02 Jul 1997 Forbes Memo on “Expanding the IRS As We Know It”
MEMORANDUM BY STEVE FORBES
July 2, 1997
TO: MEMBERS OF CONGRESS AND CONSERVATIVE LEADERS
FROM: STEVE FORBES, HONORARY CHAIRMAN
SUBJECT: EXPANDING THE IRS AS WE KNOW IT
“A credit of up to $1,500 a year for the first two years of college, starting in 1998. Students could receive a 100 percent credit for the first $1,000 in tuition and book expenses, and then a 50 percent credit for up to another $1,000. Eligibility would be phased out for families with incomes starting at $80,000. The credit could be taken for expenses after accounting for federal tuition grants. After 2002, the credit would increase to a maximum of $2,000. The plan also includes a credit of up to $1,000 a year for the third and fourth years of undergraduate expenses, plus graduate school and courses taken by working people. The credit would increase to $2,000 after 2000.” Excerpt from, “A Brief Look At How The President Proposes To Reduce Taxes,” New York Times, July 1, 1997
So much for last year’s debate over tax reform and tax simplification. Bill Clinton and the Republican Congress have joined hands to expand the IRS as we know it!
No normal American taxpayer understands the details emerging from the tax bill debate in Washington. That’s because the tax code is not about to become simple, honest and fair. It’s becoming more complex, more confusing, and more corrupt. The true real winners will be tax lawyers, lobbyists and loophole advocates.
The Clinton-Gore proposal — to be expected — is pure liberal social engineering. The White House message to the American people: Big Brother Clinton knows best. If your family does exactly what he wants you to do, when he wants you to do it, where he wants you to do it, then you might get a pathetically small little break on your federal taxes. Sure, you may actually end up spending more money on professional tax advice to figure out if you even qualify, but apparently that’s the price of doing business with the IRS in the 1990s.
It is unconscionable for the Republicans to go along. Will they ever learn?
Speaker Newt Gingrich and Senate Majority Leader Trent Lott say fundamental tax reform is the GOP’s top priority. But even their tax bills will make a 7.5 million word tax code worse than ever. Congressional Republicans are moving in the direct opposite direction of tax reform, even as the Russian Duma abolishes 47 different types of taxes and reduces the number of tax rates on personal income in Russia from 5 to 2 (a 30 percent rate and a 12 percent rate).
No wonder American voters shrug off GOP rhetoric as so much Beltway hot air.
Take the House Ways and Means Committee tax bill, for example. Just the official description of the tax cuts not the entire legislation, mind you, just a laymen’s language overview runs 215 pages. The description of the “tax simplification provisions” of the bill run 78 pages. The “technical correction provisions” run 31 pages. That’s 324 pages, not exactly a plan that moves us toward abolishing the Internal Revenue Service.
Of course, if the resulting tax cuts were wide, deep and permanent, an argument for a bigger, more confusing tax code might have some merit. But Clinton and Congress are arguing like children over miserly tax cuts of just $17 billion a year out of total projected annual federal government spending of more than $1.7 trillion.
An AHGO analysis of new Commerce Department data finds that for the last six months Bill Clinton has been taking more money from the American people in federal taxes than any other president in American history, a record 21 percent of GDP. Even during the worst years of World War II, Washington never taxed Americans this heavily. The average American family today pays more in federal, state and local taxes than for food, clothing, transportation and housing combined!
But the marriage penalty isn’t being abolished. Senior citizens who want to work will still get hit with big Social Security penalties. Miserly family tax relief will be “phased in.” Estate taxes won t be indexed for inflation. So not only will Americans continue to be taxed for dying, they’ll also pay punishingly high tax rates on the inflated value of their family assets.
Meanwhile, Bill Clinton proposes to cut the top capital gains rate from 28 percent to 27.72 percent. Message to the future Bill Gates and Andy Groves of the world: Get lost!
Tax relief and tax simplification may be out in Washington, but big government spending is in. CATO economist Steve Moore points out that a federal budget of $1.7 trillion is more money, even after adjusting for inflation, that the federal government spent from the Revolutionary War through 1940. The budget deal will increase federal spending by $267 billion over five years, increase the deficit while Bill Clinton remains in office, explode the national debt, and not eliminate a single, wasteful government program or department. Not the Commerce Department, the National Endowment for the Arts or even the international popcorn promotion program.
It is time to end not expand the IRS as we know it, downsize Washington, and dramatically reduce the tax burden on the American people. Two incomes in a family still can’t do the job one income did in previous generations. That’s Washington s fault. And Bill Clinton and the GOP Congress are failing to do anything about it.
Apologize for that.