Michele Bachmann on Tax Reform
Republican Representative (MN-6); 2011 GOP frontrunner
Those millions of words in the tax code--many of them opaque, many even contradictory--contain enough traps and snares to catch just about any taxpayer. So I realized that if IRS auditors wanted to nail someone, they usually could do so. And the people who were targeted usually chose to settle, because they knew they couldn't win--or couldn't afford to win--against the IRS.
In other words, the infernal complexity of the tax code almost always favors the IRS. People often end up paying more than they should just to get relief finally from the tax man. Why was it, I would observe, that the government nearly always won and the people nearly always lost?
ROMNEY: I would like to see our tax rates flatter & simpler. But let's get the job done first to lower the tax rates on middle-income Americans.
Q: Romney would preserve different rates for different people. Why is he wrong?
BACHMANN: Well, I would say President Obama is the one that's wrong, because President Obama's plan for job creation has absolutely nothing to do with the true people who know how to create jobs. He should really be going to job-creators if he wants to know how to create jobs. We know what needs to be done. We have a real problem. When you have 53% of Americans paying federal income taxes, but you have 47% of Americans who pay no federal income taxes, you have a real problem. And that's why in my tax plan, I have everyone paying something because everyone benefits by this magnificent country. Freedom isn't free. We all benefit. We all need to sacrifice. Everybody has to be a part of this tax code.
BACHMANN: One thing I know about Congress is that any time you give the Congress a brand-new tax, it doesn't go away. When we got the income tax in 1913, the top rate was 7%. By 1980, the top rate was 70%. If we give Congress a 9% sales tax, how long will it take a liberal Congress to run that up to maybe 90%? We also have to be concerned about the hidden tax of the value-added tax, because at every stage of production, you'd be taxing that item 9% on the profit. That's the worry.
CAIN: It's not a value-added tax. It's a single tax.
BACHMANN: How do you not have a value-added tax? Because at every level of production you have a profit, and that profit gets taxed. And ultimately, that becomes a value-added tax. It's a hidden tax. And any time the federal government needs revenue, they dial up the rate and the American people think that it's the vendor that creates the tax, but it's the government that creates the tax.
CAIN: The biggest tax a lot of Americans pay is the payroll tax, 15.3%. That goes to 9%. So they've got a 6 percentage point difference to apply to the national sales tax.
BACHMANN: I would have to say the 9-9-9 plan isn't a jobs plan, it is a tax plan. And I would say that from my experience being in Congress but also as a federal tax lawyer, the last thing you would do is give Congress another pipeline of a revenue stream, and this gives Congress a pipeline in a sales tax. A sales tax can also lead to a value added tax. The United States Congress put into place the Spanish-American War tax in 1898. We only partially repealed that in 2006. So once you get a new revenue stream, you're never going to get rid of it. And one thing I would say is, when you take the 9-9-9 plan and you turn it upside down, I think the devil's in the details.
A: BACHMANN: I think you earned every dollar. You should get to keep every dollar that you earn. That's your money; that's not the government's money. That's the whole point. Barack Obama seems to think that when we earn money, it belongs to him and we're lucky just to keep a little bit of it. I don't think that at all. I think when people make money, it's their money. Obviously, we have to give money back to the government s that we can run the government, but we have to have a completely different mindset. And that mindset is, the American people are the genius of this economy. It certainly isn't government that's the genius. And that's the two views. Pres. Obama has embraced a view of government-directed temporary fixes and gimmicks. They don't work. He's destroyed the economy. What does work is private solutions that are permanent in the private sector. That gives certainty; that will grow our economy.
PAWLENTY: I did agree to the cigarette fee. I regretted that.
Q: [to Bachmann]: You opposed the tax, but in the end, you voted for it. Now you promis never to raise taxes. Why would you compromise then, but not now?
BACHMANN: I fought against that tax. The problem is, Gov. Pawlenty cut a deal with the special interest groups and he put in the same bill, a vote to increase the cigarette tax as well as the vote that would take away protections from the unborn.
PAWLENTY: Rep. Bachmann didn't vote for that bill because of a stripping away of pro-life protection, she voted for it and is now creating that as the excuse.
BACHMANN: If a member casts a vote one way, they would be increasing the cigarette tax. If they cast a vote another way, they would not be voting for the pro-life protection. It was a choice. The governor put us in that box and I chose to protect human life.
A: I am. Simple. Fair. Flat. Everyone should pay something.
Michele Bachmann is a congresswoman from the 6th district of Minnesota, the first Republican woman elected to the House from her state. She's a small-government, low-tax, pro-energy independence phenomenon who's also a small-business owner and a mother of five.
The AMT sets a minimum tax rate of 26% or 28% on some taxpayers so that they cannot use certain types of deductions to lower their tax. By contrast, the rate for a corporation is 20%. Affected taxpayers are those who have what are known as "tax preference items". These include long-term capital gains, accelerated depreciation, & percentage depletion.
Because the AMT is not indexed to inflation, an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax. In 2006, an IRS report highlighted the AMT as the single most serious problem with the tax code.
For 2007, the AMT Exemption was not fully phased until [income reaches] $415,000 for joint returns. Within the $150,000 to $415,000 range, AMT liability typically increases as income increases above $150,000.
OnTheIssues.org Explanation: This vote extends the AMT exemption, and hence avoids the AMT affecting more upper-middle-income people. This vote has no permanent effect on the AMT, although voting YES implies that one would support the same permanent AMT change.
Proponents support voting YES because:
Rep. RANGEL: We have the opportunity to provide relief to upward of some 25 million people from being hit by a $50 billion tax increase, which it was never thought could happen to these people. Almost apart from this, we have an opportunity to close a very unfair tax provision, that certainly no one has come to me to defend, which prevents a handful of people from having unlimited funds being shipped overseas under deferred compensation and escaping liability. Nobody, liberal or conservative, believes that these AMT taxpayers should be hit by a tax that we didn't intend. But also, no one has the guts to defend the offshore deferred compensation. So what is the problem?
Opponents recommend voting NO because:
Rep. McCRERY: This is a bill that would patch the AMT, and then increase other taxes for the patch costs. Republicans are for patching the AMT. Where we differ is over the question of whether we need to pay for the patch by raising other taxes. The President's budget includes a 1-year patch on the AMT without a pay-for. That is what the Senate passed by a rather large vote very recently, 88-5. The President has said he won't sign the bill that is before us today. Republicans have argued against applying PAYGO to the AMT patch. In many ways PAYGO has shown itself to be a farce.
Politicians often run for office saying they won't raise taxes, but then quickly turn their backs on the taxpayer. The idea of the Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing.
In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is actually made to a candidate's constituents, who are entitled to know where candidates stand before sending them to the capitol. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which he or she signed the Pledge.
Since its rollout with the endorsement of President Reagan in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts.
The Contract from America, clause 4. Enact Fundamental Tax Reform:
Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words--the length of the original Constitution.
The Contract from America, clause 10. Stop the Tax Hikes:
Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.
[The ATR, Americans for Tax Reform, run by conservative lobbyist Grover Norquist, ask legislators to sign the Taxpayer Protection Pledge in each election cycle. Their self-description:]
In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. Since its rollout in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts. Today the Taxpayer Protection Pledge is offered to every candidate for state office and to all incumbents. More than 1,100 state officeholders, from state representative to governor, have signed the Pledge.
The Taxpayer Protection Pledge: "I pledge to the taxpayers of my district and to the American people that I will: ONE, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."
Opponents' Opinion (from wikipedia.com):In Nov. 2011, Sen. Harry Reid (D-NV) claimed that Congressional Republicans "are being led like puppets by Grover Norquist. They're giving speeches that we should compromise on our deficit, but never do they compromise on Grover Norquist. He is their leader." Since Norquist's pledge binds signatories to opposing deficit reduction agreements that include any element of increased tax revenue, some Republican deficit hawks now retired from office have stated that Norquist has become an obstacle to deficit reduction. Former Republican Senator Alan Simpson, co-chairman of the National Commission on Fiscal Responsibility and Reform, has been particularly critical, describing Norquist's position as "no taxes, under any situation, even if your country goes to hell."
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