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Jewish World Review Dec. 13, 2000 / 16 Kislev, 5761

Jack Kemp

Jack Kemp
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Consumer Reports


A new tax system for
the 21st Century

http://www.jewishworldreview.com --
WHILE THE MARATHON presidential election in Florida grinds to a conclusion, in Washington, D.C., members of Congress returned in lame-duck session to finish up this year's legislative business. Lost in the shuffle was an important Capitol Hill press conference that illustrated the fallacy of the conventional wisdom that this year's razor-thin electoral margins mean nothing of importance can be accomplished. This is pure nonsense. Reforming the tax code is a perfect candidate for bipartisan consensus, and progress toward a more inclusive and prosperous America for everyone.

Recently a Coalition for Fundamental Tax Reform brought together policy groups, business groups and members of Congress to urge Congress and the new president to fundamentally reform and simplify the federal tax system. I was proud to associate our organization, Empower America, where Bill Bennett, Jeane Kirkpatrick and I serve as co-directors, with this bold new effort. Significantly, among the key members of Congress who spoke at the press conference to show support for fundamental tax reform were Congressmen Phil Crane and Bill Thomas, the two contenders for the chairmanship of the Committee on Ways and Means, among others on the tax-writing committee of the U.S. House of Representatives.

All of the participants agreed that it would be a mistake to keep maintaining tax rates and tax burdens higher than they need to be - now a record-high 21.5 percent of GDP - to generate huge budget surpluses in order to retire federal debt. Not only are the goals of debt reduction, Social Security reform and low-rate tax reform compatible with one another, it's virtually impossible to accomplish one without dealing with the others. The key to them all is a 21st century tax code for all Americans.

The current federal tax code, which would be relied upon to raise the surplus revenues to retire the debt, is economically destructive, impossibly complex, overly intrusive and inconsistent with the principles of a free society. It is outrageously expensive, manifestly unfair, and it inhibits the industry and genius of the American people. Every additional dollar of tax revenue raised through this tax code retards and damages the economy far more than any offsetting beneficial results one conceivably could hope to achieve by using that revenue dollar to retire public debt.

As John Maynard Keynes has said, "Nor shall the argument seem strange, that taxation would be so high as to defeat its object and that given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget."

Members of our coalition have different perspectives on details, but every one of them agrees that the current tax system should be repealed in its entirety and replaced with a new, simple and fair system that applies a single tax rate on all taxpayers in the most transparent manner possible; provides relief for working families; protects taxpayer rights and stops collection abuses; ends the bias against work, saving and investing, and providing for one's heirs; promotes growth and job creation; and imposes rules to make it difficult to raise taxes.

The economy is demonstrably slowing, as evidenced by shrinking corporate profits, rising unemployment claims, and the squeeze on credit and capital availability. With the course of our economy uncertain, the next administration will need not only to reduce tax rates and the tax burden, but also reform the entire tax code to simplify it and lower the cost of capital in order to make more capital available to low-income people to give them a better shot at the American dream.

In this new era of challenge to both parties, fundamental tax reform can be the beginning of a political reconciliation. Both Democrats and Republicans are members of the Coalition for Fundamental Tax Reform, a strong reminder that the 1980s wave of tax reform was led not just by Ronald Reagan, but by Congressmen Bill Bradley and Dick Gephardt, Sen. Lloyd Bentsen and many others who understood that tax rates were too high and the tax code too complex.

I can't put it better than author John Gardner, who was quoted to dramatic effect in the final report of the 1996 Tax Reform Commission I was privileged to chair in 1996: "There occurs at breathtaking moments in history an exhilarating burst of energy and motivation, of hope and zest and imagination, and a severing of the bonds that normally hold in check the full release of human possibilities. A door is opened, and the caged eagle soars." We must work for an America where all doors of opportunity are open and our full potential can be realized.


Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute. Comment by clicking here.



Up

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