Local Response to National Economic Uncertainty 23 September, 2008
Posted by David Anderson in Action Item, Economic Policy, Election 2008, Kent county, Local.add a comment
For Immediate Release
Contact: David Anderson
302-734-0366
ANDERSON DECLARES JOBS AND ECONOMY TOP ISSUE IN LEVY COURT RACE—
NATIONAL SITUATION DEMANDS A MORE PROACTIVE LOCAL GOVERNMENT
At Thursday’s Kent County Federation’s of Republican Women’s meeting, David Anderson candidate for Levy Court will promote a jobs and prosperity agenda for Kent County.
David Anderson believes now is the time to make jobs and the economy a top priority of Kent County Government. Levy Court 3rd District. The current Levy Court is investing $73,000 in economic development. 2008 was $74,000. The 2007 investment was $1,600,000 in grants, land acquisition, and expenditures. A previous year was approximately $900,000. $700,000 was transferred from Economic Development to open space preservation.
The following is a synopsis of Mr. Anderson’s proposal– A Prosperity Agenda!
We need to be pro-business in order to be pro-jobs. I would like to see our industrial-commercial areas become enterprise zones and international trade zones. We need to work with the chamber of commerce (CDCC) to take advantage of grants available to businesses which export overseas. With the Internet and parcel post services, it is an easy proposition for more businesses than we think. There are more than 360 federal economic development programs. Let’s have a contest with the colleges to see who can come with the best way to tap them.
I would also like us to take advantage of alternative energy and science grants. I would also like to see a tax credit to any business anywhere in the county which expands. The new expansion portion should be exempt from higher taxes for three years. I would love to see start ups get a one year tax holiday. These ideas won’t cost us money but could bring us a real return.
We can also publish all of the available support programs for local and start up businesses. Every non profit, institution or agency should be known through the county website and a booklet.
Instead of wasting money on lawsuits because we don’t follow state laws, lets build our economy.
My recommendation is to draft an incentive which piggybacks on a program like the SBA small business loan program that requires a business plan. It has a track record of being effective and not abused. For example, proposed legislation might be that if one starts or expands a business in Kent County and one qualified for a small business loan through the SBA program then the County will provide seed money grant each year for three years as long as your location remains Kent County, etc. The amount of seed money could be a percentage of wages paid to encourage job creation, a percentage of taxable income generated by the business, both, or taxpayer’s choice each year. This would inspire all types of business entities: sole-proprietorships, partnerships, corporations, and LLCs.
I specifically note applicants must qualify for a SBA loan – not have received a SBA loan - because if a person doesn’t need to finance their business start-up/expansion they should not be ineligible. Other similar incentives may be available to entice larger businesses to the area by working with the State Economic Development Office.
What are we doing now? We hired a professional firm which came up with some good ideas. We shelved the study and cut the economic development budget to its lowest level in years. When we need jobs the most, we made that the lowest priority.
The meeting is sponsored by Kent County Republican Woman’s club. David Anderson will be one of the guest speakers at the monthly luncheon on September 25th at Maple Dale Country Club Dover. The luncheon starts at 11:30.
Mr. Anderson will gladly accommodate any press questions afterward or arrange interviews with any media unable to attend..
End
Our Magic Piggy Bank 17 September, 2008
Posted by David Anderson in Economic Policy.Tags: AIG, bailouts, Bear Stearn, economic meltdown, Economic Policy, Federal Reserve, money supply
2 comments
I heard it on the radio news. Taxpayers are bailing out AIG. It turned out the Fed(Federal Reserve Bank) was bailing out AIG. That is a big difference. The fact that even the news reporting can’t get this right concerns me. The truth is today, America may have become a temporary corporate state. We are seeing the economic power of America consolidate in the hands of a few planners who have government power to print as much money as they see fit.
In 1913 the United States established an Independent central bank system called the Federal Reserve System headed by the Federal Reserve Bank and its politically appointed board of governors with banker appointed members of the open market committee. It was established to put professionals in charge of monetary policy. The Treasury Department had shall we say varying degrees of success.
The Federal Reserve by law is charged with keeping inflation under control, keeping us from deflationary depression, and keeping us as close to full employment. They have enormous power over the banking industry, the money supply, interest rates and now that depression era laws have been activated, investment banks. The maestros of the privately owned central bank have become the most important people in world. If I can find an hour this week, I will write about the implications of the bankers expanding their control to the insurance, investment banks and commodities. No promises though.
Many people think the Fed is a federal agency. Like Freddie Mac and Fannie Mae it is not really a federal agency, but unlike them (which were publicly held) it is privately owned. It is an amazing innovation. Instead of having political hacks running the money supply and then have to be bailed out by the bankers every 20 years, the professionals run the money supply by controlling the federal bond market, bank margins, and printing the money.
The money that the Fed is using does not come from the federal budget. It is not tax money. This unique ability to print money gives the policy makers a major temptation; it is to treat the Fed like a magic piggy bank (as Greenspan warned us against). It can do amazing things to stabilize the economy, but it comes at a price. Too much money equals inflation which is a silent tax on wages and assets. Allow the Fed to expand its scope too much and it becomes distracted from its historic and vital role. The reason companies like AIG ran into problems is that they became to diversified for anyone to manage. Imagine trying to control the variables of the global economy. No one can do it. If the Fed becomes too preoccupied, it may well miss the next crisis signal. For our own sake, we need an economic policy which restores risk management to the market place, a sound energy policy, and sound fiscal policy, and tax reform.
And Now for the Rest of The Story 7 August, 2008
Posted by stoptaxing in Economic Policy, Energy.add a comment
Remember when the adjournment of Congress passed by one vote and the vote on energy policy was left in limbo? Here is the behind the scenes story. Tell me it isn’t time for a change.
A Smarter Approach to Planning 8 June, 2008
Posted by David Anderson in Economic Policy, Kent county, Local, Revolutionary Reform.3 comments
When I listen to the land management debate, I wonder why the real issues are often mentioned only in passing. We are in danger of becoming a bedroom community not a vibrant self-sustaining one. In Kent county, most people can no longer afford to live here on the wages paid. According to the housing report, most people are being stretched by rent and mortgages beyond what they can comfortably afford. High energy costs make commuting to find a better job an unproductive option for many. Stagnant wages, high energy costs, and a lack of affordable housing have created an iron triangle of despair for many people.
To answer this we need to begin with a smarter, fairer approach to land management. It should meet these three objectives: reviving our towns and cities, providing a diversity of housing stock, and promoting a vibrant business environment. It needs to respect property rights and be environmentally and culturally sustainable.
First, I wonder why we need to build town centers where there is no town. It is almost like the Democrat majority in Kent county is trying to dump all of the growth in areas still represented by Republicans; political gamesmanship is not leadership. That doesn’t seem like real change to the CR district and does nothing to alleviate the traffic issues about which everyone around Dover complains. The idea has merit if it is connected to town growth plans and can connect to town services. The county needs to cooperate with the towns not build new towns.
Second, we need implement a Transfer of Development bank and institute a system where people can easily sale or trade TDR’s. If someone wants to sell their development rights, not even the county can tell them for sure what to do. I spoke with someone who did three different deals and each one had different rules, all in the same year. The worse part is that it was becoming harder not easier. If you want to control growth, let people make money off of keeping their property rural. It is the best way to fairly compensate people for choosing to preserve their property. It won’t work unless it is a market commodity. Ideally, the TDR’s should also be able to be used in the towns to facilitate Traditional neighborhood design plans and giving developers matching tax credits to rehabilitate housing. We don’t need to devalue property and place unheard of restrictions on people.
Third, we need to implement a traditional neighborhood design as a development option. In my view it should be available in all areas and be encouraged not subjected to higher scrutiny. It would provide a mix of housing, allow churches, medical offices, smaller stores, and other businesses not high traffic to be in an area. It would allow a landowner and developer to make a greater profit offering some affordable housing while bringing good local jobs where people live. That is good environmental policy, and economic policy. The bedroom community mandates have failed. Let’s try something different. Let’s give people more choices. History shows that choice works better than mandates.
Fourth, we need to be pro-business in order to be pro-jobs. I would like to see our industrial-commercial areas become enterprise zones and international trade zones. We need to work with the chamber of commerce (CDCC) to take advantage of grants available to businesses which export overseas. With the Internet and parcel post services, it is an easy proposition for more businesses than we think. There are more than 360 federal economic development programs. Let’s have a contest with the colleges to see who can come with the best way to tap them. I would also like us to take advantage of alternative energy and science grants. I would also like to see a tax credit to any business anywhere in the county which expands. The new expansion portion should be exempt from higher taxes for three years. I would love to see start ups get a one year tax holiday. These ideas won’t cost us money but could bring us a real return.
Fifth, we need to continue cooperation with the cities to coordinate economic development and not work contrary to one another. The county should ensure that it plans proper infrastructure for industrial parks like the Garrison Farm. If you don’t build it, they won’t come. That was even true in the “Field of Dreams”. Impact and adequate facility related fees should go into a trust fund used to for that purpose and not into the general fund.
What we are attempting to do in the Livable Delaware and the proposed Kent County Comprehensive plan hasn’t worked well for the average person and often fails at its stated goals anywhere I can find. So why not try something smarter? We need smart change.
Mike Protack, Candidate for Governor on his Delacare proposal 17 April, 2008
Posted by David Anderson in Economic Policy, Election 2008, Healthcare, State.Tags: Protack for Governor
11 comments
Everybody Is In
No One Is Out
Everyone Pays Their Fair Share
The year 2008 will be a monumental step in the history of Delaware, as together we launch a dialog for change. Ours is a message of healthcare security for all, now and in the future years. We look not into a far-off crystal ball and hypothesize the what-ifs based on a notion, but instead we look into the needs of our people and say “Let’s work together for positive change now and for the future of our state and nation.” After many discussions with people all over this nation, I have seen a common thread that affects us all yet lacks current leadership is healthcare. Healthcare is the single largest domestic issue we have as a nation that could jeopardize our entire economy because it affects our ability to work, our ability to achieve a balanced federal budget, our ability to see our children grow up happy and our ability to age gracefully. It touches the lives of all people.
Although the U.S. has the best healthcare in the world, we are still in an extremely vulnerable state with costs increasing 5-8% faster than our income, personal expenditure rates steeply climb as we experience higher insurance premiums, higher co-payments, more services limited within our insurance coverage policies, and fewer benefits covered. These are not the results of frills or extravagances. These results are the state of a critical need for all Americans that threaten our society. If left unchanged, the threats will not disappear. Our challenge is to team up as a community and bring overdue leadership to this very real issue. As your Governor, I will bring leadership in the development of a new healthcare program for all Americans that will start right here in Delaware. We call this Delacare.
The Delacare Plan will be a universal, private health care system that will be open to all citizens. Just as today, it will be funded by its citizens through taxes, employment contributions and private business taxation. Unlike other systems previously introduced for reform, this plan comprises a multi-tiered approach that encourages additional investment into all levels of education, refocuses industrial growth and creates larger markets for healthcare to be a more economically viable export product through which we shall be able to assist other nations around the world. An ambitious effort, our model affects personal health status as well as it affects local, regional, national and global efforts. It intends to put personal human capital at the top of the list of importance for our families, our communities, our nation and our world.
We seek your consideration and support as we consider implementing perhaps the most significant legislation in decades for Delawareans.
Key Points
Healthcare will become the highest priority in the nation:
· All citizens are covered from cradle to grave and each state will “build” large geographic pools, Delaware will have one pool.
· Doctors, Nurse Practioners etc will be paid ‘fee for service’ and there will be recognition of the years of training, sacrifice and stress of daily decisions that are often looked at with zero tolerance.
· Citizens may receive care anywhere – total freedom of choice.
· No more product confusion: In Network/Out of Network, POS, PPO, HMO
· A “basic” plan will be offered along with optional buy-up plans.
· Buy-up plans will be at the option of the individual consumer.
· The buy-up plans will cover benefits not covered under the basic plan.
· States may offer their own buy-up plans or minimally priced riders to the basic plan.
· Plan covers both allopathic and selected integrated medical care.
· Individuals shall receive EOBs that detail expenditures, so they will become better healthcare consumers.
· Federal allocations to healthcare shall be frozen. Private corporate and personal taxation shall contribute to the balance of the expense.
· The rate of increase to the government shall not be higher than the national rate of inflation.
· The financial goal of the plan shall be to develop a pricing structure that is cost-neutral to the current financial landscape.
· Administration of the basic plan will be a 4 year administrative contract that may be bid on by any qualified company.
· Providers are supported with streamlined administrative processes.
· Professional providers will receive educational loan forgiveness.
· Education systems will be reformed to complement the demand and quality required for a high level of quality care and support by future providers
· States will develop healthy community partnerships between providers, employers and educational institutions to promote healthy lifestyles
· Corporations will team with the government to export healthcare expertise to other nations on a fee basis to help foreign nations
· Paraprofessionals will be trained in their programs to provide healthcare both locally and overseas
· Volunteerism will be encouraged of professional and paraprofessional healthcare students rewarded by student loan redemption credits
· Youth service corps will be set up to have young people serve as health care interns and trainees to serve as local patient advocates, before they can apply for professional healthcare schools
· Costs for reckless lifestyles will be borne by the citizen choosing riskier behavior, not solely by the national plan
· Tort reform shall be imposed to limit the malpractice awards, limit attorney percentages and the plaintiff attorney will be required to have a board certified Dr in the same area as the alleged malpractice that harmed the patient. The Judge will review the report prior to filing and rule on the appropriateness. The expert’s opinion should clearly state who erred and filing will be limited to those an appropriate expert said erred.
· (more…)
Senator Obama, Please Explain How this Will Work. 5 April, 2008
Posted by David Anderson in Economic Policy, Election 2008.3 comments
Senator Obama is a very intelligent man so how does he justify adding costs to domestic oil consumption by forcing 150 billion dollars of their money to be invested in his chosen energy programs (not drilling or building new refineries that we desperately need )and robbing them of profits as a means to control gas prices. When we tried this in the 70’s it was a disaster. At least we can get gas when we want not wait in lines and decide for ourselves how to control our budgets.
The problem with the Democrat party and energy is that they have no realistic plan. We can’t mandate our way to affordable energy. There policies will increase the cost of energy not decrease it. I am a big believer in alternative energy. I now see it as a national security issue not just an economic one. On that basis, I favor a more aggressive approach of tax credits and other breaks and even government seed money for research, development, and start up companies. Alternative energy is important to the future of the nation. Encouraging conservation is also a good move. On this I agree with the Democrats.
Where I depart from them is that we need more government mandates and to “punish” oil companies for making money. I am all for them making whatever. They are not stealing the money. They are providing the world a service. They need not apologize nor suffer theft of their profits through some windfall profit tax while being expected to invest in other industries the rest of their profit. Weakening the dollar, preventing drilling off shore and in Alaska, moving away from nuclear reactors, and not approving refineries (all government policies) have done as more to contribute to high gas prices than any decision by Exxon/Mobil. Unfortunately, he addresses none of these issues. Don’t get jealous, just buy stock.
The oil companies have moved to become energy companies on their own. Giving tax credits would aid the process along. Companies would find what is most efficient in the marketplace and not what is the fad. If you force companies to give away x amount of money by a certain date, you will create bad decisions and may end up delaying new inventions which will give us cheap, clean, and renewable supplies of energy. The truth is we need oil companies to invest in developing new oil resources. If they want to diversify, great. If Senator Obama wants to run an oil company, he should run for chairman of the board of one not for President of the United States. Under our Constitution, you still have the right to control your money not the government and that includes a collective expression of personal rights represented by a corporation.
Another area I see is a problem is that Nuclear power is not mentioned. No other industrial country in world would even think that in the medium term any non emitting power solution could exist without a nuclear power dimension.
I think we need a comprehensive approach to energy policy based upon economics not pandering. On this score the senator fails. The energy issue is one too vital for us to be stuck with thinking that hasn’t changed since the ’70’s.
Let’s play cut that budget. 31 March, 2008
Posted by David Anderson in Action Item, Budget, Economic Policy, State.add a comment
Our leaders in state government are grappling for ways to keep government afloat. I think the revenue shortfall will not be as bad as now projected any more than it was as good as projected 3 months ago. Nonetheless, they are the best numbers we have and we have to make tough decisions. Our leaders could use fresh ideas. Let’s play cut that budget.
Here are my top ten in no order of priority.
Repeal the new prevailing wage law because it is not the real prevailing wage. I am all for a decent living wage in government contracts, but it makes no sense to cancel projects and have no wages. Balance is a good thing.
Allow more competition in the state supplier list by opening it up to new suppliers every quarter for mundane items and simplify the process. Many times it is cheaper to go to Sam’s or Staples than buy from the state’s approved list. If a company can come up with a great deal, why make them wait a year or more to offer it.
Let’s get a performance audit of the Medicaid plan and the SChip program. I don’t want to balance the budget on the backs of the poor. I just want to find where the system is working and where it is not.
Sentencing reform would help us keep the dangerous people incarcerated and eliminate silly mandatory minimums for nonviolent offenders. Drug rehabilitation would be money better spent than mandatory minimum sentences. Our prison system is one of the fastest growing portions of our budget yet we aren’t much safer.
Sorry, but a salary freeze has to be a given. Slight increases in employee premium shares for dependent health care seem unavoidable for now. That is painful for me to even write, but it is better than job or hour cuts.
Stop spending tax money for open spaces and help the counties establish Transfer of Development Rights banks. The key to making it work is for the cities to cooperate. We need to rebuild our cities not artificially build town centers in our counties. Livable Delaware is a failed experiment which we can no longer afford.
Deregulate school construction. Let’s allow schools to save money in construction by making sure schools are safe not dictating every detail. Why force prevailing wage on the schools? Why not allow steel buildings and cut the cost by as much as 2/3’s. Why stop a district from planning for obvious growth?
Now let me borrow a couple from Dave Burris of the Delaware Taxpayers’ coalition. I agree that we need a performance audit of state government. Many of State Auditor Tom Wagner’s old recommendations are still on the shelf. Let’s find which ones are still relevant.
I also agree that we need to invite the citizens in the process with a lot more transparency. A good start would be putting the proposed budget out and on line 5 days before the vote and the bond bill 3 days before the deadline.
Finally, Let’s re-energize the process. First, we need an active sunset committee which asks of each program over the next two years, does this program fit into the purpose of state government, is it fulfilling its goals, is it effective. Second, take the budget into a committee of the whole with a rule which allows members to offer budget efficiencies or new proposals only by offsetting costs. Third, let’s set up a temporary DEFAC style committee for economic growth. Let’s get some economic, business, and community experts to recommend some approaches for the future.
Your turn!
The Delaware Job Magnet is Waning 20 March, 2008
Posted by David Anderson in Economic Policy, State.1 comment so far
Our state has a relatively low unemployment rate. This is good news. The bad news is that according to the State’s economic report written in 2007, our job growth has been weakening consistently over the last decade and a half. We are in the bottom 1/3 of the nation in job creation. This is evidence that we are running on the fumes of the DuPont reforms 30 years ago. It is time to refuel the tank. Here is the money quote from the report.
Looking at the Local Area Unemployment Statistics (LAUS), the resident employment data for the state, Delaware’s economy looks rather healthy. The annual average unemployment rate dropped from 4.0 percent in 2005 to 3.6 percent in 2006, and it has been even lower in 4 out of the first 5 months of 2007. All of these rates are substantially below the national unemployment rate. As measured by this data series, employment growth has averaged 1.89 percent per year in Delaware over the last 30 years. It was 1.88 percent in 2005, and 2.12 percent in 2006, and has only just fallen below that, averaging 1.67 percent through May, 2007. On the other hand, a look at job growth in the state yields a different picture. Delaware has added jobs at a 2.06 percent annual rate since 1976. It last surpassed that rate in 2004, and growth has steadily slowed since then, to a current 0.82 percent rate in 2007. Growth over the last 18 months has been positive, but only about half the long-term rate - not enough to be considered healthy.Delaware’s 1.18 percent job growth from 2005 to 2006 placed it just in front of the bottom one-third of states in this regard. There were 33 states with faster job growth, and 16 with slower job growth. With the exception of Louisiana and Mississippi, the two states hit hardest by Hurricane Katrina, all of the other states with slower job growth are contiguous and located in the northeastern part of the US. The states with job growth slower than Delaware’s were all of New England, New York, New Jersey, and Pennsylvania, then Ohio, Kentucky, Indiana, Michigan, and Wisconsin.
Delawareans seem to be like the proverbial frog in gradually heating water. The Minner-Carney regime is slowly strangling job creation. Will we feel the heat before we are doomed?
Guest Post from Congressman John Linder 22 January, 2008
Posted by David Anderson in Economic Policy, Election 2008, Fair Tax.1 comment so far
By John Linder
Sunday, January 20, 2008
I was first elected to the Georgia House of Representatives 34 years ago. I have watched this party change for a long time. Some changes have been better than others.
Two years after that first election, I went to work on the Reagan campaign for the Republican presidential nomination. I was one of the leaders of that campaign in Georgia, and my friend, Paul Coverdell, led the establishment’s efforts to nominate President Ford.
It was the typical establishment-versus-interloper campaign. Most of the friends I had made in the party were in the establishment. Most of them thought the nomination of Ronald Reagan was not only impractical, but would destroy our party.
Reagan had just served two terms as the governor of California. His record was not all that conservative. He signed the biggest tax increase in the history of the state. He got the best he could get with a Democrat-dominated general assembly. He signed a bill legalizing abortion. But governors have different challenges than presidents.
Frankly, most of the establishment couldn’t have cared less about abortion. They thought the discussion of it was, well, tacky. But we were, at the time, the party that Barry built, and the new foot soldiers cared about abortion.
Their concern with Reagan was that he just wasn’t up to it. What did he know about foreign policy? How could he stand up to the Soviets? Did he understand detente?
During that campaign, as in all campaigns, the establishment sat at the head table, and the rest of us milled around the small round tables below.
Coverdell approached me, after Ford had won the first several primaries, and urged me to switch sides. Paul was convinced that Ford had the best chance of winning. Paul recited all of the reservations mentioned above and then said, “John, Reagan cannot win. No one will take him seriously.” That was also the consensus of the Republican writers and commentators.
I said, “Paul, I think politics is all about what you believe. I know what Reagan believes. I have no idea what Ford believes. But you need to watch Reagan connect with the people. He is the best communicator I have ever seen. He is bringing new people into the party. And these are folks you won’t be meeting at the club for lunch. They carry a lunch bucket to work.
Or a brown paper bag.”
Four years later, I worked again for Reagan and Paul worked for George H. W. Bush. Again, the Wall Street crowd sat at the head table, and the Main Street crowd sat at the small round tables on the floor.
The same arguments came from the establishment. His tax cut idea was a “riverboat gamble.” In fact, his tax cuts doubled the size of the economy and doubled revenues to the treasury. Unfortunately, they spent that and more.
Reagan didn’t understand that the world is a dangerous place and dealing with the Soviets required a more “understanding” policy. It also required a willingness to sign more treaties. They didn’t know that Reagan had no interest in understanding the Soviets. He wanted communism consigned to “the ash heap of history.”
It was a neverending series of put-downs until New Hampshire. Then it was over.
Reagan won that election with the support of Larry Lunch-bucket and Betty Brownbag. They were called the Reagan Democrats. When we celebrated that victory, I asked some of them why they chose to join us. They said, “When he talked, we felt that he was talking to us.” The Reagan Democrats believe they have been ignored since 1988.
The establishment doesn’t like change. They have always felt that their seats at the head table were threatened by those new to the club. The establishment that so ardently opposed Reagan’s nomination in 1980 crawled all over each other to chair his 1984 race.
Today they now see themselves as those who put Reagan in power. His presidency was their presidency. They believe they are the keepers of the flame.
Today’s establishment includes elected officials, consultants, lobbyists and even conservative writers and commentators. Unless you allow them to write the rules and approve of your positions you are unwelcome. Anyone who does not genuflect before their altar is “not conservative.”
When you look at the many fine candidates seeking the Republican nomination for president, who do you believe can best speak to those Reagan Democrats?
I believe that candidate is Mike Huckabee.
When Reagan became president, one of his first moves was to reduce income taxes from 70 percent to 50 percent and ultimately down to 28 percent. As pointed out above, both the size of the economy and the federal revenues doubled in eight years.
Huckabee doesn’t want to lower income taxes. He wants to abolish them -along with the IRS, the most intrusive, coercive and corrosive federal agency ever. Mike would replace those taxes on income with a sales tax - the FairTax. Every American will become a voluntary taxpayer paying taxes when you choose, as much as you choose, by how you choose to spend. How conservative can one get?
Rep. John Linder, R-Duluth, has served in the House of Representatives since 1992.
80 Influencial Economists Sign Endorsement of the FAIR Tax! 11 January, 2008
Posted by stoptaxing in Economic Policy, Fair Tax.21 comments
80 well known business and university economists including Delaware’s own premier economist, Eleanor Craig of the Associate Chair of the University of Delaware Economics Department, signed the following endorsement of the Fair Tax which concluded the tax code can’t be fixed and the cost of keeping it is outweighed by the benefits of the Fair Tax.
An Open Letter to the President, the Congress, and the American people
Concerning Reform of the Federal Tax Code
Dear Mr. President, Members of Congress, and Fellow Americans,
We, the undersigned business and university economists, welcome and applaud the ongoing
initiative to reform the federal tax code. We urge the President and the Congress to work
together in good faith to pass and sign into federal law H.R. 25 and S. 25, which together call
for:
• Eliminating all federal income taxes for individuals and corporations,
• Eliminating all federal payroll withholding taxes,
• Abolishing estate and capital gains taxes, and
• Repealing the 16th Amendment
We are not calling for elimination of federal taxation, which would be irresponsible and
undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan
we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax
code, including payroll withholding taxes.
We are calling for elimination of federal income taxes and federal payroll withholding taxes.
We endorse replacing these costly, oppressively complex, and economically inefficient taxes
with a progressive national retail sales tax, such as the tax plan offered by H.R. 25 and S. 25 –
which is also known as the FairTax Plan. The FairTax Plan has been introduced in the 109th
Congress and had 54 co-sponsors in the 108th Congress.
If passed and signed into law, the FairTax Plan would:
• Enable workers and retirees to receive 100% of their paychecks and pension benefits,
• Replace all federal income and payroll taxes with a simple, progressive, visible,
efficiently collected national retail sales tax, which would be levied on the final sale of
newly produced goods and services,
• Rebate to all households each month the federal sales tax they pay on basic necessities,
up to an independently determined level of spending (a.k.a., the poverty level, as
determined by the Department of Health and Human Services), which removes the
burden of federal taxation on the poor and makes the FairTax Plan as progressive as the
current tax code,
• Collect the national sales tax at the retail cash register, just as 45 states already do,
• Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax
revenue as now raised by federal income taxes plus payroll withholding taxes,
• Continue Social Security and Medicare benefits as provided by law; only the means of
tax collection changes,
• Eliminate all filing of individual federal tax returns,
• Eliminate the IRS and all audits of individual taxpayers; only audits of retailers would be
needed, greatly reducing the cost of enforcing the federal tax code,
An Open Letter to the President, the Congress, and the American people
-2-
• Allow states the option of collecting the national retail sales tax, in return for a fee, along
with their state and local sales taxes,
• Collect federal sales tax from every retail consumer in the country, whether citizen or
undocumented alien, which will enlarge the federal tax base,
• Collect federal sales tax on all consumption spending on new final goods and services,
whether the dollars used to finance the spending are generated legally, illegally, or in the
huge “underground economy,”
• Dramatically reduce federal tax compliance costs paid by businesses, which are now
embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world
markets,
• Bring greater accountability and visibility to federal tax collection,
• Attract foreign equity investment to the United States, as well as encourage U.S. firms to
locate new capital projects in the United States that might otherwise go abroad, and
• Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education
to be investment, not consumption, which will make education about half as expensive
for American families as it is now.
The current U.S. income tax code is widely regarded by just about everyone as unfair,
complex, wasteful, confusing, and costly. Businesses and other organizations spend more than
six billion hours each year complying with the federal tax code. Estimated compliance costs
conservatively top $225 billion annually – costs that are ultimately embedded in retail prices paid
by consumers.
The Internal Revenue Code cannot simply be “fixed,” which is amply demonstrated by more
than 35 years of attempted tax code reform, each round resulting in yet more complexity and
unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing
more than 2.8 million words).
Our nation’s current income tax alters business decisions in ways that limit growth in
productivity. The federal income tax also alters saving and investment decisions of households,
which dramatically reduces the economy’s potential for growth and job creation.
Payroll withholding taxes are regressive, hitting hardest those least able to pay. Simply
stated, the complexity and frequently changing rules of the federal income tax code make our
country less competitive in the global economy and rob the nation of its full potential for growth
and job creation.
In summary, the economic benefits of the FairTax Plan are compelling. The FairTax Plan
eliminates the tax bias against work, saving, and investment, which would lead to higher rates of
economic growth, faster growth in productivity, more jobs, lower interest rates, and a higher
standard of living for the American people.
