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1 J. D. Foster, The Contract with America and Tax Reform 1 (1995)

handle is hein.taxfoundation/taxfaaxc0001 and id is 1 raw text is: TAX'% FOUNDATION January 1995 The Contract with America and Tax Reform House Ways & Means Committee Testimony ByjD. Foster The following testimony was presented Executive Director and by Dr. Foster before the House Ways & Means Chief Economist Committee on January 11, 1995. Tax Foundation Mr. Chairman and Members of the Com- mittee, my name is J.D. Foster and I am the Ex- ecutive Director and Chief Economist of the Tax Foundation. It is an honor for me to ap- pear before your committee today on behalf of the Tax Foundation to discuss the Contract with America and the direction of tax policy. The Tax Foundation is a non-profit, non- partisan research and public education organi- zation that has been monitoring fiscal policy at all levels of government since 1937. We have approximately 600 members, consisting of large and small corporate and non-corporate businesses, charitable foundations, and individ- uals. Our business membership covers practi- cally every region of the country and every in- dustry category. In the recent election, the American people, as interpreted by the press and this Congress, expressed a clear preference for lower taxes and less government. I would like to emphasize to the Commit- tee that the Tax Foundation is not a grass- roots organization, a trade association, or a lobbying organization. We do not take posi- tions on specific legislation or legislative pro- posals. Our goal is to explain as precisely and clearly as we can the current state of fiscal pol- icy and the consequences of particular legisla- tion in the light of the tax principles delineat- ed before, so that you, the policy makers, may make informed decisions. When it was established in the late 1930s, the Tax Foundation's founding fathers set out certain principles of taxation which the Tax Foundation would promote and which would guide our analysis of tax proposals. According to these principles, a good tax system should: * Be as simple as possible - complexity makes accurate tax compliance needlessly ex- pensive and diminishes the public's willing- ness to comply with the law; * Not be retroactive - taxpayers must have confidence in the law as it exists entering into a transaction; * Raise revenue, not micromanage the econ- omy with subsidies and penalties; * Not be continually rewritten - frequent change lessens citizen understanding of the tax code and complicates long-term economic planning; and, * Be implemented recognizing the competi- tive nature of the world economy. In the recent election the American peo- ple, as interpreted by the press and this Con- gress, expressed a clear preference for lower taxes and less government. One does not have to look far to find an explanation. Every year the Tax Foundation produces an analysis we call Tax Freedom Day. Imagine every dollar you earn going to pay federal, state, and local taxes beginning January 1. Tax Freedom Day is the day when the average taxpayer's tax bill is paid off for the year, when the taxpayer is free to keep the money he or she earns.

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