TAXWATCH NTLC Leads Fight for a Federal Balanced Budget Amendment
America Needs Major Tax Reform End to the Death Tax
A powerful movement is underway in the states to control federal spending and deficits through balanced budget fiscal discipline amendment. This renewed effort has been christened “The Reagan Project,” because years ago Ronald Reagan endorsed state power under Article V to propose such an amendment.
With a corporate tax rate of 35% and a death tax rate of 45%, America has “priced itself out of the market.” Is it any wonder businesses and investment capital are fleeing through so-called corporate “inversions,” and we are facing a job and brain “drain.”
Twenty-four state resolutions have been obtained. Ohio Governor John Kasich has been on the Herman Cain and Lew Uhler road in several western at South Carolina Article V states to help obtain the BBA rally 10 more resolutions necessary to force Congress to call a convention of the states to prepare an amendment. (Please review the full story, the players, the target states, and the Reagan endorsement on pages 13-14.)
Ohio Governor John Kasich and Herman Cain Join the “Reagan Project” President Ronald Reagan proposed a balanced budget amendment (which NTLC helped to design and pass) that was approved in the US Senate in 1982, but was defeated in the House. Had it been approved and ratified, America’s fiscal situation would be much improved today. (For a full analysis, see the Uhler/ Ferrara op.ed. on page 15—The “Elixir” article.)
Rep. Paul Ryan (R-WI), former vice presidential candidate and new chairman of the House Ways and Means committee, and NTLC President Lew Uhler, have worked together for years.
Cong. Kevin Brady (R-TX) has reintroduced his bill to kill the death tax, and NTLC, Jim Martin’s 60 Plus Association and many other of our colleagues are working closely with him.
Kill the death tax “Black Flag Dead” Now that conservatives/death tax opponents have taken control of the US Senate, we’ll be able to confront President Obama with a vote killing the death tax by April 15th. Obama proposed in his State of the Union message to increase the death tax, so he will likely veto our bill. But that will set the stage for the 2016 presidential election when we can make this a pivotal issue in the race, creating a mandate for killing this hated, unfair, counter-productive death tax once and for all … “black flag dead,” as we like to say! And we must reform the US tax code in its entirety, reducing rates substantially for individuals and corporations, creating a “flat tax system” which taxes only the portion of your income – and that of a corporation – which you consume, but doesn’t tax what you and businesses save and invest. It will be a consumptionbased tax that will induce explosive economic growth in America. (See Tax Reform article—page 17.)
BBA Rally on the Yorktown in Charleston Harbor 1
President’s Corner Dear Friend of NTLC – We are very pleased to mark the occasion of conservative control of the 114th Congress with reissuance of NTLC’s TAXWATCH. This year is NTLC’s 40th anniversary. We founded our Committee (501c4) and our Foundation (501c3) to carry out the advocacy, research and education on taxes and spending we had begun for Ronald Reagan when he was Governor. With the assistance of Milton Friedman and other of our founders, we developed constitutional tax limitation/balanced budget solutions, starting from a narrow base of advocates and supporters expanding nationwide and to Washington, DC. Realizing that resources were thin—there were no Heritage, Cato, CNP, CEI, ALEC, SPN and affiliates or other conservative intellectual and activist assets—we sought to “multiply” our conservative/libertarian base. Following Ronald Reagan’s prescription for success: “There’s no end to the good you can do if you don’t care who gets the credit,” we have worked across the Nation with a multitude of national and state conservative leaders and organizations, helping to coordinate (with Jim Martin [60 Plus Association] and Dan Mitchell [Cato], the Tax Cut Working Group Coalition in DC.
We must multiply to assure the presidency in 2016 and restore “American exceptionalism” The conservative/libertarian movement, with the recent addition of Tea Partiers nationwide, has matured and proven its mettle in capturing the US Senate and increasing its numbers in the House. We must continue to multiply to assure the presidency in 2016 in order to begin restoring “American exceptionalism.” That multiplication contemplates more volunteers and more financial resources to carry out our many vital initiatives and the rapid economic growth which our plans and policies can achieve. (See page 18 for our elements of NTLC’s strategic plan.) Please spend a moment to give us the benefit of your thoughts on key issues on page 19 and help us with your most generous contribution, identify others who may appreciate TaxWatch and return in the enclosed prepaid envelope.
Many thanks for your continued support. Kindest Regards…..Lew Uhler
In This NTLC Leads Fight for BBA ............................................ Cover
Abolish IRS—Congress to COLLECT taxes .................. Page 5
America Needs Tax Reform ........................................ Cover
World TP Leaders Salute Bjorn Tarras-Wahlberg ...... Page 5
President’s Corner ..................................................... Page 2
Return EPA Functions to Congress ............................ Page 5
Ryan and Gingrich New Books ................................... Page 3
Fetal Alcohol Syndrome Disabilities Project .............. Page 6
NTLC State/Local Issues—Dennis Hollingsworth ....... Page 4
New Federalism & Congressional Hearings ............... Page 6
Use Resources to Grow Economy & Pay off Debt ..... Page 4
Freedom Fest Frolic ................................................... Page 7 2
Ryan & Gingrich Chart Route to American Exceptionalism Recent polls confirm that the President, Congress and the federal bureaucracy are trusted with America’s future by as few as 20% of our electorate. A vast majority of people are looking for answers the old-fashioned way: through their communities, their churches and other institutions close to home; and through their states and local governments, and especially through the private sector with its creative, market-driven, responsive organizations and institutions. It is as if Alexis DeToqueville were walking among us today and currently writing “Democracy in America,” rather than nearly 200 years ago. For this we can all be thankful. And our special thanks should go to our good friends and comrades-in-arms over the years: Cong. Paul Ryan and Former House Speaker Newt Gingrich, both of whom have new must-read books available. Both Paul and Newt underscore the need for rapid, sustained economic growth to work our Nation out of bankruptcy, to expand the size of our economy and our Nation’s wealth, producing more federal revenues at lower rates of taxation. Please read these books – you won’t be disappointed! RYAN: In his new book, “The Way Forward: Renewing the American Idea,” Paul talks about his formative years, the untimely death of his father, as well as his family, faith and work ethic. He wants the federal government out of local problems which should be the province of states, local governments, the private sector and especially our churches, as our Founders anticipated. He emphasizes self-government under the rule of law, valuing each individual and protecting them from the time of conception – equality under God and government with the consent of the governed, securing the inalienable rights that are the inheritance of a free people. Paul wants reform of our so-called “entitlement” programs in a way that protects seniors, soon-to-be seniors and younger Americans in a fair and equitable way through private sector and “pay-as-you-go” solutions. Paul’s reforms start with what NTLC has been urging for years: devolution of domestic programs to the states and local governments. NEWT: In his book, “Breakout,” Newt, as always the college professor and historian, as well as former Speaker of the House, looks at many of the same issues as Paul – with many of the same solutions – but is prodigious in his recommendations for the use of modern technology, computers and “the cloud” to reform the way government does business. Maybe we need to start all over because the bureaucracy and its bureaucrats are so change-resistant that they simply can’t keep up with the pace of the real world. He refers to them as being stuck with manual typewriters in the age of hand-held computers—and producing accordingly. So force-reduction and turnover are essential at the federal level if we’re ever to have a modern civil service.
s Issue 113th Congress TAXFIGHTER Awards........................ Page 7
Op Ed—Abolish the IRS ............................................Page 16
Deficit Reduction Action Plan .................................... Page 8
Op Ed—Tax Reform and Economic Growth .............Page 17
113th Congress Scorecard ........................ Page 9, 10, 11, 12
NTLC’s Strategic Growth Plan ..................................Page 18
“Reagan Project” BBA Resolution Status Report .... Page 13
“We Need Your Advice & Help” ...............................Page 19
Reagan Article V Support Letter .............................. Page 14
Ronald Reagan Blesses Article V State BBA Resolution Project ............................Page 20
Op Ed—Reagan’s Tax Limit Plan.............................. Page 15 3
NTLC Protects Citizen Interests at State and Local Government Levels “All politics are local,” professed long-time Reagan era Speaker of the House the late Tip O’Neill (D-MA). And he was right—what happens at the local level influences the states and, ultimately, Washington, DC. NTLC has long been involved in local government battles and lawsuits that influence state capitals and Washington, DC. Issues in California include: Enforcing the property rights “promises” of the Southern California City of Escondido. A failed golf course with existing residential zoning was purchased by a developer. Some citizens petitioned to stop development, and the City Council concurred. In the face of the developer’s lawsuit, NTLC sided with citizens who put Measure “H” on the ballot to protect private property rights (per zoning) and to build homes generating property tax revenues for the City instead of costing the City and its taxpayers $100 million to compensate for lost property value.
A “bag tax” (they call it a “fee”) on grocery bags provided by local markets. NTLC has opposed this tax and is involved in a referendum to kill it.
Dennis Hollingsworth, former Republican leader in the California State Senate, is NTLC’s Executive Vice President and focuses on California state and local government issues and state projects.
Stopping the “bullet train” to nowhere in California, for which the funding and local support are entirely lacking.
Opposition to a “rent-seeking” bill by California pharmacists who are trying to prevent purchase of prescriptions out of state at lower cost.
Water legislation to “take” and subject to regulation, the subsurface waters which have always “run with the land” of California.
California Air Resources Board (CARB) imposition of “fees” on all alleged producers of “air pollution” under California’s AB-32 (global warming claims). NTLC is one of several parties plaintiff in Pacific Legal Foundation’s lawsuit declaring that the cap-and-trade (CARB) fees are taxes and are illegal because they were not passed by a 2/3 vote of the Legislature, as required by Proposition 13. We think we will prevail and protect all working Californians from huge – and totally unnecessary and preventable – increases in gasoline prices and home heating/air conditioning costs.
NTLC continues to fight for individuals, families, small businesses and all others who believe in our Founders’ concept of freedom.
Domestic Fossil Fuel Exploitation will Seed Rapid Economic Growth America sits atop the world’s most abundant supply of fossil fuels—oil, gas, and coal—and the investment and jobs they will bring – if only we can restore common-sense policies that will allow us to exploit this opportunity for an economic renaissance in America. Recent declines in the price of oil per barrel have underscored that America can continue to produce oil profitably at or below the price that undermines our enemies around the world, including Russia and enemy Arab states.
Develop Natural Resources on Federal Lands to Pay Off National Debt Equally important is opening up federal lands and resources to development, as we have for past generations through homesteading, land grant colleges, railroad rights-of-way, etc. The proceeds of leases and royalties should be placed in a special fund dedicated exclusively to paying off the national debt and seeding private Social Security accounts for our grandchildren, leaving them wealthy, not debt-ridden. (See NTLC’s strategic plan for the US on page 18.) 4
Abolish the IRS — Create a Congressional Bureau of “Tax Collection”
TAXPAYER LEADERS RECOGNIZE BJORN TARRAS-WAHLBERG The recent Vancouver, BC, meeting of the World Taxpayers Association was unique. Biennially, starting in Sweden in 1990, the World Taxpayers Association has come together to share ideas, challenges, successes – and yes, failures.
President Obama has mocked the constitutional separation of powers by changing federal laws through executive orders and edicts, while failing to faithfully execute the laws of Congress as required by the Constitution. Speaker John Boehner chose a lawsuit over impeachment to challenge Obama’s usurpation of congressional authority.
But over the past decades, the creator of the worldwide association -- Bjorn Tarras-Wahlberg -- has provided leadership and inspiration, helping to bring down income tax rates in nation after nation – including his native Sweden – as well Lew Uhler with Bjorn Tarras-Wahlberg as in many of at the WTA meeting in Vancouver, BC the nations that emerged as independent republics following the breakup of the Soviet Union.
We feel there is a better way to restore If Congress collects the taxes, the separation of Members don’t ask her to powers. Congress testify, they fire her should simply reverse its nearly 150-year delegation of rule/law making authority and management to administrative agencies and begin re-establishing its powers by abolishing the hated IRS and replac“Congress shall lay ing it with a tax collecand collect taxes” tion bureau within and reportable directly to Congress, pursuant to the constitutional mandate that “Congress shall lay and collect taxes.” Then when Lois Lerner refuses to cooperate with Congress, they simply fire her.
The former conservative leader of the Canadian National Government praised Bjorn who urged a 15% corporate tax rate for Canada, one of the lowest in the western world, creating a free market renaissance in Canada. Bjorn has joined NTLC in urging that the US compete with the lowest corporate and personal income tax rates in the world – 10% -- to make America a magnet for investment, job creation and corporate expansion.
For a full discussion of this issue, see the Uhler/ Ferrara op.ed., “Putting Congress in Control of Tax Policy Again,” The Washington Times, July 2014, on page 16.
EPA Functions Must Be Retrieved and Administered by Congress The Environmental Protection Agency (EPA) is another runaway executive bureaucracy, created by congressional action in the Nixon era, which has far exceeded its legislative authority. It is threatening to shut down major segments of American energy/electricity sources which will cost our Nation dearly in jobs and increased family and individual energy costs. It is time Congress repealed the legislation which created EPA. Congress should transfer or devolve to the states environmental, water, air pollution and other regulatory issues that can and should be handled closest to the people. Only truly national environmental regulatory issues should remain in Washington but be controlled directly by Congress through the relevant House and Senate committees Any “rules” proposed by the committees would have to be fashioned into legislation and voted on by the committees and the full Congress. Most such rules would never be approved, and our Nation would be far better served and our people more prosperous. 5
FETAL ALCOHOL SYNDROME DISABILITY:
National Tax Limitation Foundation Mounts “TotallyPreventable.Org” Campaign While the NTLC and NTLF have historically fought excessive government spending, taxes and regulations to limit government’s size and intrusiveness in the lives of our citizens, we tend to forget that many problems that result in calls on the public treasury can and should be dealt with at origin. We know that children of intact families, as contrasted with those born out of wedlock, are much more likely to live successful lives, avoiding foster care, special education, the juvenile and adult criminal justice systems and other gigantic social and financial costs to society. We are taking steps to heal a broken welfare system that has fractured, not nurtured, intact families, creating what is known as the “poverty trap.” Now we have learned from extensive international research and analysis that one of the major sources of dysfunctional and anti-social individuals is alcohol consumption by mothers during pregnancy. This is known as FASD – Fetal Alcohol Spectrum Disorder – and it affects 1-2% of babies born in the US, with higher numbers in some states and on Indian Reservations. Studies reveal that in addition to the social/family “costs,” the dollar costs to the taxpayer are extraordinary over the life of such individuals, averaging from $800,000 to $5 million per individual, with annual total costs for all such individuals exceeding billions of dollars annually. Yet, FASD is totally preventable if women will avoid alcohol consumption during pregnancy. NTLF, under the direction of Executive Vice President Dennis Hollingsworth, former Republican leader of the California State Senate, is launching a vigorous public education campaign among young women in high schools and colleges and in the restaurant/ bar and alcohol beverage industries, to “Fetal alcohol syndrome disabilities (FASD) impose communicate the dangers of alcohol conenormous social and taxpayer costs we can avoid” sumption during pregnancy. The research of Jim Uhler, a consultant to NTLF, has uncovered this vast problem and societal need, in conjunction with the national organization, “FASWORLD.” This is a special project for NTLF with details and needs to be found at “TotallyPreventable.org.”
DEVOLVE FAILED MEANS-TESTED PROGRAMS TO THE STATES
NEW FEDERALISM MUST PREVAIL NTLC has long believed that the over 200 means-tested entitlement programs of the federal government would be much better managed at the state and local level using the 1996 welfare reform model of Ronald Reagan and his California welfare director, the late Bob Carleson (a founding sponsor of the Nat’l Tax Limitation Committee). Lew Uhler, NTLC President, and Peter Ferrara, NTLF advisor and scholar, coauthored a study confirming the need for and effectiveness of the devolution of these federal means-tested entitlements to the states. (Review the Executive Summary of that study: “Deficit Reduction Action Plan,” on page 8 of this TaxWatch.)
Cong. John Mica (R-FL) and NTLC Pres. Lew Uhler at recent oversight hearing in Detroit, MI
Through field oversight hearings we can communicate and educate taxpayer/voters more effectively in their respective districts. NTLC has launched this effort and is recruiting like-minded organizations in DC – such as Charlie Sauer’s Marketing Institute --which are plugged into the committee structure in the House. 6
FREEDOM FESTFROLIC - July 2014
Economist Mark Skousen and others rally each year in Las Vegas to proclaim personal freedom and wealth creation through the free market. NTLC President Lew Uhler presided at a general session with panelists Steve Moore (Heritage), John Goodman (foremost free-market medical system expert) and tax-and-spending reformer/expert, Peter Ferrara, a NTLC advisor, scholar, consultant (above, shown left to right). The lively session brought globe-trotting attendee George Gilder to the mike to ask penetrating questions, as always. All were urging an end to Obamacare and a restoration of traditional American free-market, private solutions. Everyone on the panel agreed that with control of the US Senate, conservatives could pass powerful health care reform, as well as tax and spending reduction legislation, framing the issues for the 2016 presidential election, knowing that in 2015 and 2016 Obama is likely to veto any meaningful reforms. This will frame the bankruptcy of the progressive movement in America which has waged a modern “Hundred Years War” starting in1913 (and before) with the federal income tax, direct election of US Senators, the Federal Reserve and the inauguration of Woodrow Wilson – to today’s Obama Keynesian policies imposed on Americans and our economy, and enable conservatives to revitalize and re-establish American exceptionalism.
Tax Fighter Awards Presented to Members NTLC’s 113th Congress Scorecard For 30 years NTLC has been scoring Members of the US House and Senate on their voting records affecting taxpayer interests. NTLC provides one of the longest-standing and most respected congressional scorecards, emulating the American Conservative Union (NTLC President Lew Uhler has served on ACU’s board of directors for a quarter-century). Those Members who score 80% and above are given an “A” grade and presented with the NTLC “Tax Fighter Award” at a ceremony on Capitol Hill at the end of each Congress. (The 113th Congress Scorecard is the centerfold of this edition of Tax Watch. Please take the time to see how your Senators and Representatives have scored.)
Senator Mitch McConnel receives NTLC Tax Fighter Award
Those Members who have consistently received the Tax Fighter Award over the years are honored with the “Lifetime Tax Fighter Award.” Recent recipients include Senators Mitch McConnell (R-KY) (average grade of 90% over 30 years), Sen. Pat Roberts (R-KA) and Sen. Jim Inhofe (R-OK). 7
113th CONGRESS SCORECARD (2013-2014)
The “Reagan Project” - A Status Report on State Article V Balanced Budget Amendment Resolutions Introduction Washington’s continued profligacy is driving – or renewing – efforts to impose fiscal discipline through a balanced budget amendment initiated by the states. In their wisdom, our Founders provided two ways to propose amendments in Article V of the US Constitution: by Congress with a two-thirds vote of each House, or pursuant to the action of a convention of the states to be convened by Congress per resolutions of two-thirds of the states on a particular subject. In August 1982 NTLC—with major assistance from Senator Orrin Hatch (R-UT)—succeeded in passing President Ronald Reagan’s Tax Limitation/Balanced Budget Amendment (S.J. Res 58) in the US Senate, only to have it ambushed in Tip O’Neal’s liberal House of Representatives. That precipitated an intensified effort at the state level for balanced budget Article V resolutions, but we reached only 32 resolutions by 1996 when the effort was aggressively countered by forces on the left and right, and the need for an amendment was undermined by Gramm-Rudman and a series of actual balanced budgets.
The New “Reagan Project” In 2010, re-starting from a base of 16 valid and subsisting (un-repealed) state resolutions, the Balanced Budget Amendment Task Force, led by David Biddulph of Florida and Scott Rogers of Virginia has been adding state resolutions at a startling pace. Ohio – Number 20 (approved Fall 2013) and Michigan – Number 23 (approved Winter 2014) – had never before passed such resolutions. Because Ronald Reagan so favored the Article V state resolution process, the renewed effort is now labeled “The Reagan Project.” (See letter from Ronald Reagan to Lew Uhler of March 23, 1994 on reverse.) The recent success of the movement has been aided by the wise counsel and aggressive legislative testimony of Economic Advisor William H. Fruth, Dr. Barry Poulson, economist at the University of Colorado, Boulder, constitutional lawyer/authority Rob Natelson, the Independent Institute, Golden, Colorado, and advisor to the American Legislative Exchange Council (ALEC). Grass roots training and rallies have been spearheaded by the “I Am American” organization, led by “Typhoon” Lou Marin and Loren Enns from Florida. And key to its success has been the leadership and commitment of the members of ALEC .
Legislators Providing Leadership A group of legislative leaders organized the “Mount Vernon Assembly” on December 7, 2013. More than 100 legislators from 30 states began creating rules for an amendment convention. A second assembly was held in June 2014 at the Indiana Statehouse, with legislators from 33 states (this group met again in D.C. on December 8 and 9 to continue their work). When the balanced budget amendment Article V state resolution effort was renewed, the 16 valid and subsisting state resolutions included those from: AK, NV, CO, NM, TX, KS, NE, IA, MO, AR, MS, NC, IN, PA, DE and MD . In 2011 AL approved and NH followed in 2012, as did OH in 2013. More recently FL, GA, MI, TN and LA passed or revalidated resolutions. That’s 24 of 34 states necessary. One or the other house of the legislature has approved the Article V resolution in AZ, WI and SC. Other target states include: OR, ID, MT, WY, UT, ND, SD, OK, LA, KY, WV, VA and ME. We are working with legislators and others in all those states, but the movement needs all the help we can get. Anyone wanting to join the effort, please email the Balanced Budget Amendment Task Force as follows: David Biddulph @BBA4USA.org, or Lew.Uhler@limittaxes.org. Phone contact: Balanced Budget Amendment Tax Force (386-423-4744); Lew Uhler (916-765-9172). 13
UHLER & FERRERA: Putting Congress in control of tax policy again
Abolishing the IRS would rein in a runaway president By Lewis K. Uhler and Peter J. Ferrara - - Tuesday, July 8, 2014
House Speaker John A. Boehner is confronted by a president who has become virtually lawless: He runs roughshod over existing laws and legislation by changing them or not enforcing them, in complete violation of the separation of powers under Article II, Section 3. Administrative agencies under his jurisdiction issue rules and edicts beyond the scope ever intended by Congress in its enabling legislation. He makes "recess" appointments that are clearly unlawful and declared so unanimously by the Supreme Court. The list goes on and on. Mr. Boehner has several responses available, including impeachment. He has chosen a lawsuit against President Obama to enforce the separation of powers. There is a more immediate and contemporaneous route to restoring congressional legislative authority than awaiting the multiyear, uncertain outcome of the judicial process. It begins with the recognition that Congress has voluntarily diluted its own legislative powers over the years, starting with the Interstate Commerce Commission in 1887, an "independent agency" that developed regulations for railroad and shipping rates and operations. However, Congress retained control over the commission and terminated it in 1980 in favor of rate competition, setting a positive free-market precedent. Subsequently, delegation of rule-making authority to agencies and bureaus under presidential control began the dilution of congressional authority and the separation of powers. Congress has walked away without any meaningful oversight over the rules these entities promulgate or how they are administrated. The rules issued by these agencies are a burden now estimated by the Competitive Enterprise Institute to cost our economy $1.9 trillion a year in compliance expenses, equal to more than half of our nation's annual budget. Since the Constitution does not authorize Congress to delegate its legislative duties to others, Congress could redeem itself immediately by reasserting its legislative authority. A good place to start is with the Internal Revenue Service (IRS), which has become a runaway agency. The specter of the IRS commissioner smirking at outraged House Ways and Means Committee members seeking honest answers about Lois Lerner's "lost" emails should terrify law-abiding taxpayers. A very real option would be for Congress to abolish or defund the IRS — now with 90,000 employees and a $2 billion budget — and create a new tax agency wholly under congressional control. The Constitution provides that only "Congress shall have the power to lay and collect taxes " (Article I, Section 8). The president has no authority over fiscal matters except through his veto power. Congress' exclusive tax-collection authority was reaffirmed with the ratification of the 16th Amendment in 1913: "Congress shall have the power to lay and collect taxes on incomes ." There was no mention of a presidential role in this process. Congress' first mistake on taxes occurred in 1862, creating the commissioner of internal revenue in the executive branch (Treasury). Congress can remedy that error by creating a new tax-receipts office within and wholly under the control of Congress. Name it the Congressional Tax Collection Bureau, not a "service." Members of Congress would be responsive to those constituents who run afoul of absurd decisions or arrogant conduct of the tax bureau personnel. Such intimacy with their taxpaying citizens might lead Congress to more quickly respond to the need for a simpler and fairer tax code. (One of the bureau's responsibilities should include estimates of the tax-revenue effects of proposed tax-law changes using a dynamic-scoring methodology, contracted out to private-sector sources able to fairly score Kennedy-Reagan-type tax reform plans.) If the House were to send IRS-repeal legislation to the Senate, Majority Leader Harry Reid would surely sit on it. This would provide another powerful reason to "change the guard" in the Senate, and it would become clear to Americans that a significant change in the White House is essential in 2016. Meanwhile, Congress could — and should — use this model to reclaim its rightful legislative authority over runaway executive rule-making agencies and independent regulatory bodies, such as the Environmental Protection Agency, the Occupational Safety and Health Administration and the Securities and Exchange Commission, which are destroying jobs and making a shambles of our economy while trashing the separation of powers and producing a result resembling those European nations ruled by a parliament and a "professional" civil service. The current members should be angry at the relinquishment by earlier Congresses of constitutional responsibilities and authority to administrative agencies and the president. They can restore congressional authority by abolishing the IRS and reorganizing tax collection under the direct control of Congress. This would be the strongest act by Mr. Boehner to restore power to Congress and discipline a runaway president. Lewis K. Uhler is president of the National Tax Limitation Committee. Peter J. Ferrara is a senior fellow at the foundation and at the Heartland Institute. 16
Want Explosive Growth, America? Reform the Tax Code By Lewis K. Uhler and Peter J. Ferrara ** Reprinted from Investor’s Business Daily, November 24, 2014
Voters affirmed that rapid economic growth and job creation remain the nation's top priorities. The new Congress should adopt personal and corporate tax reform that will launch maximum, sustained economic growth. The president, who'd like to "rule America" without congressional "annoyance," may veto such a measure. But let him become the president of "no" as battle lines are drawn for 2016. Congress has an opportunity to follow the lead of state tax reformers who have demonstrated the political appeal of taxrate reductions and reforms. Govs. Scott Walker of Wisconsin, Rick Snyder of Michigan, Sam Brownback of Kansas and North Carolina's Senator-elect Thom Tillis all won handily largely because of leadership on state tax reform. We convened a group of the nation's top free-market tax experts in Washington to develop the most pro-growth tax reform. The consensus was to refocus our current income-tax system on consumption, rather than savings and investment, the lifeblood of capitalist economies and the economic foundation for job creation and rising wages and incomes. That can be accomplished first by allowing all families and individuals to deduct from taxable income all capital investment, savings, debt-reduction and retirement-account contributions. Second, allow capital "expensing" for all business, which means replacing depreciation with deductions each year for all expenses for plant and equipment. Corporate Rate For individuals and families, the income-tax rate structure would be a modified version of the tax reform included in the budgets of Paul Ryan, chairman of the House Budget Committee. That would involve a tax rate of 10% on earned income up to the maximum taxable income for the Social Security payroll tax, currently $117,000 this year, and 22.4% for income above that. Social Security's maximum taxable income is automatically indexed to rise with wages each year, which means that inflation would not push working people into the higher income-tax bracket. That means 90% of all wages would remain subject only to the 10% rate for income taxes. This would create essentially a flat rate for the income tax and the 12.4% total Social Security payroll tax combined. Working people would bear a total income tax and Social Security effective tax burden of 22.4% on the first $117,000 of wages this year. The 12.4% payroll tax would then drop off, but the income-tax rate would rise to 22.4% for wage income above $117,000 for the year. The current personal exemption of $3,000 would be raised to $6,000, exempting the first $24,000 annually from income taxes for a family of four. The plan would retain deductions for home mortgage interest and charitable contributions, but eliminate deductions for state and local taxes, which just subsidize state and local tax increases. Multiple taxation of capital would be addressed by killing the egregious, hated "death tax," and taxing dividends, capital gains and business income at a single rate of 10%. For corporations, the federal corporate income tax rate would be reduced to 10%, as would the capital gains tax and the tax on corporate dividends. That would be close to the revenue-maximizing rate. When President Bush cut capital gains from 20% to 15% in 2003, capital gains revenues soared in the following years. Higher GDP We'd be first worldwide in business-friendly tax policy, eliminating "tax inversions" and spawning waves of companies, capital ($2 trillion currently sheltered offshore) and jobs flowing back to America. Every dollar not taken in taxes from corporations provides about 50 cents for increased wages and jobs, increases earnings of pension funds, and decreases product and service prices. Such reform was not designed to be "revenue neutral," but a major tax cut under static scoring, ultimately revenuepositive under dynamic scoring considering the pro-growth effects of the reform. A standard dynamic economic model in fact scored the tax reform. Over the first 10 years, nearly 80% of the revenue losses from the dramatic rate cuts would be recovered from the resulting dynamically increased savings, investment, job creation, wage increases, and economic growth. After 10 years, GDP would be 16% higher than otherwise, producing $2.6 trillion more for American families and working people. Wages would be 11% higher than otherwise, with 5.2 million more full time jobs. The net revenue loss after 10 years would be only 2% ($111.4 billion) of the then-projected budget ($5.9 trillion). The private economy would gain $24 in increased output and production for each dollar of net revenue loss. This is tax reform you can believe in! • Uhler is chairman of the National Tax Limitation Committee and National Tax Limitation Foundation. • Ferrara is senior policy adviser for budget and entitlement reform policy to NTLF. 17
NTLC’S STRATEGIC PLAN TO ACHIEVE NATIONAL PROSPERITY THROUGH SPENDING REDUCTION AND REGULATORY CONTROL (continued from the “President’s Corner” on page 2) We’ve learned from our mentors, Ronald Reagan and Milton Friedman, the policies essential for America’s future. NTLC is providing leadership on or assisting with: Reducing the size of the federal government and federal spending by devolving means-tested entitlements to the states
and local governments: The New Federalism (see articles on pages 6 and 8). Major tax reform to reduce corporate and individual rates and kill the death tax (see articles on pages 1 and 17). Controlling future federal spending through a tax limitation/balanced budget amendment imposed on Washington by the
states through Article V state resolutions, reducing the size of the federal government as a share of the economy (see articles on pages 1, 13 and 14). Restoring the separation of powers and the huge burden of federal regulation on our economy by abolishing the IRS and
creating a tax collection bureau under the direct control of Congress – and ending EPA, OSHA and other law-making administrative agencies and placing their functions under the direct control of Congress (see article on page 3). Clearing away the EPA and other administrative roadblocks to full development of our national resources to create a vi-
brant economy with low-cost energy (see article on page 5). Development of federal land resources and sale of federal lands with proceeds dedicated to paying off the national debt
for our children and grandchildren and seeding individual retirement accounts for them , using the highly successful Chilean Social Security reform model (see article on page 4). And we are working with and assisting health care experts to end Obamacare and advance free-market, pro-doctor/
patient relationship solutions to the Nation’s health care derailment, including long-term solutions to the unfunded liabilities of Medicare. NTLC and NTLF will continue to collaborate and assist those who share our hopes and vision for a bright future of America. We have long since adopted the Ronald Reagan philosophy that there is no end to the good you can do if you don’t care who gets the credit.
In a 1989 letter regarding the Article V balanced budget amendment effort, Milton wrote: “For many years I have worked with the National Tax Limitation Committee to prompt an amendment to the US Constitution requiring a balance budget and limit on government spending… The surest way to achieve such a constitutional amendment is to allow the public at large to express its wishes through the state legislatures by a call for a convention to propose a balanced-budget amendment. That is the democratic way.”
Milton Friedman, a Founder and sponsor of NTLC, and NTLC President Lew Uhler greeted guests at NTLC’s Washington Office gala during the January 1981 Ronald Reagan Inaugural Celebration.
We are also mindful that we live in an increasingly dangerous world and must adapt to it with key principles in mind:
We must reduce the domestic-issue time demand on the President and
the Congress so they can more effectively deal with defense and foreign relations which our Founders intended to be the primary focus of our national government. We have to free their “management time” for issues which only they are empowered to address.
We must recognize that the jihadist threat is real and that our Nation is in danger because of the nature of Islamic teachings and Sharia Law. Beheadings are only the most visible and egregious manifestations of the anti-woman, anti-civilized society, anti-Judeo-Christian traditions of Jihad. The fight for human freedom and the dignity of man never ends. NTLC and NTLF will not falter in this eternal battle.
We must restore the Reagan defense and foreign policy philosophy that we can assure “peace through strength” without having to deploy or exercise that strength in constant combat engagements. 18
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Ronald Reagan Counted on State Article V Resolutions to Achieve a Federal Balanced Budget/Tax Limitation Amendment
President Ronald Reagan and NTLC President Lew Uhler at Reagan’s Century City office in California in 1989, shortly after Reagan had left the White House. Uhler worked for Reagan when he was Governor and assisted him during his presidency with tax, spending and balanced budget amendment issues. 20
Ronald Reagan firmly supported the Article V state balanced budget resolution process to achieve a federal fiscal control amendment. In a letter to Lew Uhler in March 1994, Ronald Reagan reconfirmed his commitment: “You are absolutely right. We can’t depend on Congress to discipline itself .. We must rely on the states … that is the only strategy that will work … You have persevered in this effort … but I know you can’t do it alone … Now it’s time to discipline Washington through the power of state resolutions … Our opportunity has never been greater … As I have said before: If not now, when? If not us, who? (For the full letter and discussion of this project please see pages 13 and 14.)