.S. at a Reduced Tax Rate

More than $1 trillion in income is stuck overseas due to the current complicated U.S. treatment of foreign-earned corporate income according to numerous studies from researchers on both sides of the political divide. Although a territorial system of taxation eliminates the issue of locked-up overseas income going forward, a reduced tax rate on repatriated earnings can help attract capital that has been left overseas since the most recent repatriation holiday in 2004.

A study conducted for the U.S. Chamber of Commerce by former CBO director Douglas Holtz-Eakin estimated that a one-time repatriation tax rate of 5.25% would bring over $1 trillion in capital back to the U.S., creating up to 2.9 million new jobs and $360 billion in increased economic output.26 Laura Tyson, the former head of the White House Council of Economic advisers for President Clinton, authored a study for the New America Foundation that found a reduced repatriation rate would increase GDP by up to $336 billion, create between 1.3 million to 2.5 million new jobs, and increase tax revenue by $36 billion.27

Jon Huntsman

Summary

Governor Huntsman has introduced an economic plan called the "Time to Compete" plan as part of his 2012 Presidential campaign. Tax reform is one of the major components of that plan and Governor Huntsman claims that his plan is revenue neutral. The plan consists of removing all incentives and deductions, creating three new brackets of 8%, 14%, and 23%, and lowering the corporate tax rates from 35% to 25%.

• Simplify the tax code
  
  • Eliminate all tax credits and tax deductions
  • Create 3 brackets of 8%, 14%, and 23%
• Eliminate the AMT
• Eliminate the tax on capital gains and dividends
• Lower corporate rates from 35% to 25%

TEA Party Debate

Governor Huntsman participated in the TEA party debate in September of 2011. He speaks about his tax plan to move to three brackets.

QUESTION: Hi. My name is Tyler Hensley (ph). I'm from Napa, California. My -- well, first of all, thank you guys for coming out tonight. My question is, out of every dollar that I earn, how much do you think that I deserve to keep?

BACHMANN: Oh, I love that question. I love that question.

(APPLAUSE) (CROSSTALK)

BLITZER: Governor Huntsman?

HUNTSMAN: Well, I've come out with a tax program that basically simplifies, lowers, flattens the rate, why? Because I did it as governor in the state of Utah; I believe that that experience means something.

And I look at people who are earning, you in the workplace, trying to make ends meet. You ought to be given a competitive tax code. We need to clear out the cobwebs. We need to clear out the deductions, the loopholes, the corporate welfare, and all the subsidies. And for you, you know, we leave it at 8 percent, 14 percent, 24 percent. Those are the three rates that I think would work on the individual income side. On the corporate side, I think we recognize the reality that a whole lot of companies can afford to have lobbyists and lawyers on Capitol Hill working their magic. Let's recognize the reality that they're all paying 35 percent. We need to lower that to 25 percent. So let's phase out the corporate subsidies and clean out the cobwebs and leave it more competitive for the 21st century.

I can tell you, by doing that with our tax code -- and I know, because we did it in a state that took us to the number-one job creator in this country -- it will leave you and your generation a whole lot better off.

But the thing that you all need to be worried about is the debt that is coming your way, because we have a cancer that is eating away at the core of this country called debt. And it's going to eat -- eat -- eat alive this country until your generation gets active in the 2012 election cycle and finds a leader who can address debt and growth.

Time to Compete Plan

Governor Huntsman has proposed the "Time to Compete" plan for the economy as part of his 2012 Presidential campaign. The plan includes tax reform and conssits mainly of removing al deductions and tax credits and creating 3 brackets of 8%, 14%, and 23%.

Tax Reform

The tax reform portion of Governor Huntsman's plan consists of four items. First, Governor Huntsman wants to simplify the tax code by eliminating all deductions and tax credits. This would include the mortgage deduction. To offset these increases, the plan would create 3 lower tax brackets of 8%, 14%, and 23%. Governor Huntsman claims that the plan would be revenue neutral and that increases due to the loss of deductions and credits would be offset by the lowered rates. Next, the Alertnative Minimum Tax (AMT) would be eliminated, as well as the taxes on capital gains and dividends. Governor Huntsman notes that because taxes are paid on any income, that money should not be double-taxed when it is used later. Finally, Governor Huntsman proposes reducing the corporate tax rates from 35% to 25%.

• Simplify the tax code
  
  • Eliminate all tax credits and tax deductions
  • Create 3 brackets of 8%, 14%, and 23%
• Eliminate the AMT
• Eliminate the tax on capital gains and dividends
• Lower corporate rates from 35% to 25%

Fox News / Google Debate

On September 22, 2011 Governor Huntsman participated in the Fox News / Google debate. He spoke there about his support for natural gas and subsidization of certain renewable energy products.

MEGYN KELLY, FOX NEWS: Governor Huntsman, this next one's for you. This week, President Obama proposed a tax hike on millionaires, saying that they need to pay their, quote, "fair share." According to an August Gallup poll, 66 percent of American adults actually believe that a tax hike on the wealthy is a good idea to help tackle our mounting debt. Is there any scenario under which you could side with the 66 percent of people who believe that it is a good idea to raise taxes on millionaires?

FORMER GOV. JON HUNTSMAN, R-UTAH: We're not going to raise taxes. This is the worst time to be raising taxes, and everybody knows that.
(APPLAUSE)

We need to grow. We need to be reminded of what Ronald Reagan told us so beautifully, that which is great about America, freedom. We need to re-establish freedom in the marketplace.
We need to address our underlying structural problems that we have.

And in order to do that, we're going to have to fix our taxes. And we put forward a program endorsed by the Wall Street Journal that phases out for individuals all the loopholes, all the deductions, and creates three rates, 8, 14, 23.

On the corporate side, it phases out all of the corporate welfare, all of the subsidies, and it gets it from 35 percent to 25 percent.

This is exactly where we need to be. We need to grow; we need to create jobs. This is not a point in time where we should be raising taxes.

We need to fix the underlying structural problems in this economy.

And until such time as we do, we're not going to provide the confidence to businesses who are looking to deploy capital in the marketplace and hire people. And that would be serious tax reform, like I proposed, and like I did in the stay of Utah, and that would be -- that would be structural reform, as well, dealing with Dodd-Frank, and repealing Obamacare, because they are presenting tremendous uncertainty to the marketplace right now.

Dartmouth Debate

In October of 2011, Governor Huntsman participated in a debate at Dartmouth on the economy. In that debate, he notes his views on the overall economy and the relation to taxes.

ROSE: And so what would you do about that to change that, to attract those kind of people so that they would be willing to serve a cross-section of people from every gender...

HUNTSMAN: Let’s get back to what we did a generation or two ago, when we were more open in terms of accommodating people from all backgrounds who wanted to take a little bit of their life and serve in government, and then leave, and go back to what it is they did best, whether on the farm, or whether insurance, or whether business, or whether academia.

ROSE: When you mention a flat tax, does that mean that you look with some favor upon 9-9-9 that Herman Cain mentioned at the beginning of this conversation?

HUNTSMAN: I think it’s a catchy phrase. In fact, I thought it was the price of a pizza when I first heard about it.

ROSE: Price of a pizza?

HUNTSMAN: Well, here’s - here’s - here’s what - here’s what we need. We need something that’s doable, doable, doable. And what I have put forward is a tax program that is doable. It actually wipes clean all of the loopholes and the deductions.

This is right out of what the Simpson-Bowles Commission recommended, a bipartisan group of people that took a thoughtful approach to tax reform.

ROSE: Corporate and individual?

HUNTSMAN: Individual, and on the corporate side, phase out all of the corporate welfare, all of the subsidies, because we can’t afford it any longer, in a revenue-neutral fashion, buy down the rate from 35 percent to 25 percent, leveling the playing field for businesses big and small, allowing us to be a whole lot more competitive in the second decade of the 21st century.

Michigan Economic Debate

On November 10, 2011 Governor Huntsman participated in the Michigan economic debate. He spoke about his support for a flat tax.

SANTELLI: Our federal government still owns 500 million shares of GM stocks, guarantees trillions -- trillions with a "T" -- dollars of mortgages. They are basically the lender doing 90 percent of all the mortgage origination right now. And you consider the Federal Reserve, the Federal Reserve has purchased $2.62 trillion -- again, with a "T" -- of treasury securities, agency securities, and mortgage securities.

If you were president, how would your administration and would your administration reverse these obligations?

HUNTSMAN: I would clean up the balance sheet. And let me tell you what I worry about as much as anything else.

We talk about failed leadership. We certainly have failed leadership.

President Obama had two years to get this economy going and to move us toward an environment that speaks to job growth, and he's failed miserably. But along with that, we have a real trust crisis in this country.

Between the American people and our institutions of power, Congress, the executive branch, Wall Street as well, there is no trust. We are running on empty. And when a democracy begins to run on empty because of government holdings and bailouts and being involved in ways that are absolutely inappropriate, based on constitutional and where we should be, that results in a diminution of trust by the American people. We've got to raise that trust.

So let me just tell you what I think needs to be done, in terms of bringing our economy up. We've heard about all these great tax plans. I think I'm the only one on this stage who's actually delivered a flat tax. And I did that as governor of my state.

I put forward a proposal that I think is right for this country and getting it back on its feet. The Wall Street Journal has come out -- the most respected editorial page economically, maybe in the entire world -- has come out and endorsed my plan, said it's the very best of the bunch.

And it very simply calls out just as I did as governor. So I'm not sitting here talking about academic theory. I stand here as a practitioner. I've done it before. I want to phase out the loopholes and the deductions on the individual side, phase out corporate welfare and subsidies on the corporate side, and lower the rates, make us more competitive. That's the kind of work that is realistic. It can get done in Congress and fire the engines of growth that are so desperately needed to boost trust in this country.

2012 Campaign Website Statements

TIME TO COMPETE
An American Jobs Plan

Tax Reform

Governor Huntsman supports comprehensive reform to make America's tax code flatter, fairer, simpler and more conducive to growth.

Over the last 25 years, our tax system has devolved into a maze of credits, deductions, loopholes and temporary provisions, which create fiscal uncertainty and hinder America's competitiveness. American businesses suffer from the second-highest corporate tax rate in the developed world. High marginal rates also negatively impact small businesses, many of which file as individuals. These rates must be reduced for America to compete in the 21st Century economy.

Governor Huntsman's proposals are modeled after Ronald Reagan's 1986 tax reform package, which economist Dale Jorgenson calculated as yielding over one trillion dollars in efficiency gains.

A PROVEN RECORD

On tax reform, Governor Huntsman offers more than rhetoric; he also offers a record of results.

• In Utah, he signed the largest tax cut in state history, returning $400 million to families and businesses and earning him the "Taxpayer Advocate" award from the Utah Taxpayers Association.
• The Cato Institute called Huntsman's tax reform plan in Utah "very Reaganesque" and gave him an "A" in tax policy.
• Along with historic tax cuts, Huntsman also balanced every budget and tripled the state's rainy day fund, leading the Pew Center to name Utah the best-managed state in America.
• Huntsman's reforms helped Utah lead the nation in job creation under his leadership.

 

TAX REFORM PROPOSALS

Individual Taxes

Simplify the Personal Income Tax Code and Lower Rates
Gov. Huntsman supports a version of the plan crafted by the Fiscal Commission, headed by Erskine Bowles and Alan Simpson, commonly known as the "zero plan". Rather than nibble around the edges of the existing tax code, he will introduce a revenue-neutral plan that eliminates all deductions and credits in favor of three drastically lower rates of 8%, 14% and 23%. Eliminating deductions and credits in favor of lower marginal rates will yield a simpler and more efficient tax code, decreasing the burden on taxpayers.

Eliminate the Alternative Minimum Tax
Under the new simplified plan, Governor Huntsman will eliminate the Alternative Minimum Tax, which is not indexed for inflation and is penalizing an increasing number of families and small businesses. This tax is especially burdensome on the majority of small business owners who file as individuals.

Corporate Taxes

Reduce the Corporate Rate from 35% to 25%
The United States cannot compete while burdened with the second-highest corporate tax rate in the developed world; American companies and our workers deserve a level playing field. Governor Huntsman will lower the corporate tax rate to the average of other OECD nations. With high unemployment, it is important that we not push corporations and capital overseas. We need employers to be based in America if they're going to provide jobs to Americans.

Shift from a Worldwide System of Taxation to a Territorial System
We are one of the last countries taxing businesses on worldwide income and punishing businesses that bring money home. Shifting to a territorial system will allow American companies to compete with other global players and allow US-based multinationals to bring capital home to invest in new jobs.

Implement a Tax Holiday for Repatriation of Corporate Profits
A tax holiday for repatriation of corporate profits earned overseas will make available between $400 billion and $600 billion for companies to make capital investments. This is a critical tool in creating a pro-growth business environment that will get Americans back to work.

Capital Gains and Dividends

Eliminate the Taxes on Capital Gains and Dividends In Order to Eliminate the Double Taxation on Investment
Eliminating taxes on capital gains and dividends would lower the cost of capital and encourage investment in the American economy to create jobs. Additionally, these taxes amount to a double- taxation on most individuals who choose to invest since they first had to earn that money and pay income tax on it. Taxing these same dollars again when capital gains are realized serves to deter productive and much-needed investment in our economy.

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