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Steve Forbes on Tax Reform

2000 Republican Primary Candidate for President

 


1995: 15% across-the-board tax cut to stimulate economy

In 1995, we helped Dole craft a supply-side economic message with input from some of the leading economic experts in the country, including Milton Friedman and Steve Forbes. The Dole proposal had as its centerpiece a 15% across-the-board tax cut for theAmerican people. He argued that by letting people keep more of their own money, they could better stimulate the economy than the federal government could. Still, with the country seeming to be at peace & reasonably prosperous, Dole lagged behind Clinton.

Optional flat tax: 17% with $13,200 deduction

This concept of an optional flat tax rate was developed by Steve Forbes when his flat tax campaign was undermined by criticisms that it would take away popular tax breaks. Forbes proposed giving American taxpayers an opportunity to choose simplicityversus complexity and a single rate over a lot of deductions. They call it the free choice flat tax, and it's an idea whose time has come.

All workers and corporations would have the freedom to choose each year to file their income taxes either underthe new free choice flat tax option or under the current US income tax code. Anyone who strongly favors a deduction or credit under the federal government's current complex income tax system would have the choice to keep filing that way.

The free choicflat tax option would apply one single tax rate of 17% to all individuals and corporate taxpayers. It would also include a standard exemption of $13,200 for each adult and a $4,000 exemption for each child.

A flat tax will help families, homeowners, and charities

Q: What would you do about taxes? A: We need to get rid of the code. This way we truly get rid of the marriage penalty. [My] flat tax would help stay-at-home moms, not just those in the work force. It would also help charitable giving because itlets you keep more of what you earn. When the American people have more, they give more. It encourages home ownership. Why? Because it lowers interest rates, allows you to keep more of what you earn and therefore you have more with which to buy a house.

Evidence that Bush broke 1997 no-tax pledge

Q: [to Bush & Forbes]: Forbes’ TV ad says that in 1994 you signed a pledge to not support sales tax or business tax increases, and in 1997 you broke the pledge.

BUSH: I led my state, in 1997, to the largest tax cut in Texas history. I laid out a planthat cut $1 billion of property taxes.. I am a tax-cutting person.

FORBES: There was a lot of hedging about this pledge. The pledge was made in 1994. I have a copy of it here, promising not to raise the sales tax or to propose any kind of income tax.When he proposed this bill in 1997 it did have provisions in there for tax increases including increasing a sales tax. Pledges should not be lightly made and a pledge is a promise. Bush’s own staff admits that he broke the pledge. In 1998, I supportedyou & I would have voted for you. But you did break that pledge.

BUSH: [People] need to look at the results. That’s what’s important. The results are people from all walks of life received a substantial tax cut under me as the governor of Texas.

Remove mortgage deduction & keep business deductions

FORBES [to Bauer]: Should we have a no-tax plank in the Republican platform?

BAUER: Of course we should have a no-tax pledge. The American people are over-taxed. But, Steve, I don’t like your tax plan. You take away the mortgage deduction, [whichwould] decrease housing values. You take away the charitable contribution deduction which churches rely on. And then you take the money you save from those two things and you give a new write-off to big business that will allow many of them to pay zeroin federal taxes. My proposal is fair; It’s pro-family; it’s pro-entrepreneur; pro-mainstream. It looks out for the human capital of our country, which is most important.

FORBES: We need fundamental reform: getting rid of this current taxcode. If you allow people to keep more of what they earn, housing will be helped. As for the business side, not allowing a small business to recover their investments, you’ll destroy them. And as a result you’ll destroy tens of millions of jobs.

Top priority: throw out tax code

Forbes called for an overhaul of the tax system. The new year should bring a new brand of politics, and throwing out the tax code is the top priority, he said. “Is there anybody in America today who believes this tax code is working?” he asked.“It’s an atrocity, an abomination. As a free people we should decide what kind of code we have.” Forbes, who supports a 17% flat tax, also criticized a tax cut suggested by the Clinton administration, which would target specific groups.

Flat-tax IRS exists, but is smaller and less powerful

KEYES [To Forbes]: I’m slightly confused because it seems to me that what you propose is not that we strike off the chains of tax slavery, but that we equalize it. In this case, we will still have to have an agency - I guess we could call it the happyfaced enforcer of equal tax surplus. But it would still be there, enforcing an invasive tax that would require that people tell the government what the government wants to know. How do you abolish the IRS if you don’t get rid of the income tax?

FORBES: Whatever tax you have, whether it’s the flat tax or national sales tax, you are going to have a collection agency to make sure the money comes in. The virtue of the flat tax is that you can do it on a single page since it’ssimple. You don’t need a hundred and ten thousand agents to do it. You just need a handful to take in the paper, make sure the checks are attached, that they clear and the job is done.

Sales tax better than current IRS; but we’d end up with both

KEYES [To Forbes]: I think part of the problem is that folks would still be subject, under your plan, to an income tax. When they wanted a tax cut, they’d still have to beg their politicians. When under a sales tax system, they’d give themselves a taxcut by changing their pattern of consumption. If we really want to give people control of their money, shouldn’t we just abolish the income tax?

FORBES: I think if you abolish it for lower-income Americans, yes, that’s what I’d do. As for the nationalsales tax, either a flat tax or national sales tax would be much better that what we have today. But there are challenges for a national sales tax. Depending on what you choose to exempt, the rate can be 20% to 35%. So a kid comes and cuts your lawn, youowe a 35% tax. You buy a new house, 35% tax. And also, you better make sure you repeal the 16th Amendment, which enables the income tax, or you’re going to have both an income tax and a sales tax.

End death taxes: “No taxation without respiration”

As president I’d propose a new economic plan that would remove this 40 percent tax burden from middle class families. Let’s say you have a family of four, your first $36,000 would be free of federal income tax. And anything you earnabove the $36,000 level, you’d pay only 17 cents on the dollar. There also would be no tax on your pensions. No tax on capital gains and no death taxes. Sort of a new principle of taxation. No taxation without respiration.

Murky tax code breeds police state collection tactics

The US federal income tax code, with its attendant regulations, is over 7,000,000 words and rising. Non one knows what’s in there. Give your tax information to 50 different accountants, and you will get 50 different returns.And it is precisely this murkiness that breed police-state collection tactics. Who can effectively argue with the IRS if no one understands the system? Who can successfully fight with an IRS so large and so powerful?

Tax return on a postcard

The Steve Forbes Flat Tax Form
  1. Wages & Salary
  2. Number of adults in family
  3. Number of children in family
  4. Deductions for adults (multiply line 2 by $13,000)
  5. Deductions for children (multiply line 3 by $5,000)
  6. Total deductions(line 4 plus line 5)
  7. Taxable income (line 1 minus line 6)
  8. Tax (multiply line 7 by 17%)

Better tax incentives for business investments

As a businessman, [my flat tax plan] has incentives for investment. If you tell a farmer, “You can’t recover the cost of your tractor,” you ruin him.You tell a restaurant owner they can’t recover the cost of the equipment, you ruin him. I provide for jobs. I provide a tax break for all.

Urges Clinton to sign Congress’ $792 billion tax cut plan

Washington politicians and special interests don’t want you to get your money back. On one side, there are those of us who think that the federal government spends too much, taxes too much and is just too big. On the other side, are those in Washingtonwho want to make government even bigger. By passing this tax cut, Congress has said that $792 billion would be better spent by America’s families than by Washington bureaucrats. I agree. Sign the tax cut, Mr. President. I would.

Signed no-tax pledge; will “end IRS as we know it”

Signed the Americans for Tax Reform pledge that reads: “I pledge to the taxpayers of the United States of America that I will: (1) oppose any effort to increase the marginal income tax rates for individuals and/or businesses; and (2) oppose any furtherreduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” Forbes also said he will dramatically reduce the tax burden on working families and fight to “end the IRS as we know it.”

Flat Tax of 17% on earnings over $36,000

With Forbes’ Flat Tax, you would pay a low rate of just 17%, after generous personal exemptions for individuals and families. Twenty million low-income Americans would be taken off the tax rolls altogether. The average family of four would pay no federalincome tax on their first $36,000. Also, there would be no marriage tax penalty, no “death tax,” and no federal taxes on savings, pensions or capital gains - and, you could fill out your taxes on a simple postcard.

Bible has 700,000 words; Tax Code has 7 million. Junk it.

The power to tax is the power to destroy. The tax code is the principle source of political power in Washington. To change the culture, you must substantially change the tax code. I think we have to junk it. No one outside of Washington could havedevised something more complex, more corrupting, more anti-growth, more of a dead weight on economic activity & family life than the tax code we have today. The Bible is 773,000 words. The Tax Code is 7 million words & rising. That puts it in perspective

Charitable deduction gone under Flat Tax; but giving is not

On charities, the flat tax’s very simplicity means the deductions go away. Americans don’t need to be bribed by the tax code to give money. We were known as a generous nation, as one with an extraordinary array of charitable activities, long before wehad the federal income tax. When people have more, they give more. When the flat tax is fully implemented, fund raisers will pitch the worth of the charity [rather than] this is a great way to save on taxes. We will see the revival of civic virtue.






Page last updated: Oct 28, 2021
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