Statements on Introduced Bills and Joint Resolutionsby Former Senator Saxby Chambliss
Posted on 2013-01-23
CHAMBLISS (for himself, Mr. Burr, Mr. Inhofe, Mr. Coburn,
Mr. Cornyn, Mr. Moran, and Mr. Cruz):
S. 122. A bill to promote freedom, fairness, and economic opportunity
by repealing the income tax and other taxes, abolishing the Internal
Revenue Service, and enacting a national sales tax to be administered
primarily by the States; to the Committee on Finance.
Mr. CHAMBLISS. Mr. President, I rise to speak today about our Tax Code as well as our economic future. There is a problem with our Tax Code, one that hits home with nearly all Americans; that is, its complexity. In the past few years I have met with hundreds of constituents who are worried about this issue. Individuals, small businesses, farms, and large corporations alike struggle with meeting their obligations to the IRS because of the complexity of our current Tax Code.
Earlier this month the IRS Taxpayer Advocate revealed some startling figures in the Agency's annual report to Congress. It estimates that individuals and businesses spend 6.1 billion hours each year complying with the IRS tax filing requirements. The complexity of the Tax Code is so burdensome that 9 out of 10 taxpayers now pay a professional preparer or use often costly commercial software to assist in tax preparation.
Then there is the problem with our corporate taxes. The United States has the highest marginal effective tax rate among the largest developed nations in the Organization for Economic Cooperation and Development. According to recent studies by the Cato Institute, that rate for U.S. corporations is almost 36 percent. In fact, only Argentina, Chad, and Uzbekistan have higher tax rates than does the United States. While the U.S. corporate rates have remained high, other countries are lowering their rates. Sweden, for example, has become the latest country to announce that it will lower corporate tax rates, in part to help attract more foreign investment. Our corporate tax rates continue to be higher than they should, and we lose our competitive advantage to other nations in part because of that high tax rate.
I want to talk about a way to fix both these problems. Since joining the Senate, I have introduced in each new Congress the Fair Tax Act. Today I am reintroducing this legislation because of my belief that the Fair Tax Act can fix the problems built into our current Tax Code. The fair tax will promote freedom and economic opportunity by eliminating our current archaic and inefficient Tax Code and replacing it with a simpler, fairer means of collecting tax revenue. It will repeal the individual income tax, the corporate income tax, capital gains taxes, all payroll taxes, self-employment taxes, and the estate and gift tax in lieu of a 23-percent tax on the final sale of goods and services. Elimination of these inefficient taxing mechanisms will not only bring about equality within our tax system, it will also bring about simplicity. It will provide tax relief for business-to-business transactions. These transactions, including those for used goods that have already been taxed, are not subject to the sales tax, so there would be no double taxation.
Some of my colleagues have asked how the fair tax would affect our revenue on our entitlement programs. Social Security and Medicare benefits would remain untouched under the Fair Tax Act. There would be no financial reductions to either of these vital programs. Instead, the source of the trust fund revenue for these two programs would be replaced simply by the sales tax revenue instead of by payroll tax revenue.
Another question I get is how the fair tax would affect impoverished Americans. Under the Fair Tax Act, every American would receive a monthly rebate check equal to the spending up to the Federal poverty level, according to Department of Health and Human Services guidelines. This rebate would ensure that no American pays taxes on the purchase of necessities.
We have made nearly 5,000 changes to the Tax Code since 2001--I have supported some of them, and I have not supported others--all in the name of improvement and economic benefit. I believe we can do better than simply lowering our taxes. I know we can make a bigger impact on our economic future by ridding ourselves of a tax structure that is holding us back.
Ronald Reagan once said: I believe we really can, however, say that God did give mankind virtually unlimited gifts to invent, produce and create. And for that reason alone, it would be wrong for governments to devise a tax structure or economic system that suppresses and denies those gifts.
With that statement, I could not agree more.