Issue Topics

Reducing Our Tax Burden - Three Stages of Reform

Having spent twenty-five years preparing taxes for working Americans, I am painfully sensitive to the hardships that the Internal Revenue Code has created for employers and families alike. Many of the reasons I entered public service fifteen years ago arise from the experiences I gained guiding families through the tax code and witnessing the inequities and inefficiencies of our system. Democrats and Republicans agree that the next Congress will be faced with critical choices over tax reform, and the consequences of making wrong choices will be severe. When you elect me as your next Representative, there will be no on-the-job training when it comes to tax reform. I am well-prepared to stand up to Charlie Rangel and others who want to preserve an arcane system and whose ideas will stifle economic growth. Federal tax policy is hopelessly complex and diminishes our natural inclination to earn income and save for our future. Americans spend far too many hours trying to decipher a system that is outdated, inefficient and confusing. For too long, tax policy has been a patchwork of ideas lacking a core guiding principle. It is time for comprehensive reform which benefits all Americans and creates meaningful incentives so that families work, save and invest in their future. My plan for tax relief is based on three stages of reform: (1) Immediate Reform – Repeal the Alternative Minimum Tax (AMT). The AMT is the perfect illustration of an out-of-date, confusing tax code that discourages savings and investment. It penalizes millions of unsuspecting taxpayers, delivering a financial blow to families, despite the fact that this was never the intent of the law. The AMT disproportionately impacts married couples who have children. By the year 2010, three-fourths of families with earnings between $75,000 and $100,000 with two children will be trapped in AMT’s wake to the tune of several thousand dollars in penalties. This statistic is indicative of why I strongly support the immediate repeal of the AMT. (2) Short-Term Reform – Make the Republican Tax Cuts of 2001 and 2003 Permanent. The next Congress must pass legislation to make the pro-growth tax cuts from 2001 and 2003 permanent. Until Congress enacts long-term, comprehensive tax reform, this extension of the Republican tax cuts is imperative and needs to be matched with spending restraint. The death tax will be resurrected in 2011, and I remain firmly opposed to making death a taxable event. Failure to extend the tax cuts will also harm low-income Americans, as the 10 percent income tax rate is set to expire. I also support extension of these tax cuts because the sunset provisions will revitalize the marriage penalty inherent in the tax code. The current provision will sunset in 2010. The tax code should not penalize people who decide to marry or are married. (3) Long-Term Reform – Enact the FairTax. I strongly endorse the FairTax, the only sensible, comprehensive tax reform legislation pending today which will change a broken system and end our citizens’ hopelessly confusing relationship every April with the Internal Revenue Code. The FairTax embraces principles of economic freedom and liberty and treats all Americans equitably. The FairTax will abolish all personal and corporate income taxes, the death tax, the capital gains tax and self-employment taxes. The FairTax would tax every American on what he or she chooses to spend with a rebate to ensure that no one pays taxes on spending up to the poverty level. Every hard-working American will see the benefits of the FairTax immediately, because every citizen keeps 100 percent of his or her paycheck. Workers keep what they earn, and entrepreneurs will have the resources necessary to create jobs, develop new technologies and compete in the global economy. This system will encourage hard work and savings and will end a system that allows tax cheats, drug dealers, pimps and prostitutes to escape the tax burden that the rest of Americans shoulder for them. The FairTax, supported by Republicans and Democrats alike, needs to be a cornerstone of our long-term federal tax policy and must be a priority for the next Congress.   For more information on Senator Lauzen’s tax reform policies, please click here.