Ways and Means Hearing Submission: Tax Issues

In support of The Fair Tax, I submitted the following to the the Committee on Ways and Means Hearing on Member Proposals on Tax Issues Introduced in the 109th Congress.

Honorable Committee Members,

I support passing of HR 25, The Fair Tax, and the fundamental reform of the current tax system. A model of tax collection based upon a national retail sales tax will greatly improve the nation's economy by providing a more equitable taxing system that encourages investment in the United States rather than in various tax havens around the world.

Tax havens are “a place where certain taxes are levied at a low rate or not at all. This encourages wealthy individuals and/or firms to establish themselves in areas that would otherwise be overlooked” (Tax Haven, Wikipedia). This exodus of capital to more forgiving tax environments drains our economy of investment capital and facilitates an enormous opportunity cost felt by all Americans. Tax havens such as the Cayman Islands and The Isle of Man contain about 1 percent of the world’s population, but they hold approximately 30 percent of the world’s assets (David R. Francis, Christian Science Monitor, April 2005). “[T]hese overseas tax havens undermine confidence and trust in our federal government” (Senator John Kerry, 26 April 2002).

The tax haven situation causes the United States to lose an estimated $60 billion a year and worst of all; it shifts the majority of the tax burden from those who can afford it to those who cannot. According to John Christensen of London’s Tax Justice Network, “the tax burden has been shifted from those who can afford it to middle- and low-income households and from businesses to working people and consumers." As international pressure causes some tax haven countries to crack down on tax haven abuses, the door simply opens on new players. New players, such as Singapore, have recently entered the tax haven market and threaten to cost the United States an estimated $5 billion over the next decade (Taylor and Prystay, Wall Street Journal, February 2006).

Investment capital is not all that we are loosing to the war on taxes. Some wealthy Americans are actually opting to give up their U.S. citizenship for more favorable tax treatment.
“Who in his right mind would give up his U.S. citizenship? Lots of people. You could practically fill a Boeing 747 with well-heeled U.S. citizens who have taken on foreign citizenship rather than submit to what Learned Hand called ‘enforced exactions’ at a level that amounts to virtual confiscation.” (Forbes, Nov 21, 1994 v154 n12 p131).
We are faced with a challenge to fund our government through a method that is fair and equitable to all citizens. Those of lesser financial means should not be burdened with government taxation that the wealthy are enabled to avoid. A system of taxation based on consumption will target those most capable of paying. Passing HR 25 will lessen the burden on the less fortunate, increase the fair share of the most fortunate, and also spread the burden to non-citizens who enjoy the greatest nation on earth through tourism and business expansion. This is not a partisan issue, it is an American challenge. Enable the United States to become the world’s new tax haven by passing HR 25 and bring our expatriates and their money home.

##That's my opinion## ... supported by fact