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Congressional Testimony
April 11, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1120 words
HEADLINE:
TESTIMONY April 11, 2000 BILL ARCHER CHAIRMAN HOUSE WAYS AND
MEANS TAX OVERHAUL PROPOSALS
BODY:
April 11, 2000
Bill Archer, Chairman Good morning Chairman Archer and members of the committee.
Thank you for hosting three days of hearings on Fundamental Tax Reform
proposals. Please allow this document to serve as written testimony supporting
Fundamental Tax Reform and the Fair Tax, or the national retail sales tax
proposal (HR 2525). This testimony is submitted on behalf of the nation s
largest chamber of commerce. The Greater Cleveland Growth Association and it's
small business division, The Council of Smaller Enterprises (COSE), represent
over 16,000 businesses in Ohio and over 250,000 lives in its health insurance
plan. Based in Cleveland, Ohio, our health insurance plan was adopted over 25
years ago to give our members, their employees and families access to high
quality, affordable health care benefits. We are often cited and studied as a
national model for health insurance purchasing cooperatives. We support the Fair
Tax model because it promotes fairness and simplicity, improves the
competitiveness of American businesses, and will increase the standard of living
for the American people. The Fair Tax plan as introduced in HR2525
(Linder,(R-GA) and Peterson, D-MN) would repeal the federal
personal income, corporate income, estate, gift, capital gains,
self-employment, payroll, social security and Medicare taxes
and replace them with a 23% sales tax on all new goods and services. This tax
would be collected at the point of final purchase for consumption. Every
taxpayer will be subject to the same tax rate with no exceptions and no
exclusions. Since the Internal Revenue Service would be abolished under the Fair
Tax plan, the 23% rate is intended to raise the same amount of federal funds as
raised by the current federal tax system. In addition, the rate is calculated to
pay for a universal rebate for essential goods and services and pay for a fee to
retailers and state governments collecting the tax. The universal rebate to all
registered in the Social Security system would replace, in effect, the
exclusions on clothing and food, for example, that states make for their sales
taxes. The universal rebate is proposed to be calculated as the sales tax rate
times the poverty level income adopted by the government for different family
sizes. Proceeds from the Fair Tax would become the primary general revenue
source for the United States government. Social Security and Medicare would be
funded from this revenue stream. The bill as proposed is estimated to be
revenue-neutral for its first full year in effect. The new tax system will then
go into effect one calendar year after the repeal amendment is ratified, with a
transition phase beginning with the ratification of the amendment. The COSE
Board of Directors endorsed the Fair Tax on October 12, 1999 (see attached
Resolution). Our members, primarily entrepreneurs and business owners, agreed
that the current system cannot be reformed. It must be replaced. COSE believes
HR 2525 is a positive non-partisan proposal that will fix the current system by
taxing citizens on what they spend, not what they earn. Thus, the time for
change has come. Even former IRS Commissioner Shirley Peterson acknowledged that
the current tax system should be changed. Head of the IRS in 1992, Commissioner
Peterson noted that "we have reached the point where further patchwork will only
compound the problem. It is time to repeal the Internal Revenue Code and start
over." COSE believes there are valuable member benefits to the adoption of the
Fair Tax. Employees will be able to take home their entire paycheck. Businesses
will not have to pay capital gains, payroll, income taxes or many other taxes
which hurt business growth. The elimination of the estate tax burden will help
family businesses grow. Finally, more capital will be available to business
owners since investment will not be taxed. On behalf of over 16,000 businesses
in Ohio, we urge you to support the Fair Tax proposal. COSE believes it is the
most sensible method to revise our current complex and ever-changing tax code.
Thank you for your time and consideration.
LOAD-DATE:
April 18, 2000, Tuesday 
