An Inconvenient Tax (2011) Movie Script

1
( thunder rumbling )
( rain falling )
Man: HOW MANY PAGES
IS THE U.S. TAX CODE?
( phone beeping )
Woman: HOW MANY PAGES
THE STIMULUS BILL IS?
Man: NO, NO, THE TAX CODE.
Woman: TAX CODE? UM, A LOT.
I DON'T KNOW OFF THE TOP
OF MY HEAD.
( extension ringing )
Woman 2: WELCOME
TO THE UNITED STATES
GOVERNMENT PRINTING OFFICE.
Man: YES, UM, I WAS TRYING
TO FIND OUT HOW LARGE
THE TAX CODE IS.
Woman 2: I'M SORRY?
Man: THE U.S. TAX CODE.
I WAS CURIOUS HOW MANY PAGES
IT IS.
Woman 2: I'M NOT FAMILIAR
WITH THAT, SIR.
I DON'T KNOW WHAYOU'RE REFERENCING.
Man: IT'S THE DOCUMENTHAT CONGRESS COMES UP WITH
TO TELL THE INTERNAL REVENUE
SERVICE HOW TO TAX AMERICANS.
Woman 2: OH! ARE YOU DEALING
WITH A RECENT CODE?
Man: A-A WHAT?
Woman 2: RECENTLY FOR 19--
FOR 2008 OR NINE OR WHAT?
Man: I MEAN, I GUESS,
LIKE, RIGHT NOW.
( extension ringing )
Woman 3: HELLO,
INTERNAL REVENUE.
Man: YES, I WAS TRYING
TO FIND OUT HOW MANY PAGES
THE TAX CODE IS.
Woman 3: I WOULDN'T KNOW.
I HAVE NO IDEA.
Man: WHAT ABOUT THE HEAD
OF THE IRS, I MEAN,
WOULD HE KNOW?
Woman 3: WELL, I'M SURE
HE WOULD, BUT YOU PROBABLY
WON'T GET THROUGH TO HIM.
Man: SO, IT'S KIND OF LIKE
SENSITIVE INFORMATION
THAT CAN'T BE--
Woman 3: NO, IT'S NOSENSITIVE, IT'S JUST THANONE OF US KNOW.
WE HAVE NO WAY OF TELLING YOU
HOW MANY PAGES
ARE IN THE TAX CODE.
WE'RE LOOKING AT VOLUMES
AND VOLUMES AND VOLUMES
AND VOLUMES!
THE ONLY THING I CAN SAY
IS MAYBE, UM...
YOUR LIBRARY WOULD HAVE
THAT INFORMATION,
BECAUSE WE DON'T HAVE ION OUR COMPUTER.
APRIL 15th
HAS COME AGAIN
IT'S TIME TO MAIL
YOUR RETURNS IN
TO SEE WHAT YOU HAVE TO PAY
OR WHAT'S COMING BACK
( fiddle plays )
WELL, IT'S ALL PENCILS
AND CALCULATORS
FORMS, RECEIPTS
AN HOUR LATER
UNCLE SAM WILL GETHAT OLD CHECK
WILL IT BE ENOUGH TO PAY
FOR ALL THE STUFF
WE GOT TODAY?
TODAY WE'RE NOT THE SAME
AS WE ONCE WERE
WARS AND ROADS AND EDUCATION
EVERYTHING THAT MAKES
A NATION
CAN'T BE PAID FOR
WITH A BROKEN CODE
WE GOTTA FIX THE SYSTEM
OR GO HOME
FIX THE SYSTEM
OR GO HOME
WE'LL CUT TAXES DOWN
OR RAISE THEM HIGH
EITHER WAY THE FLAG WILL FLY
THAT'S THE MESS
THAT WE'RE DEALING WITH
THE FARE IS FLATHE FLAT IS FAIR
UNCLE SAM'S DOWN
TO HIS UNDERWEAR
WHILE EVERYONE
PREACHES THEIR NEW PLAN
WELL, I DON'T CARE
IF YOU WROTE A BOOK
I DO THINK CONGRESS IS
FULL OF CROOKS
THAT DON'T CHANGE A THING
FOR UNCLE SAM
GOTTA FIX THE SYSTEM
OR GO HOME
GOTTA FIX THE SYSTEM
OR GO HOME
TIERED TAX, FLAT TAX, V.A.T.
WHICH PLAN IS
THE BEST OF THESE?
I CAN'T EVEN READ MY W2
EX-TAX, GAS TAX
GONNA NEED SOME EX-LAX
BABY BOOMERS ALL RETIRE
WHILE OUR DEBIS CLIMBING HIGHER
HERE COME MY CONSUMPTION BASE
WHERE MY MONEY?
MISPLACED SOMEWHERE
IN THE CODE
GOTTA FIX THE SYSTEM
OR GO HOME
GOTTA FIX THE SYSTEM
OR GO HOME
Thorndike: THE PROBLEM
WITH TAXES AND DEMOCRACY
IS THAT TAXES ARE COMPLICATED
AND TEDIOUS AND UNPLEASANT.
PEOPLE DON'T WANTO TALK ABOUT THEM.
THEY DON'T WANT TO READ
ABOUT THEM.
THEY WANT TO COMPLAIN ABOUTHEM, BUT ACTUALLY LEARNING
SOMETHING ABOUT THEM
IS NO FUN FOR ANYBODY,
AND YET THEY ARE SO IMPORTANTO THE WAY THE GOVERNMENT WORKS,
TO THE WAY THE ECONOMY
FUNCTIONS, WE CAN'T AFFORD
TO NOT PAY ATTENTION
TO WHAT KIND OF TAXES WE HAVE.
TROOPS OF AN ALIEN SOURCE
ARE APPROACHING FROM THE SKY.
RADIO CONTACT HAS BEEN
ATTEMPTED, BUT CANNOBE ESTABLISHED.
INSTRUCTIONS ARE TO PREPARE
FOR AN ATTACK
BY AN UNKNOWN ENEMY.
THE ONE OBLIGATION
THAT EVERY CITIZEN HAS
IS TO PAY THEIR TAXES,
AND THERE'S 175 MILLION
TAXPAYERS WHO INTERACIN THE TAX SYSTEM,
SO THAT'S THE ONE THING
THAT THE FEDERAL GOVERNMENT HAS
THAT EVERYBODY HAS A STAKE IN.
THERE'S NOT AN AMERICAN
BREATHING TODAY THAT'S NOAFFECTED BY THE TAX CODE.
IT AFFECTS HIS OR HER JOB,
IT AFFECTS WHETHER OR NOYOU CAN AFFORD TO, UH,
BUY A CAR,
WHETHER YOUR JOB'S GONNA
STILL BE THERE NEXT YEAR...
EVERYTHING A PERSON
IN THIS COUNTRY DOES
IS AFFECTED BY THE TAX CODE.
I WILL SUCCEED IN CREATING
A PERFECT BEING.
WHEN YOU THINK ABOUT HOW
THE TAX LAWS AFFECEVERY ASPECT OF OUR LIVES,
JUST ABOUT-- HOUSING
AND HEALTHCARE AND EDUCATION
AND FAMILY AND DIVORCE
AND MARRIAGE, CHILDCARE...
IT GOES ON AND ON.
RETIREMENT.
THERE'S SUCH A CONNECTION
BETWEEN THE WAY WE TAX,
WHOM WE TAX, WHOM WE DON'T,
& THE WAY GOVERNMENT FUNCTIONS.
HEY, WHO DO YOU THINK
YOU ARE, ANYWAY?
ANSWER ME,
OR I'LL DESTROY YOU!
YOU'RE UP AGAINSTHE FUNDAMENTAL LIMITATION
THAT THE TAX CODE HAS BECOME
A REAL MONSTROSITY
IN TERMS OF THE COMPLEXITY
OF THE BURDEN.
Linder: WE HAVE CREATED
A MONSTER...
THAT SEEMS NOT TO BE ABLE
TO BE CONTROLLED.
( screaming )
YOU ADD IN ALL OF
THE CRAZY POLITICAL
ACTION COMMITTEES,
AND EVERYBODY HAS AN AGENDA,
AND THE LOBBYISTS,
AND, YOU KNOW, YOU HAVE A MESS.
( screaming )
IN THE LAST 20 YEARS,
I THINK WE'VE AMENDED THE THING
14,000 TIMES, ADDED
THREE MILLION NEW WORDS.
AAH! JULIE! AAH!
EVEN THOSE WHO WOULD LIKE
TO MAKE IT EFFICIENAND MAKE IT WORK,
IT'S STILL A MONSTER.
NOBODY UNDERSTANDS IT.
EVERY TIME YOU ADD
A NEW PROVISION--
AND THERE'S BEEN 14,000 NEW ONES
IN THE LAST 20 YEARS--
YOU HAVE TO PUT SOMETHING
IN A FORM TO COVER THAT.
Shaviro: THE AVERAGE AMERICAN
SPENDS, I THINK, 57 HOURS
WORKING ON THEIR TAXES.
MANY OF THEM HIRE ACCOUNTANTS
BECAUSE IT'S BECOME
SO HORRIBLY COMPLICATED.
Man: PERHAPS THE 1st QUESTION
YOU SHOULD ASK YOURSELF IS,
"DO I REALLY ENJOY
DOING FIGURES?"
IF YOU HAVE A DISTASTE
FOR MATHEMATICS,
IS IS NOT THE WORK FOR YOU.
IT IS SO COMPLICATED,
YOU HAVE NO IDEA
WHETHER OR NOYOU'VE DONE IT RIGHT OR NOT.
TAXES. BUDGETS.
PAPERWORK POLLUTION.
THERE'S JUST NO GETTING
AROUND IT.
WHETHER IT'S AN INDIVIDUAL
OR A SMALL BUSINESS OPERATOR,
HE CAN CALL THE IRS
THREE DIFFERENT TIMES
AND GET THREE ANSWERS
ABOUT THE SAME QUESTION.
IT'S SO COMPLICATED
THE IRS DOESN'T UNDERSTAND IT.
WE WANT THE TAXPAYERS TO KNOW
THAT WE'RE HERE TO HELP.
AFTER ALL, THEY ARE THE ONES
THAT WE REALLY WORK FOR.
THE IRS, CONTRARY
TO WHAT MOST PEOPLE THINK,
REALLY HAS NOTHING TO SAY
ABOUT WHAT THE TAX CODE IS.
IT'S JUST GIVEN THE TAX CODE
THAT'S PASSED BY THE CONGRESS
AND THE ADMINISTRATION.
IT'S THEN ADMINISTERED.
NONE OF US EVER HESITATES
TO CRITICIZE CONGRESS
AT EVERY OPPORTUNITY,
BUT HOW MANY EVER STOP TO THINK
ABOUT THE BROAD POWERS
OF CONGRESS AND HOW THESE POWERS
AFFECT EVERY ONE OF US?
THE WAY THE CONGRESS
OF THE UNITED STATES WORKS,
THINGS HAVE TO BE
IN A JUST TOTAL...
SMACK-AGAINST-THE-WALL CRISIS
FOR ANYTHING TO GET FIXED.
( screams )
THE TAX SYSTEM IS
SO COMPLICATED THAT A LOOF PEOPLE FEEL LIKE THEY'RE
NOT GETTING THEIR FAIR SHARE
OF ALL THE TAX BREAKS.
ALMOST EVERYBODY FEELS
THAT THE OTHER GUY
IS ESCAPING TAXES.
AND AS THEY BELIEVE
INCREASINGLY THAT IT'S NOT FAIR,
THAT REFLECTS ON ALL
OF GOVERNMENT.
ONE RESULT IS
THE APRIL 15th PHENOMENON.
THIS ALIEN FORCE, YOU KNOW,
FROM MARS OR SOMETHING,
IS TAKING AWAY
YOUR HARD-EARNED MONEY,
NOT "I'M PARTICIPATING
IN A COMMUNITY
WHERE WE MADE COMMON DECISIONS,
AND I'M GLAD TO BE ABLE
TO PARTICIPATE IN IT,"
WHICH IS THE WAY
A HEALTHY SOCIETY WOULD WORK.
I DON'T THINK IT'S
AN EXAGGERATION TO SAY THAOUR DEMOCRACY AS WE'VE KNOWN IIS AT STAKE.
WE LIVE LIKE PARTS
OF A MACHINE.
WE DON'T KNOW OUR FATHERS
OR MOTHERS, WE'RE RAISED
IN CUBICLES, THE SICK
AND THE OLD ARE PUT TO DEATH...
IT IS THE ONE AND ONLY WAY
TO MAINTAIN THE SUPREME RACE.
HAVE YOU FORGOTTEN--
OUR PEOPLE HAVE FORGOTTEN.
THEY HAVE BEEN MADE TO FORGET.
IF WE BELIEVE THAT WE
OUGHT TO HAVE, UH,
FEDERAL ASSISTANCE FOR,
NOT JUST HURRICANES AND FLOODS,
YOU KNOW, BUT HIGHWAYS
AND OUR COURT SYSTEM
AND POLICE ON THE STREEAND OUR EDUCATION SYSTEM
AND OUR HEALTH SYSTEM
AND THE FOOD
AND DRUG ADMINISTRATION...
IF WE WANT A SECURITIES
AND EXCHANGE COMMISSION,
IF WE WANT A FEDERAL
TRADE COMMISSION,
IF WE WANT TO HAVE THE THINGS
THAT WE'VE GROWN USED TO,
WHICH MAY BE EXCESSIVE NOW.
I MEAN, SOME OF THEM MAY BE,
AND OTHERS WE WANT TO LOOK AT.
BUT IF WE WANT GOVERNMENT,
FEDERAL GOVERNMENT,
TO LOOK AFTER THE PUBLIC
IN LOTS OF WAYS,
'CAUSE SOCIETY IS
SO COMPLICATED, WE WILL NOBE ABLE TO AFFORD THAT.
THE CURRENT TAX SYSTEM
JUST ISN'T UP TO THAT CHALLENGE.
WE'RE GONNA NEED AN EFFICIENWAY OF RAISING REVENUE,
AND ONE THAT IS FAIR
AND THAT PEOPLE
PERCEIVE TO BE FAIR.
WE FACE PROBLEMS
IN THIS COUNTRY RIGHT NOW,
FISCAL PROBLEMS
OVER THE LONG TERM
THAT ARE SO SERIOUS
THAT WE SHOULD ALL FEAR
FOR THE SAFETY OF OUR CHILDREN
DOWN THE ROAD.
AMERICANS CANNOT IGNORE
THAT THEY'RE GONNA HAVE
TO JUST COWBOY UP
AND DEAL WITH THIS NASTY,
BORING, TEDIOUS TOPIC,
UH, BECAUSE IT'S JUST TOO--
TOO IMPORTANT TO IGNORE.
OBJECTIONS TO TAXATION
ARE FRAMED IN TERMS
OF WHY THIS IS UNFAIR TO ME,
WHY THIS IS UNFAIR
TO PEOPLE LIKE ME,
WHY IT TREATS OTHER PEOPLE
DIFFERENTLY THAN IT TREATS ME,
AND I THINK THAT THAT OUTRAGE
THAT CAN DEVELOP
AROUND SPECIAL TREATMENAND FAVORITISM, UH,
IS A KEY TO UNDERSTANDING
AMERICAN TAX HISTORY.
THE U.S. WAS BORN
OF A TAX REVOLT,
BUT IT WAS ACTUALLY
NOT A REVOLT AGAINST HIGH TAXES.
THE BOSTON TEA PARTY
WAS A REVOLT AGAINSTAX LOOPHOLES.
THE BRITISH HAD PASSED A LAW
THAT GRANTED CERTAIN
SPECIAL FAVORS
TO A FEW MERCHANTS
WHO WERE SELLING TEA,
AND AMERICAN MERCHANTS
RESENTED THE MONOPOLY
THAT HAD BEEN GRANTED HERE
AND THE TAX EXEMPTIONS
THAT HAD BEEN GRANTED,
AND THEIR OBJECTIONS
TO THE BRITISH TAX
WERE REALLY DIRECTED
AT THE LOOPHOLES
THAT WERE A PART OF THAT TAX,
NOT AT THE TAX ITSELF.
IT'S IMPORTANT BECAUSE IT IS
AMERICANS' FIRST EXPERIENCE
WITH REALLY, UH, THROWING DOWN--
WELL, THROWING THE TEA
INTO THE HARBOR--
BUT SIMPLY TO SAY
WE ARE NOT GONNA STAND FOR
THIS KIND OF SPECIAL TREATMENT.
WE ARE NOT GONNA STAND
FOR TAXES THAT DON'T TREAEVERYONE EQUALLY.
THAT'S THE KIND OF TAX REVOLIT WAS, AND THERE ARE MORE
TAX REVOLTS LIKE THAOVER THE COURSE
OF AMERICAN HISTORY.
( cannon fires )
MANY OF THE ARGUMENTS
OVER TAXATION
IN THE EARLY REPUBLIC,
IN THE EARLY YEARS
AFTER THE CONSTITUTION
WAS RATIFIED,
WERE ABOUT TAXATION.
THOMAS JEFFERSON'S PARTY
GENERALLY BELIEVED
THAT THE FEDERAL GOVERNMENSHOULD CONFINE ITSELF
TO IMPORT DUTIES
AND FUND ITSELF
THROUGH A TARIFF.
THE FEDERALISTS INSISTED
ON USING INTERNAL TAXES,
AS WELL, AND THAT PRODUCED
QUITE A BIT OF CONFLICT,
INCLUDING THE WHISKEY REBELLION,
AN INTERNAL TAX
MORE POORLY TOLERATED
IN THIS PERIOD OF TIME.
IT OUTRAGED FARMERS,
WHO WERE DEPENDING ON--
ON THE PRODUCTION OF WHISKEY
TO MAKE THEIR LIVING
AND WHO FELT THAT IT WAS UNFAIR
TO IMPOSE A TAX ON THEIR PRODUCSPECIFICALLY.
IT POSED A SIGNIFICANT THREATO THE FEDERAL GOVERNMENT,
BUT IN MANY RESPECTS GAVE
THE FEDERAL GOVERNMENAN OPPORTUNITY TO DEMONSTRATE
FOR THE FIRST TIME
THAT IT WAS ABLE
TO TAKE CARE OF ITSELF.
THE FEDERAL GOVERNMENT SENTROOPS INTO WESTERN PENNSYLVANIA
AND QUELLED THE REBELLION
AND ESTABLISHED
THAT THE FEDERAL GOVERNMENNOT ONLY HAD THE LEGAL AUTHORITY
TO IMPOSE THESE TAXES,
BUT ALSO HAD THE POWER
TO IMPOSE THEM, AS WELL.
( "Yankee Doodle Dandy" )
Fox: DURING THE CIVIL WAR,
LINCOLN KNEW THAT THE GOVERNMENNEEDED REVENUE,
AND SO THEY ACTUALLY ADOPTED
THE FIRST FEDERAL INCOME TAX.
ONE OF THE STRIKING THINGS
ABOUT THIS WARTIME TAX
WAS THAT IT WAS CONDUCTED
IN PUBLIC, AND ANYONE
COULD GO AND ASK TO SEE THEM.
THEY COULD GO TO THE LOCAL
COLLECTOR'S OFFICE AND SAY,
"I WANT TO SEE
MY NEIGHBOR'S TAX RETURN."
THIS WAS ABOUT AS UNPOPULAR
AS YOU WOULD EXPECT IT TO BE.
PEOPLE REALLY FELT LIKE THIS
WAS AN INVASION
ON THEIR PRIVACY.
THEY DIDN'T WANT PEOPLE
PAWING AROUND
IN THEIR PERSONAL AFFAIRS,
BUT THERE WERE MANY PEOPLE
AT THE TIME, INCLUDING
MANY POLITICAL LEADERS,
WHO FELT THAT THIS WAS
A VITAL COMPONENOF THE INCOME TAX,
BECAUSE IT ENSURED
BETTER COMPLIANCE.
IF YOUR NEIGHBORS COULD GO IN
AND LOOK AT YOUR TAX RETURNS
AND SEE THAT YOU WEREN'REPORTING A REASONABLE AMOUNOF MONEY, THEY COULD REPORYOU TO THE TAX COLLECTORS,
AND THEY MIGHT GO
AND INVESTIGATE,
WHICH THEY HAD THE RIGHT TO DO.
THE SOUTH WAS MUCH MORE
RELUCTANT TO IMPOSE
HEAVY TAXES, AND RELIED
MUCH MORE THAN THE NORTH
ON LOANS, ON PRINTING
PAPER MONEY...
ALSO ON JUST CONFISCATING
GOODS THAT THEY NEEDED
FOR THEIR--
FOR FIGHTING THE WAR,
AND THE RESULTS WERE
FINANCIALLY DISASTROUS
FOR THE CONFEDERACY.
THEY NEVER WERE ABLE TO DEVELOP
A ROBUST TAX SYSTEM,
AND I THINK, IN PART,
THIS IS A-- WAS A CULTURAL
RESISTANCE TO TAX POLICY,
ESPECIALLY IN THE EARLY YEARS
OF THE WAR.
WELL, NO ONE LOVED
THE INCOME TAX IN THE CIVIL WAR.
IT WAS A NECESSITY,
LIKE ALL TAXES ARE,
BUT IT WAS TREMENDOUSLY HELPFUL
IN ENABLING THE UNION
TO PAY FOR THE WAR
WITHOUT ENTIRELY RESORTING
TO BORROWING, AND YOU COULD
ARGUE THAT THE INCOME TAX
REALLY HELPED THE UNION
WIN THE WAR.
SURRENDER...
MY POOR ARMY.
Weisman: BUT AS SOON
AS THE WAR WAS OVER,
EVERYONE WANTED TO REPEAL IT.
IT WAS A, UH, DISTASTEFUL TAX,
AND THEY REPEALED ISTEP BY STEP.
BUT AS THEY DID SO,
STARTING IN THE 1860s
AND THEN THE 1870s,
UH, THERE WERE WARNINGS,
EVEN FROM REPUBLICANS,
WHO SAID, "THIS TAX
WILL COME BACK.
WE'LL HAVE TO TURN BACK
TO BACK TO IT AGAIN,
EITHER BECAUSE OF A CRISIS,
UH, IN OUR-- A MILITARY CRISIS,
A WAR, OR BECAUSE OF
AN ECONOMIC CRISIS,
AND THIS IS THE TAX
THAT AMERICANS ARE GONNA HAVE
TO GET USED TO IN THE FUTURE."
( out-of-tune piano playing )
WHAT HAPPENED
AT THE TURN OF THE CENTURY
WAS THE EMERGENCE
OF A MIDDLE CLASS
AND AN UPPER MIDDLE CLASS
OF PROFESSIONALS.
THE MAN WHO SYMBOLIZED THEM
WAS, UH, TEDDY ROOSEVELT,
AND WHO EMBRACED THE INCOME TAX,
ALTHOUGH HE DIDN'GET IT PASSED, BUT HE EMBRACED
IT DURING HIS PRESIDENCY.
Thorndike: THERE IS
A CONTINUAL AND FAIRLY SPIRITED
DEBATE ABOUT HOW TO REINTRODUCE
THE INCOME TAX IN A WAY
THAT WOULD PASS
CONSTITUTIONAL MUSTER
AND THAT WOULD ALLOW LAWMAKERS
TO REDUCE THEIR DEPENDENCE
ON TARIFF DUTIES
AND REPLACE THEM
WITH SOMETHING MORE PROGRESSIVE.
BY 1913, WE HAD
THE 16th AMENDMENT,
WHICH WAS NECESSARY
BECAUSE OF THE SUPREME COURDECISION THAT SAID
THAT, UH, YOU COULDN'T HAVE
THE INCOME TAX CONSTITUTIONALLY
WITHOUT THE AMENDMENT.
Thorndike: RIGHT AROUND
THE SAME TIME THAWOODROW WILSON BECAME PRESIDENT,
THE INCOME TAX WAS PAROF THE REFORMS THAT HE THEN
ENACTED INTO LAW
THROUGH STATUTE.
SO, YOU CREATE THIS INCOME TAX
IN 1913, IT, UH, BARELY GETS
ITS FEET ON THE GROUND
BEFORE WORLD WAR ONE,
ONCE AGAIN, DISRUPTS
TARIFF REVENUES,
CREATES A REVENUE CRISIS
FOR THE FEDERAL GOVERNMENT,
AND CONGRESS TURNS
TO THE INCOME TAX
AS THE MOST LIKELY
REPLACEMENT FOR THIS
IN THE TIME OF WAR.
Man: THREE THOUSAND MILES
FROM HOME, AN AMERICAN ARMY
IS FIGHTING FOR YOU.
EVERYTHING YOU HOLD WORTHWHILE
IS AT STAKE.
Fox: DURING WORLD WAR ONE,
THE TOP TAX RATE MOVES
FROM 7% TO 77%,
AND SUDDENLY TAXES BECOME
A HUGE CONCERN OF
A LOT OF PEOPLE.
PEOPLE CAME TO CONGRESS--
THE FIRST DEDUCTION,
THE FIRST ONE THAT WAS
REALLY FOCUSED ON THE TAX LAWS,
WAS THE CHARITABLE DEDUCTION,
AND THAT'S BECAUSE
PRESIDENTS OF UNIVERSITIES
AND COLLEGE CAME TO CONGRESS
AND SAID, "LOOK, WE'RE NOGETTING CONTRIBUTIONS.
YOU'RE TAKING 77%
OF THE TOP DOLLARS
OF RICH PEOPLE."
SO CONGRESS SAID, WELL,
WE'LL GIVE YOU
A CHARITABLE DEDUCTION,
AND VERY MUCH, THAT'S THE WAY
THE LAWS EVOLVED.
SO, IN THE EARLY 1920s,
SUDDENLY THERE WAS
A SPECIAL RATE
FOR CAPITAL GAINS,
A LOW RATE FOR CAPITAL GAINS.
THERE WAS RELIEF
FOR CONTRIBUTIONS
TO RETIREMENT PLANS,
AND LITTLE BY LITTLE,
THE INCOME TAX BECAME
SOMETHING OTHER THAN
A REVENUE RAISING SYSTEM.
IT BECAME ALSO, AS IT IS TODAY,
A WAY OF TRYING TO MICROMANAGE
THE WAY PEOPLE BEHAVE,
OR TO GIVE THEM RELIEF
FOR CERTAIN BEHAVIOR
HOPING THAT THEY WILL
BEHAVE IN THAT WAY.
Man: THE WAR IS OVER,
AND THERE'LL NEVER BE ANOTHER.
( marching bands playing )
Thorndike: THE WAR ENDS,
AND THERE'S A SORT OF
SCALING BACK.
THERE'S A, "YOU KNOW, WE DON'NEED AS MUCH MONEY ANYMORE.
WE DO NEED TO RETIRE SOME DEBT,
BUT WE CAN LET GO
SOME OF THAT WARTIME TAXATION,
SOME OF THAT PAINFUL,
SACRIFICIAL WARTIME TAXATION."
THE LEADER OF THAT EFFORAFTER WORLD WAR ONE
WAS ANDREW MELLON,
WHO WAS SUCH A POWERFUL
TREASURY SECRETARY
THAT HE SERVED
IN THREE ADMINISTRATIONS.
PEOPLE OFTEN SAID
THAT THREE DIFFERENT PRESIDENTS
SERVED UNDER HIM.
BUT I THINK WHAT'S MOST STRIKING
ABOUT ANDREW MELLON IS NOTHAT HE CUT TAXES,
WHICH I THINK ALMOST ANYONE
WOULD'VE DONE IN THE WAKE
OF WORLD WAR ONE, BUT THAT HE,
BY CUTTING TAXES,
BY SORT OF DE-FANGING
THE INCOME TAX, UH,
AND MAKING IT MORE MODERATE,
ENSURED THAT IT WOULD SURVIVE.
IF WOODROW WILSON MADE
THE WORLD SAFE FOR DEMOCRACY,
ANDREW MELLON MADE THE WORLD
SAFE FOR INCOME TAXATION.
HE MADE IT A TAX
THAT PEOPLE COULD TOLERATE.
FDR: YESTERDAY,
DECEMBER 7th, 1941,
A DATE WHICH WILL
LIVE IN INFAMY...
( explosions )
THE UNITED STATES OF AMERICA
WAS SUDDENLY
AND DELIBERATELY ATTACKED
BY NAVAL AND AIR FORCES
OF THE EMPIRE OF JAPAN.
NO MATTER HOW LONG IT MAY
TAKE US TO OVERCOME
THIS PREMEDITATED INVASION,
THE AMERICAN PEOPLE
IN THEIR RIGHTEOUS MIGHWILL WIN THROUGH
TO ABSOLUTE VICTORY.
( people cheering )
BEFORE WORLD WAR TWO--
1939, 1940-- NO MORE THAN 10%
OF HOUSEHOLDS PAID
THE INCOME TAX.
IT REMAINED A CLASS TAX.
BUT THEN PEARL HARBOR HAPPENED,
AND HITLER INVADED EUROPE.
AND FRANKLIN ROOSEVELCAME TO THE CONGRESS
AND CAME TO THE AMERICAN PEOPLE
AND SAID THAT THE FUTURE
OF THE UNITED STATES
WAS AT STAKE.
AND HE SAID, "SO, WE HAVE
TO MOVE FROM A TAX ON THE FEW
TO A MASS TAX
THAT IS ON THE MANY."
BUT THE RICH PAY THE TAXES.
WHY SHOULD I WORRY?
THAT'S WHERE WE'RE
FOOLING OURSELVES.
THIS WAS A REALLY
IMPORTANT CHANGE.
THEY LOWER THE EXEMPTIONS,
AND SUDDENLY MILLIONS OF PEOPLE
WHO HAVE NEVER PAID
AN INCOME TAX IN THE PASAND WHO HAVE, SOME OF THEM,
ASPIRED TO THE NOTION
OF SOMEDAY GETTING TO PAY
INCOME TAX, 'CAUSE IT WOULD MEAN
THAT THEY WERE RICH,
WELL, THEY WERE NOT ALL
THAT RICH AND SUDDENLY FINDING
THEMSELVES PAYING INCOME TAXES.
THE 1942 REVENUE BILL
WILL IMPOSE THE HEAVIESTAX BURDEN EVER PLACED
UPON THE AMERICAN CITIZENS.
FOR SINGLE PEOPLE,
NOW THE VALUE OF DOLLARS
WERE DIFFERENT--
OF A DOLLAR WAS DIFFERENT.
BUT SINGLE PEOPLE PAID A TAX
ON INCOME OVER $500
UNDER THE 1942-43 REVENUE ACTS.
THE NATIONAL ASSOCIATION
OF MANUFACTURERS,
YOU KNOW, INTERESTED IN,
TODAY, NOT PAYING MORE TAXES
THAN THEY ABSOLUTELY HAVE TO--
THEY SAID THAT NO BUSINESS
SHOULD MAKE MORE
THAN THEY ABSOLUTELY NEEDED
TO STAY ALIVE, AND TAXES
SHOULD CONSUME EVERYTHING ELSE.
CORPORATION RATES
HAVE ALSO BEEN SUBSTANTIALLY
INCREASED ON BOTH NORMAL
AND EXCESS PROFITS.
WE BELIEVE THESE RATES
ARE ADEQUATE TO PREVENANYONE REALIZING UNDUE PROFITS
OUT OF THE WAR EFFORT.
THIS IS A BIG CHANGE.
IT MAKES THE INCOME TAX
MUCH MORE PRODUCTIVE,
HELPS IT RAISE MUCH,
MUCH MORE MONEY.
IT ALSO POSES ALL SORTS
OF DIFFICULTIES
FOR THE FEDERAL GOVERNMENT,
BECAUSE THEY HAVE TO INSTRUCALL OF THESE PEOPLE IN HOW
TO PAY THEIR INCOME TAXES, WHICH
IS NOT AN EASY THING TO DO.
THEY INSTITUTED A HUGE
PUBLIC RELATIONS CAMPAIGN
TO TELL PEOPLE THAT THIS
WAS THEIR RESPONSIBILITY,
THEY WERE GONNA HAVE TO DO IT.
THEY WANTED TO MAKE A CONNECTION
BETWEEN THE SACRIFICE
THAT PEOPLE WERE MAKING
ON THE BATTLEFIELD
AND THE FINANCIAL SACRIFICE
THAT WAS BEING ASKED OF PEOPLE
ON THE HOME FRONT.
I AM WILLING TO PAY TAXES
TO PROVIDE NATIONAL DEFENSE
FOR MY COUNTRY,
TO SEE THAT WE HAVE
AN ARMY, A NAVY, AND AIRPLANES
STRONG ENOUGH TO PROTECT US
AGAINST ANY INVADERS.
IT WASN'T JUST ABOUCHANGING A FINANCIAL INSTRUMENT;
IT WAS REALLY ABOUT CHANGING
POLITICAL CULTURE
AND CIVIL RITUALS
IN AN IMPORTANT WAY,
AND REALLY CREATING
A WHOLE NEW CIVIC RITUAL.
I MEAN, AMERICANS
HAD NEVER BEEN UNITED
BY THIS ANNUAL RESPONSIBILITY
BEFORE, AND SUDDENLY, UH--
IT WAS ACTUALLY IN MARCH, THEN,
BUT WHAT LATER GOT MOVED
TO APRIL-- APRIL 15tH HAS BECOME
SORT OF A NATIONAL
ANTI-HOLIDAY, YOU KNOW?
IT'S A DAY THAT WE ALL RECOGNIZE
AS PART OF OUR CIVIC
RESPONSIBILITIES, AS OUR--
AS OUR-- IN OUR ROLE
AS AMERICANS.
Weisman: FOR AS LONG
AS AMERICANS HAVE BEEN DEBATING
THE INCOME TAX,
THEY'VE BEEN DEBATING
TWO DEFINITIONS OF,
UH, MORALITY.
ON THE ONE SIDE IS WHAT I CALL
VIRTUE, WHICH IS THIS IDEA
THAT AMERICANS HAVE
THAT THEIR-- THAT WEALTH
THAT THEY GAIN IS THE RESULOF VIRTUOUS BEHAVIOR--
SAVING, INVESTING, HARD WORK,
TAKING RISKS, AND THAT YOU DON'WANT A TAX SYSTEM
THAT PUNISHES THAT,
AND THEREFORE, YOU DON'T WANTO PUNISH PEOPLE
AS THEY MAKE MORE MONEY.
BUT ON THE OTHER HAND,
AMERICANS BELIEVE
IN ESSENTIAL FAIRNESS,
AND THAT, ESPECIALLY IN A TIME
OF WAR AND SACRIFICE,
YOU HAVE TO HAVE A SYSTEM
THAT'S FAIR AND SUPPORTED
BY EVERYONE, AND THAT SYSTEM
DOES THE OPPOSITE.
THAT SYSTEM WOULD MAKE PEOPLE
WHO HAVE MORE MONEY
PAY TAXES AT A HIGHER RATE.
I THINK MOST OF US WOULD
SYMPATHIZE WITH EITHER
OF THOSE VIEWS,
AND MAYBE WE GO BACK AND FORTH.
I THINK THAT'S PROBABLY TRUE
OF MOST AMERICANS,
BUT AT ANY GIVEN TIME,
ONE OF THE IDEAS IS UPPERMOST.
THESE ISSUES, MANY OF WHICH
NOW INVOLVE AN ECONOMIC CONCERN,
WERE OF VIRTUALLY NO CONCERN
UNTIL THE KENNEDY
ADMINISTRATION.
( fanfare )
KENNEDY, KENNEDY
KENNEDY, KENNEDY, KENNEDY
KENNEDY, KEN-NE-DY FOR ME
Various Voices: KENNEDY!
THE FIRST PRESIDENOF THE MODERN ERA
TO EMBRACE THE ISSUE
OF THE INCOME TAX
WAS JOHN F. KENNEDY.
SUCH A BILL WILL BE PRESENTED
TO THE CONGRESS
FOR ACTION NEXT YEAR.
IT WILL INCLUDE
AN ACROSS-THE-BOARD,
TOP-TO-BOTTOM CUIN BOTH CORPORATE
AND PERSONAL INCOME TAXES.
IT WILL INCLUDE
LONG-NEEDED TAX REFORMS
THAT LOGIC AND EQUITY DEMAND,
AND IT WILL DATE THACUT IN TAXES TO TAKE EFFECAS OF THE START OF NEXT YEAR,
JANUARY 1963.
KENNEDY CAME ALONG
AND HIS TAX ADVISORS
CAME ALONG AND SAID,
"BUT THESE HIGH RATES
RETARD ECONOMIC GROWTH,"
AND THAT BEGAN
THE REAL CONVERSATION
ABOUT THE RELATIONSHIP
BETWEEN TAX RATES
AND ECONOMIC OUTCOMES.
HE HADN'T GIVEN OULITTLE INCREASES
IN THE PERSONAL EXEMPTION
OR THE STANDARD DEDUCTION.
HE'D ACTUALLY GONE IN
AND SLASHED THE WORLD WAR TWO
AND KOREAN WAR TAX RATES,
THE MARGINAL RATES,
ACROSS THE BOARD.
HE TOOK THE TOP RATE DOWN
FROM 91% TO 70,
AND THE BOTTOM RATE DOWN
FROM 20 TO 14.
AND WE HAD SEVERAL
GOOD YEARS OF GROWTH
AFTER THE KENNEDY TAX CUTS,
UNLIKE THE LATER CUTS
OF THE 1970s, WHICH WERE
JUST THESE LITTLE HANDOUTS
ON THE FIRST TWO OR THREE
OF FIVE DOLLARS THAT YOU EARNED.
Weisman: I THINK IT WAS
REALLY IN THE 1970s
THAT TAXES BECAME A BIG NATIONAL
AND ALMOST MORAL ISSUE.
Shaviro: PEOPLE STARTED
GETTING A LOT MORE UNHAPPY
WITH THE GOVERNMENT.
YOU HAVE THE VIETNAM WAR
AND NIXON AND WATERGATE
AND ALL THOSE THINGS.
AND ALSO, IN THE 1970s,
YOU GET INCREDIBLE TAX INCREASES
THAT WEREN'T ACTUALLY ENACTED
BY THE CONGRESS.
IT WAS BECAUSE OF INFLATION.
IT TURNED OUT THAT WHEN
THERE WAS HIGH INFLATION,
PEOPLE WERE BEING PUSHED
INTO HIGHER TAX BRACKETS.
IT MIGHT BE THAT YOU USED
TO PAY TAXES AT 30%.
NOW, YOU REALLY HAVE
THE SAME SPENDING POWER
AS BEFORE, BUT NOW YOU'RE
PAYING SOME TAX AT 40%.
SO, WE DECIDED
AT THE END OF THE '70s
THAT WE NEEDED TO TRY
THAT AGAIN-- WE NEEDED
TO REPEAT THE KENNEDY EXPERIMENTO SEE IF LOWERING
THE MARGINAL RATES
AND PERHAPS PUTTING ON
THE INVESTMENT TAX CREDITHAT HE HAD ALSO USED
TO SPUR INVESTMENT,
MIGHT GET US OUOF THE STAGFLATION.
AND, OF COURSE, THE MAN
WHO RODE THAT ISSUE
INTO THE WHITE HOUSE
WAS RONALD REAGAN,
WHO I LIKE TO THINK OF
AS THE POET LAUREATE
OF CAPITALISM.
Reagan: I'M A CITIZEN.
I'M NOT AN OFFICEHOLDER
OR A PARTY OFFICIAL.
I'LL MAKE A SPEECH
AT A BUS STOP IF ENOUGH
PEOPLE ARE WAITIN'.
I WAS A DEMOCRAMOST OF MY LIFE.
I HAVE A LONG PENANCE TO DO.
( laughter )
IF YOU'RE UNWILLING
TO MEET THIS CHALLENGE,
THEN YOU'D BETTER STARPREPARING, DECIDING WHAYOU'LL TELL YOUR CHILDREN
IT WAS THAT YOU FOUND
MORE IMPORTANT THAN FREEDOM.
THEY'LL WANNA KNOW.
IN THIS PRESENT CRISIS,
GOVERNMENT IS NOTHE SOLUTION TO OUR PROBLEMS.
GOVERNMENT IS THE PROBLEM.
FROM TIME TO TIME,
WE'VE BEEN TEMPTED TO BELIEVE
THAT SOCIETY HAS BECOME
TOO COMPLEX TO BE MANAGED
BY SELF-RULE,
THAT GOVERNMENT BY
AN ELITE GROUP IS SUPERIOR
TO GOVERNMENT FOR, BY,
AND OF THE PEOPLE.
NO ONE BEFORE OR SINCE
HAS, UH, PAINTED SUCH
A VISIONARY PICTURE
OF HOW AMERICANS ARE BURDENED
BY THE TAX SYSTEM.
IN SHORT, A PUNITIVE
TAX SYSTEM MUST BE REPLACED
BY ONE THAT RESTORES
INCENTIVE FOR THE WORKER
AND FOR INDUSTRY,
A SYSTEM THAT REWARDS
INITIATIVE AND EFFORAND ENCOURAGES THRIFT.
NOW, ALL THESE THINGS
ARE POSSIBLE.
NONE OF THEM WILL BE EASY,
BUT THE CHOICE IS CLEAR.
WE CAN GO ON LETTING
THE COUNTRY SLIP
OVER THE BRINK
OF FINANCIAL RUIN
WITH THE DISASTER WHICH THIS
MEANS FOR THE INDIVIDUAL,
OR WE CAN FIND THE WILL
TO WORK TOGETHER,
TO RESTORE CONFIDENCE
IN OURSELVES
AND TO REGAIN THE CONFIDENCE
OF THE WORLD.
Fox: RONALD REAGAN
CAME INTO OFFICE BELIEVING
THAT HIGH TAX RATES
DISCOURAGE ECONOMIC GROWTH
AND DISCOURAGE PEOPLE
FROM WORKING HARDER.
THE CONTEXT FOR HIM
WAS THE MOVIE INDUSTRY.
Man: ALL RIGHT, GET ON STAGE,
YOU PRIMA DONNAS. LET'S GO!
GET ON FOR STAGE FOUR...
HEY, FELLAS!
GET A LOAD OF THIS WIRE.
ANYBODY I KNOW?
WE'RE GOING ON TOUR.
WHAT DO YOU KNOW, BOSTON,
PHILADELPHIA, WASHINGTON...
WASHINGTON? HEY, WOULDN'T IBE SOMETHING IF THE PRESIDENCAME TO SEE US,
THE CHIEF HIMSELF?
Weisman: HE'D MAKE A CERTAIN
NUMBER OF MOVIES, AND THEN
ANYTIME HE MADE ANOTHER MOVIE,
HE FIGURED THAT 80 OR 90%
OF THE INCOME HE WAS
GETTING FROM THAT MOVIE
WOULD GO TO THE FEDERAL
GOVERNMENT, SO HE WOULD STOP
MAKING MOVIES AND GO OFF
AND RIDE HORSES.
HE JUST BECAME CONVINCED,
BASED ON HIS PERSONAL EXPERIENCE
THAT A HIGH TAX RATE
DISCOURAGES PEOPLE
FROM WORKING HARD
AND-- AND GOING THE EXTRA MILE
TO BE PRODUCTIVE.
AND HE RODE THAT IDEA-- I--
BECAUSE HE BELIEVED IAND BECAUSE HE WAS SUCH
A GREAT COMMUNICATOR,
HE RODE IT INTO THE WHITE HOUSE,
AND HE RODE IT INTO THE BRAINS
OF AMERICANS.
WE MUST GO FORWARD
WITH A TAX RELIEF PACKAGE.
I SHALL ASK FOR A 10% REDUCTION
ACROSS THE BOARD
IN PERSONAL INCOME TAX RATES
FOR EACH OF THE NEXTHREE YEARS.
Fox: HE WAS THE SPONSOR,
THE SUPPORTER OF
THE ECONOMIC RECOVERY TAX ACOF 1981, AND IT'S THE FIRST TIME
THEY GAVE A NAME
TO A TAX REFORM.
THE IMPORTANT THING NOW
IS TO HOLD TO A FIRM,
STEADY COURSE.
TONIGHT, I WANT TO TALK WITH YOU
ABOUT THE NEXT STEPS
THAT WE MUST TAKE
ON THAT COURSE,
ADDITIONAL REDUCTIONS
IN FEDERAL SPENDING
THAT WILL HELP LOWER
OUR INTEREST RATES,
OUR INFLATION,
AND BRING US CLOSER
TO FULL ECONOMIC RECOVERY.
DAVID STOCKMAN ADMITTED,
WHEN HE WAS THE HEAD
OF THE CONGRESSIONAL BUDGEOFFICE FOR REAGAN,
WAS THAT IN FIGHTING
FOR LOW TAX RATES, HE EXPECTED
THE REAGAN REVOLUTION ALSO
TO REDUCE GOVERNMENT,
BUT THEY FOUND--
THE REPUBLICANS FOUND--
THAT THE-- THERE WAS TOO MUCH
ENTRENCHED IN THE GOVERNMENPROGRAMS, AND SO GOVERNMENSPENDING WENT WAY UP.
SO, IT REALLY DIDN'T TESSUPPLY-SIDE ECONOMICS
IN THE BEST OF CONDITIONS.
REAGAN SOMETIMES GETS CREDIFOR MASSIVELY LOWER TAXING,
BUT THAT SHORT PERIOD
BETWEEN '80 AND '84 WERE--
WHEN I WAS HERE--
HE, UH, LOWERED THE TAX RATES,
AND THAT WAS VERY GOOD,
BUT HE ALSO HAD THREE TAX
INCREASES-- SOCIAL SECURITY
TAXES WENT UP,
AND OTHER REVENUES WENT UP,
AND IT WAS ALL CANCELED OUAND, UH, SPENDING WENT UP
AND THE DEFICIT EXPLODED.
ONE OF THE THINGS
ABOUT REAGAN WAS THAT WHEN HE
WAS CONVINCED THAT WE NEEDED
HIGHER TAXES, HE JUST WENT OUAND GAVE A SPEECH.
WE'RE WITHIN SIGHOF THE SAFE POROF ECONOMIC RECOVERY.
DO WE MAKE POROR GO AGROUND ON THE SHOALS
OF SELFISHNESS, PARTISANSHIP,
AND JUST PLAIN BULL-HEADEDNESS?
THE MEASURE THAT CONGRESS
IS ABOUT TO VOTE ON,
WHILE NOT PERFECT IN THE EYES
OF ANY ONE OF US,
WILL BRING US CLOSER
TO THE GOAL
OF A BALANCED BUDGET,
RESTORED INDUSTRIAL POWER,
AND EMPLOYMENT FOR ALL
WHO WANT TO WORK.
TOGETHER, WE CAN REACH
THAT GOAL.
ON A BIPARTISAN BASIS
IN THE SENATE AND THE HOUSE,
PEOPLE REALLY BEGAN TO STUDY
WHAT TAXES DO
THROUGH THE ECONOMY,
HOW PEOPLE CHANGE THEIR BEHAVIOR
IN RESPONSE TO
DIFFERENT TAX POLICIES.
Burman: IN THE EARLY '80s,
TAX SHELTERS
WERE REALLY RAMPANT.
THERE WERE STORIES ALL THE TIME
ABOUT RICH DEVELOPERS
WHO BUILT EMPTY OFFICE BUILDINGS
THAT MADE NO SENSE
FROM AN ECONOMIC PERSPECTIVE
BUT SAVED THEM AN ENORMOUS
AMOUNT OF MONEY IN TAXES,
AND PEOPLE SAW THAAS JUST A TRAVESTY.
THEY THOUGHT IT WAS UNFAIR
RICH PEOPLE WERE GETTING AWAY
WITH MURDER, AND THEY UNDERSTOOD
THAT THE TAX SYSTEM
WAS UNRAVELING.
YOU COULD ACTUALLY SELL
TAX CREDITS-- BUSINESSES
COULD SELL INVESTMENTAX CREDITS THEY DIDN'T NEED.
THERE WAS A MARKEIN THE WALL STREET JOURNAL.
YOU COULD BUY THE RIGHNOT TO PAY TAXES.
WE HAD A SITUATION
WHERE HALF OF
OUR BIG CORPORATIONS WEREN'PAYING ANY TAXES, AND MANY OF
THE OTHER ONES, THE OTHER HALF,
WERE PAYING QUITE A BIT.
REAGAN CAME TO BELIEVE
THAT THIS REALLY WASN'T RIGHT,
AND, UH, HE WAS A MAN
OF CERTAIN VERY STRONG
CONVICTIONS.
SO HE SAID TO HIS SECRETARY
OF THE TREASURY IN 1984,
"COME UP WITH A PROPOSAL
THAT VASTLY SIMPLIFIES
THE LAWS, THAT'S FAIR
TO EVERYBODY, THAT DOESN'REALLY RAISE MORE REVENUE,
BUT DOES IT IN A SENSIBLE,
ECONOMICALLY SOUND
AND FAIR WAY, AND THAT MAKES
THE TAX LAWS MORE TRANSPARENT."
REAGAN DIDN'T PUT A LOOF PRECONDITIONS ON IT.
HE SAID, "I WANT LOWER
MARGINAL TAX RATES,
AND I'M GONNA KEEP THE TAX BREAK
FOR MORTGAGE INTEREST."
HE THOUGHT THAT WAS SACROSANCT.
BASICALLY, EVERYTHING ELSE
WAS ON THE TABLE.
ONCE TAX REFORM IS OUT THERE,
ANYONE WHO KILLS IT,
THE SAYING WAS,
HE HAS A DEAD CAON HIS DOORSTEP.
ANYONE WHO KILLED TAX REFORM
WAS IMMEDIATELY UNDER SUSPICION,
HAVING DONE IT AS SOME SOROF SLEAZY PAYOFF
TO THE INTEREST GROUPS--
WHICH, IT'S TRUE ENOUGH,
HATED IT-- SO REAGAN HAS
THIS RISK OF A DEAD CAON HIS DOORSTEP.
HE-- I THINK HE GENUINELY
BELIEVED AND WANTED TO DO IT,
BUT HE IS SORT OF FORCED
POLITICALLY TO COME UP
WITH A PLAN THAT'S MORE FEASIBLE
THAN THE PURE TREASURY ONE PLAN.
THEN IT GOES TO THE HOUSE,
WHERE-- OF REPRESENTATIVES,
WHERE CONGRESSMAN ROSTENKOWSKI,
THE DEMOCRATIC CHAIR
OF THE WAYS AND MEANS COMMITTEE,
HE HAS TO DO SOMETHING, TOO.
( shouting, cat yowls )
THE HOUSE PLAN, ACTUALLY,
THEY RESTORED A LOOF THE SPECIAL TAX BREAKS
AND THE RATES WENT BACK UP.
REAGAN ORIGINALLY HAD PROPOSED
A TOP RATE OF 35%.
THE RATE WAS EVEN HIGHER
IN THE HOUSE PLAN,
AND IT-- AND THEY RESTORED
A LOT OF THE SPECIAL TAX BREAKS.
IT WAS A TAX REFORM PROPOSAL
THAT DIED, FRANKLY,
LEGISLATIVELY, NUMEROUS TIMES,
AND RONALD REAGAN HAD TO REACH
INTO THE CONGRESS AND SAY,
"NO, WE HAVE TO FINISH
OUR JOB HERE,"
AND WOULD RESURRECT TAX REFORM.
Shaviro: THEN IT GOES
TO THE SENATE,
TO SENATOR PACKWOOD
OF THE SENATE FINANCE COMMITTEE.
INITIALLY, I THINK IT'S FAIR
TO SAY HE REALLY HATED IT.
HE CAME AROUND A BIT,
BUT PART OF THE THING
WAS THAT HE WOULD BE
THE ONE WHO KILLED IT.
HE DIDN'T WANNA BE
THE ONE WHO KILLED IT,
SO HE HAD TO DO SOMETHING ELSE.
PACKWOOD AND HIS STAFF
CAME UP WITH THE IDEA,
WHAT THEY CALLED
THE 27% SOLUTION.
THEY WOULD TAX CAPITAL GAINS
THE SAME AS OTHER INCOME.
BEFORE THAT, CAPITAL GAINS
HAD ALWAYS BEEN TAXED
AT A LOWER RATE,
AND BY ELIMINATING
A WHOLE HOST OF DEDUCTIONS
AND TAX BREAKS,
AND BY PUTTING A BIG TAX
INCREASE ON CORPORATIONS,
THEY WERE ABLE TO LOWER
THE TOP RATE TO 27%.
WHICH WAS VERY, VERY APPEALING,
AND REAGAN LIKED IT A LOT.
McIntyre: SO, WE MANAGED
TO GET A TAX REFORM
THAT WAS A TERRIFIC DEAL
FOR LOW- AND MIDDLE-INCOME
PEOPLE, OVERALL RAISE TAXES
ON CORPORATIONS AND THE WEALTHY,
BUT CUT TAXES
ON ENOUGH WEALTHY PEOPLE
AND ENOUGH CORPORATIONS
TO KEEP THOSE LOBBYING FORCES
AT BAY.
Fox: THEY ELIMINATED
ABOUT A THIRD OF ALL
THE SPECIAL RELIEF PROVISIONS.
THEY BROUGHT TAX RATES DOWN
FOR EVERYBODY.
ONLY... PEOPLE SAID,
"NOT GONNA LAST,"
BECAUSE PROVIDING TAX RELIEF
IS SO MUCH A PAROF THE POLITICAL CAMPAIGNS.
"WHAT CAN I OFFER PEOPLE
THAT WILL MAKE THEM THINK
I'M FOR THEM?"
( G.H.W. Bush speaking )
( cheering )
( Clinton speaking )
...THE OLD-FASHIONED WAY.
( G.W. Bush speaking )
( Obama speaking )
...UNDER MY PLAN...
( cheering )
BY THE ELEMENTS ALONE,
THEY WILL GROW TO MILLIONS
OF TIMES THEIR ORIGINAL SIZE
IN LESS TIME THAN IT TAKES
FOR THE SUN TO RISE AND FALL.
Mitchell: THE TAX SYSTEM
HAS BECOME A BIT OF A PLAYPEN
FOR POLITICIANS
OF BOTH PARTIES.
WHETHER THEY'RE REPUBLICANS
OR DEMOCRATS, IT SEEMS LIKE
FOR EVERY REAL OR IMAGINED
PROBLEM IN THE COUNTRY,
SOME POLITICIAN HAS AN ANSWER
THAT INVOLVES MORE COMPLICATION
OF THE TAX CODE.
WHAT YOU ARE LOOKING AT NOW
USED TO BE A GREAT CITY.
THAT WAS LONG AGO.
GEE!
IT'S THE HOME
OF MONSTERS NOW.
OUR TAX SYSTEM, IN THE WAY
IT'S USED BY GOVERNMENT,
IT'S BASICALLY
A VOTE-BUYING SYSTEM.
IT IS USED TO CURRY FAVOR
WITH VOTERS.
Burman: POLITICIANS
IN BOTH PARTIES HAVE COME
TO SEE THE INCOME TAX
AS A KIND OF CHRISTMAS TREE
FULL OF GOODIES THEY CAN
GIVE AWAY FOR ONE CONSTITUENCY
OR ANOTHER, AND THERE'S BEEN
THIS BIPARTISAN CONSENSUS
THAT THE WAY TO PANDER
TO THE ELECTORATE
IS BY CREATING NEW TAX CREDITS
TARGETED AT PARTICULAR GROUPS.
( growls )
IT'S THAT MONSTER AGAIN!
AND WE CAN CONTROL
HIS ACTIONS, DON'T WORRY.
WHY THE TAX CODE?
WHY NOT JUST SEND THE MONEY
OUT IN A CHECK?
WELL, THINGS GET HIDDEN
IN THE TAX CODE,
AND YOU GET CREDIFOR TWO THINGS WHEN YOU PUA SUBSIDY-- A SPECIAL
TAX BREAK INTO THE TAX CODE.
A), YOU GET CREDIFOR THE SUBSIDY,
AND B), YOU'VE CUT TAXES.
SO YOU DIDN'T INCREASE
GOVERNMENT SPENDING,
YOU CUT TAXES,
AND, WOW, THAT'S A TWOFER.
I DON'T UNDERSTAND.
WHY DO YOU HAVE
SUCH MONSTERS ANYWAY?
YOU'RE SO ADVANCED AND ALL.
Sheppard: CONGRESSPEOPLE
HAVE TO LOOK LIKE
THEY'RE DOING SOMETHING.
THERE'S-- THE WHOLE IMPETUS
IN WASHINGTON IS TO,
YOU KNOW, AS BILL CLINTON
USED TO PUT IT,
FEEL YOUR PAIN, YOU KNOW?
"LET'S GIVE 'EM
A LITTLE TAX CREDIT FOR IT,
AND IT'S NOT GONNA MAKE
A DENT IN THE REAL PROBLEM,
BUT IT'S GONNA LOOK LIKE
WE'RE DOING SOMETHING."
WELL, NOW, WHERE DO YOU THINK
THIS COUNTRY WOULD BE
WITHOUT POLITICIANS?
DO YOU THINK THAT THE AVERAGE
CITIZEN WOULD TAKE TIME OFF
TO HELP RUN THE COUNTRY?
THERE ARE MANY WHO WOULD.
AHH! ALL THE AVERAGE CITIZEN
THINKS ABOUT IS MAKING MONEY.
HE'S GOT NO TIME FOR POLITICS.
THE PUBLIC IS BEING TAUGHTHAT TO PAY TAXES IS PAINFUL.
THAT'S WHY YOU NEED,
QUOTE, RELIEF.
IT'S AN AFFLICTION,
AND IF YOU CAN MITIGATE
THAT IN SOME WAY,
IF POLITICIANS CAN OFFER YOU
JUST SOME MORE RELIEF FROM THAT,
YOU'LL BE BETTER OFF.
WE FOUND, TO OUR REGRET,
THAT IT MADE UNCONTROLLABLE
MONSTERS, AS WELL.
THE TAX SYSTEM HAS NOW
GOTTEN TO THE POINWHERE CONGRESS USES
THE TAX SYSTEM
THE WAY MY MOTHER
USED CHICKEN SOUP.
IT'S A CURE-ALL FOR ANY ILL
AFFECTING SOCIETY
OR THE ECONOMY.
Burman: YOU COULD PICK
ALMOST ANY PROGRAM AREA
YOU WANT-- THERE'S A TAX PROGRAM
THAT LOOKS BASICALLY
LIKE A GOVERNMENT PROGRAM
RUN BY AN AGENCY,
BUT IT'S RUN BY
THE IRS, INSTEAD.
YOU KNOW, THE LITTLE CREDITS
FOR THIS AND THAT ARE OFFENSIVE
BECAUSE THEY DON'T WORK.
YOU KNOW, THEY COST MONEY,
AND THEY DON'T WORK.
THAT'S NOT A GOOD COMBINATION.
( screaming )
THE GENERAL PRINCIPLE,
I THINK, YOU DERIVE
FROM MOST TAX RELIEF
IS THAT THE MOST RELIEF
GOES TO PEOPLE
WHO NEED IT THE LEAST;
THE LEAST RELIEF GOES TO PEOPLE
WHO NEED IT THE MOST.
SURVEY SHOWS AMERICAN PEOPLE
TODAY BETTER HOUSED
THAN ANY PEOPLE IN HISTORY.
WHEN I FIRST READ THAON THE RELEASE, I THOUGHTO MYSELF, "THEY CALL THAT NEWS?
EVERYONE KNOWS THAT!"
Fox: NOW, I WRITE
AND HAVE TALKED A LOT ABOUHOW THE HOME MORTGAGE
INTEREST DEDUCTION
IS SOMETHING SACRED.
I MEAN, IT'S A THIRD RAIL.
NO CANDIDATE IS GOING TO SAY
THAT WE OUGHT TO ELIMINATE IOR GREATLY CURTAIL IT.
I THINK THAT THE QUESTION
THAT YOU'D ASK
FOR THE HOME MORTGAGE INTERESDEDUCTION IS THE QUESTION
YOU'D ASK FOR ALL RELIEF:
WHY IS IT THERE?
THE PROOF OF THE PUDDING
IS IN THE EATING, AS THEY SAY,
AND THAT PARTICULAR KIND
OF PUDDING TASTES
RIGHT NICE TO US.
IN 2006, THE BOTTOM 52%
OF ALL TAXPAYERS, OVER 50%,
THEY GOT JUST 2%
OF THAT 66 BILLION.
THE TOP 3% GOT ABOUT 30%.
WELL, CAN YOU IMAGINE
IN THIS SENATE FINANCE COMMITTEE
HEARING SAYING, "WE ARE NOW
ANNOUNCING" JUST THAT OUTCOME?
"WE'RE GONNA GIVE 30%
TO THE TOP THREE OF YOU,
AND THE OTHER 52%,
WHY DON'T YOU JUST GEOUT OF THE MEETING?
GO HOME, 'CAUSE WE DON'T CARE
TO HELP YOU BECOME HOMEOWNERS,"
AND THAT WOULD BE OUTRAGEOUS.
IT COULDN'T HAPPEN,
BUT IT DOES HAPPEN
IN THE TAX LAWS, AND SO MANY
OF THOSE THINGS OCCUR
BECAUSE IT'S NOT TRANSPARENT.
AND POLITICIANS
DON'T WANT TO TALK ABOUT IT,
BECAUSE THEY TALK ABOUHOW MARVELOUS IS ITO HELP YOU OWN A HOME.
Man: HOMES THAT ARE
THE FINEST THAT CAN BE HAD
FOR THE MEANS
AND THE MODE OF LIFE
OF THOSE WHO LOVE, HOPE,
SLEEP, WORK, EAT...
YES, LIVE IN THEM
FOR AMERICA.
THE CHILDCARE CREDIT.
I MEAN, CHILDCARE
IS EXPENSIVE FOR EVERYBODY.
IT'S INCREDIBLY EXPENSIVE.
YOU HAVE TO-- IF YOU HAVE
ONE CHILD, LET ALONE
TWO CHILDREN IN CHILDCARE...
AND SO CONGRESS ENACTED
A CHILDCARE CREDIT.
WELL, WHO GETS IT?
WELL, YOU ONLY GET A CREDIT,
WHICH IS A DOLLAR-FOR-DOLLAR
CREDIT AGAINST YOUR TAXES--
IT OFFSETS A DOLLAR OF TAXES--
IF YOU OWE TAXES.
BUT LISTEN TO THIS--
AND IT JUST SEEMS SO STRIKING,
THE UNFAIR--
IF YOU EARN HUNDREDS
OF THOUSANDS, OR MILLIONS
OF DOLLARS, AND YOU HAVE
TWO KIDS IN CHILDCARE
AND YOU'RE THE EXECUTIVE
OF SOME TOP COMPANY,
YOU GET THE $1200 TAX CREDIT.
IF YOU EARN $25,000
AND YOU DON'T OWE INCOME TAXES,
YOU DON'T GET ANY HELP,
YET YOU'RE THE ONES
WHO NEED THE HELP THE MOST.
THAT'S THE KIND OF BUSINESS
WE LIKE.
THESE ARE OUTCOMES
THAT, IF THEY DON'T MAKE
SOCIAL SENSE, IF THEY DON'MAKE ECONOMIC SENSE,
AND THEY DRIVE UP TAX RATES,
WE OUGHT TO SAY
TO OUR POLITICIANS,
AND I'M ASKING THEM, "WHY?"
ALL RIGHT, ALL RIGHT,
HOLD OFF THE QUESTIONS.
WHY THE MYSTERY, BILL?
RIGHT NOW WE HAVE TAX CREDITS
FOR BABY-SITTERS,
TAX CREDITS FOR COLLEGE,
YOU KNOW, TAX CREDITS FOR KIDS,
AND, YOU KNOW, THIS IS
THE KIND OF JUNK
THAT MAKES THE TAX CODE
TENS OF THOUSANDS
OF PAGES LONG.
IT'S THE KIND OF JUNK
THAT CREATES THE FIELD DAY
FOR THE POLITICIANS
AND THE TAX LAWYERS
TO PLAY THEIR GAMES.
IT'S JUST NOT CLEAR
THAT YOU SHOULD REALLY
BE USING THE TAX SYSTEM
TO ENCOURAGE HOME OWNERSHIP,
OR ANYTHING ELSE LIKE THAT.
THE TAX SYSTEM
SHOULD RAISE REVENUE
AND THEN TRY TO DO
AS LITTLE ELSE AS POSSIBLE,
BECAUSE ALMOST EVERYTHING ELSE
THAT IT DOES IS HARMFUL.
BUT WHAT PEOPLE DON'T REALIZE
IS WHILE THE FEDERAL GOVERNMENSPENDS THREE TRILLION
A YEAR, ROUGHLY,
IN DIRECT SPENDING PROGRAMS,
IT ALSO SPENDS INDIRECTLY
$1 TRILLION A YEAR
IN TAX PREFERENCES.
BY THAT I MEAN
THE FEDERAL GOVERNMENT FORGOES
RECEIVING REVENUES
OF ABOUT $1 TRILLION A YEAR
BECAUSE OF DEDUCTIONS,
CREDITS, EXEMPTIONS,
AND EXCLUSIONS IN THE TAX CODE.
WHAT HAPPENS TO THE AVERAGE
PERSON IS, IF YOU LOOK
AT THE HUNDREDS,
IF NOT THOUSANDS
OF SPECIAL PREFERENCES
IN THE TAX CODE,
I BET EVERY SINGLE PERSON
WATCHING THIS BENEFITS
FROM ONE OR TWO
OF THOSE SPECIAL PREFERENCES,
AND THEY THINK, "WE'D BETTER
KEEP THE SYSTEM IN PLACE,
BECAUSE I BENEFIT FROM--
FROM LOOPHOLE 'A'
AND LOOPHOLE 'G.'"
WELL, WHAT THEY DON'T REALIZE
IS THAT THEIR NEIGHBORS
ARE BENEFITTING
FROM LOOPHOLE "E"
AND LOOPHOLE "L,"
AND THEN THE NEIGHBOR
ON THE OTHER SIDE
IS BENEFITTING
FROM LOOPHOLE "W"
AND LOOPHOLE "C."
AND SO EVERYONE IS,
IN SOME WAY, HAS THEIR SNOUIN THE TROUGH OF SPECIAL
INTEREST TAX PROVISIONS,
BUT WHAT DOES THAT MEAN?
AT THE END OF THE DAY,
THE RATE IS HIGHER
ON ALL OF US
ON THE INCOME THAT IS TAXED.
YOU SEE THAT ALMOST HALF
OF ALL INCOME THAT INDIVIDUALS
COULD BE TAXED ON
WILL NOT BE TAXED.
AND PROBABLY PEOPLE WATCHING
THIS WILL SAY, "WELL, JOHN,
THAT'S FABULOUS."
BUT THERE ARE CONSEQUENCES.
THE FIRST CONSEQUENCE
IS THAT THERE'S REALLY
A CLOSE RELATIONSHIP
BETWEEN TAX RATES
AND WHAT CAN BE TAXED.
SO, IF ONLY HALF
OF ALL INCOME CAN BE TAXED,
PEOPLE HAVE TO PAY
MUCH HIGHER TAX RATES
THAN THEY WOULD OTHERWISE.
WOULDN'T YOU RATHER
GIVE UP 50 CENTS OF LOOPHOLES
FOR A DOLLAR OF LOWER TAX RATES?
THAT'S, IN EFFECT,
WHAT TAX REFORM IS ALL ABOUT.
SIMPLIFYING THE TAX LAWS,
MAKING SENSE OF
THE TAX LAWS,
THERE ISN'T A POLITICIAN
WHO WON'T TELL YOU
THAT THEY'RE FOR IT,
AND THEN THEY'LL GO OUAND SAY, "AND WHAT I'M OFFERING
NOW IS A CREDIT HERE,
AN ADDITIONAL DEDUCTION HERE."
NOBODY WANTS TO ELIMINATE
THE RELIEF THAT'S ALREADY THERE.
ALMOST NO ONE.
SO, THE POLITICIANS
ALL ARE FOR DECENCY,
HONESTY IN THE TAX SYSTEM,
SIMPLIFICATION, TRANSPARENCY...
YOU'LL HEAR THAT, AND YOU'LL
SAY, "OH, THAT'S SOMEBODY
I'M IN FAVOR OF,"
BUT WHEN IT COMES DOWN
TO ACTUALLY DEPRIVING ANYBODY
OF THESE PROVISIONS,
IT'S VERY HARD TO GET THEM
TO DO IT.
REPORT PRELIMINARY FINDINGS.
IN HIS SECOND TERM,
PRESIDENT BUSH SAID
THAT ONE OF HIS OBJECTIVES
WAS TO SIMPLIFY THE TAX CODE
FOR VERY GOOD REASONS--
THE BURDEN IS GREAON THE TAXPAYER.
G.W. Bush: UH, I AM...
FIRM IN MY DESIRE
TO GET SOMETHIN' DONE.
WE'RE GONNA TAKE THEIR WORK,
AND WE'LL GO TO THE CONGRESS
AND SAY, "LET'S WORK TOGETHER
TO ACHIEVE SOMETHING, UH,
VERY CONSTRUCTIVE
FOR THE AMERICAN PEOPLE."
UNFORTUNATELY, OTHER
PRIORITIES TOOK THE PLACE
OF THAT, AND THE PRESIDENWAS, INSTEAD, YOU KNOW,
AT THAT POINT, PREOCCUPIED
WITH THE SOCIAL SECURITY REFORM,
WHICH DIDN'T-- DIDN'T--
DIDN'T GO OVER SO WELL.
WELL, THAT'S THE STORY
ON THAT PARTICULAR PROJECT.
THESE POLITICIANS
DON'T WILLING GIVE UP POWER.
THEY'RE NOT GOING TO
GIVE UP THE POWER THEY HAVE
UNDER OUR CURRENT TAX CODE.
IF ONLY THERE WERE
MORE POWER, BETTY!
IS THERE ANY WAY
TO GENERATE MORE POWER?
WE'VE GOT TO HAVE MORE!
( screeching )
POLITICS HAS SCREWED UP
ALL EFFORTS TO, UH,
DO TAX SIMPLIFICATION.
I MEAN, YOU KNOW, I PERSONALLY
DEFINE POLITICS
AS A CURIOUS FORM
OF JUVENILE DELINQUENCY.
( blows landing )
WELL, WHAT HAPPENS
WHEN YOU TRY TO PUSH
A GOOD IDEA THROUGH
THE LEGISLATIVE PROCESS,
EVERYBODY-- EVERY POLITICIAN
SAYS IN SO MANY WORDS,
"WHAT'S IN IT FOR ME, OR PEOPLE
THAT ARE SIGNIFICANT TO ME,
LIKE MY CAMPAIGN CONTRIBUTORS?"
SAY, WHAT THEY TEACHING YOU
UP AT THAT YANKEE UNIVERSITY,
BAD MANNERS?
THE SPECIAL INTEREST GROUPS
AND THE POLITICIANS HAVE
A VERY COZY RELATIONSHIP
WHERE THEY GET TO EXCHANGE
CAMPAIGN CASH
FOR SPECIAL INTEREST LOOPHOLES,
AND THAT'S A GAME
THAT THE AMERICAN PEOPLE LOSE,
BUT IT'S THE SPECIAL INTERESGROUPS AND THE POLITICIANS
THAT WIN.
THE RHETORIC IS ALWAYS THERE
TO HELP THE PEOPLE, AH,
STICK IT TO ONE GROUP
VERSUS THE OTHER,
CLASS WARFARE,
THAT SORT OF THING--
THAT'S ALL THEY TALK ABOUT,
BUT IT'S ALL POLITICS.
DON'T RILE ME, BOY.
DON'T RILE ME.
WE HAVE 35,000 LOBBYISTS
IN WASHINGTON WHOSE SOLE JOB
IS MOSTLY TO GEA TAX BREAK FOR THEIR EMPLOYERS.
WHAT PEOPLE WILL DO
WILL BE TO LOBBY
FOR VERY, VERY NARROW BENEFITS,
YOU KNOW, A PARTICULAR EXEMPTION
FOR A PARTICULAR PRODUCT,
OR A PARTICULAR EXEMPTION
FOR SOMETHING THAT IS
MANUFACTURED IN A CERTAIN WAY,
OR A PARTICULAR EXEMPTION
FOR RESEARCH.
A BUSINESS CAN COME IN
AND MAKE A BIG DONATION
TO A MEMBER OF CONGRESS,
AND HE'LL HEAR THEM OUABOUT PARTICULAR THINGS
THEY WAY, VERSUS
SOME OTHER BUSINESS
OR A LABOR UNION
OR A NONPROFIT,
EVEN CHURCH GROUPS AND OTHERS.
YEAH, MAC, FOR FIVE Gs,
IT'S IN THE BAG.
IF YOU HAVE ENOUGH LOBBYISTS
IN WASHINGTON SO THAT THERE
ARE 70 LOBBYISTS
FOR EVERY MEMBER OF CONGRESS...
I THINK MOST AMERICAN CITIZENS
UNDERSTAND AS THEY SIAT THE DINNER TABLE AT NIGHT,
"MAN, I'M GROSSLY OUTMANNED
UP THERE."
NOW, I HAD OBSERVED
THE PROCESS OF MEMBERS
SEEKING COMMITTEE ASSIGNMENTS
FOR A LOT OF YEARS,
AND PARTICIPATED IN THE PROCESS.
I DON'T RECALL EVER HAVING HAD
A MEMBER COME TO ME
AND SAY, "DICK, I WANT TO BE
ON WAYS AND MEANS
BECAUSE I'M INTERESTED
IN THE TAX CODE."
IT WAS, "I WANNA BE
ON WAYS AND MEANS
BECAUSE IT'S AN EXCELLENCOMMITTEE FROM WHICH
TO RAISE THE FUNDS
FOR MY CAMPAIGN."
SAME WITH SENATE FINANCE.
WELL, HOW DO YOU RAISE FUNDS?
YOU, IN FACT, PEDDLE TAX FAVORS.
( calling auction )
( man shouts )
"WE'LL GET THIS CAMPAIGN
HELP FOR YOU,
WE'LL DO THAT FOR YOU,
WE'LL DO THIS FOR YOU.
YOU'VE GOTTA, UH, YOU'VE GOTTA
HELP MY CLIENT OUWITH THIS LITTLE TAX PROBLEM
THEY'RE HAVING."
WE HAVE TAX EXEMPTIONS
FOR SPECIFIC MANUFACTURERS
OF CEILING FANS.
I CAN'T GET IT OUOF MY MIND, JAMES.
WE'RE CROOKS.
( chuckles )
YOU TALK AS IF
YOU'RE JUST FINDING THAT OUT.
AS LONG AS WE'RE ELECTING
PEOPLE AND THEY'VE GOT FRIENDS
WHO HELP THEM GET ELECTED,
AND THEY'VE GOT FRIENDS
WHO ARE GIVING THEM MONEY,
OR GIVING THEM JOBS
AFTER THEY LEAVE,
THERE ARE ALWAYS GONNA BE
REASONS WHY LAWMAKERS WANTO DO FAVORS FOR CERTAIN PEOPLE.
SOMETIMES THEY'RE GOOD REASONS.
SOMETIMES THEY WANTO HELP AN INDUSTRY.
SOMETIMES THEY WANT TO HELP
A COMPANY THAT'S
IN THEIR DISTRICT-- I MEAN,
THESE ARE GOOD REASONS,
BUT ALL OF THAT LEADS THEM
TO CLUTTER UP THE TAX CODE.
WE HAVE A BULLETIN
JUST RECEIVED.
ACCORDING TO A REPORNOT YET CONFIRMED,
A BEAST OF SEEMINGLY
GIGANTIC PROPORTIONS
HAS BEEN SIGHTED
LURKING IN THE HILLS
DUE NORTHEAST OF TOWN.
( gavel strikes )
WE'LL COME TO ORDER.
UM, I'M COMMITTED TO, UM,
DO ALL WE POSSIBLY CAN,
THIS COMMITTEE, THIS YEAR,
TO SET THE STAGE
FOR SIGNIFICANT TAX REFORM.
MY-- I BELIEVE THAT VIRTUALLY
NO ONE IN THE CONGRESS
HAS A SUFFICIENT GRASP
OF THE CODE.
THERE'S A DOZEN PROPOSALS
THAT HAVE BEEN INTRODUCED
INTO CONGRESS--
I'M NOT GONNA NAME
THE SPONSORS-- TO REVAMP
OR REFORM THE TAX CODE,
INCLUDING PROPOSALS
FOR A FAIR TAX, FLAT TAX...
THERE SEEMS TO BE
A CONSENSUS GATHERING
THAT WE NEED, QUOTE, TAX REFORM.
THERE IS NOT A CONSENSUS,
HOWEVER, ABOUT WHAT THAT MEANS.
HOW, AS WE MOVE FORWARD
WITH, UH, THE DISCUSSION
ON TAX REFORM, UH,
SHOULD WE FACTOR IN
THE, UH, NEED FOR US,
AS A GOVERNMENT,
TO BE FISCALLY, UH, RESPONSIBLE?
"HOW DO WE MOVE
TO ANY OF THESE SYSTEMS
WHEN MANY OF THEM WOULD DO AWAY
WITH THE POPULAR EXEMPTIONS
AND DEDUCTIONS,
SUCH AS THE DEDUCTIONS
FOR MORTGAGE INTEREST PAYMENTS?"
JUST, ALL THINGS BEING EQUAL,
IS THERE A-- TEND TO BE
A MORE EFFICIENT WAY
TO RAISE REVENUE...
UM, COMPARED WITH OTHER WAYS?
AS YOU SAID, MR. CHAIRMAN,
OUR TAX SYSTEM IS BADLY BROKEN.
NO ONE QUARRELS WITH THAT.
YOU MENTION THE TRAIN WRECK
COMING IN 2010.
I'M SORRY, I'M GONNA HAVE
TO CLOSE THIS HEARING DOWN.
WE'RE WAY LATE FOR A VOTE.
MEETING'S ADJOURNED.
Burman: A LONG-STANDING ISSUE
IN TAX POLICY IS WHETHER
YOU SHOULD TAX INCOME--
HOW MUCH PEOPLE PRODUCE,
OR CONSUMPTION--
HOW MUCH THEY SPEND,
AND THERE'S BEEN A PHILOSOPHICAL
DEBATE THAT'S GONE BACK
TO HOBBES AND LOCKE
AND PHILOSOPHERS
HUNDREDS OF YEARS AGO.
YES, IT'S AMAZING
WHEN YOU STOP AND THINK
ABOUT IT.
AMERICANS HAVE BEEN
SCHIZOPHRENIC IN THE WAY
THAT WE GO ABOUT TAXES.
AT SOME TIMES, WE WANTED
TO JUST TAX THE CONSUMPTION--
THAT IS, THE SALE OF THINGS--
AND OTHER TIMES, WE WANTO TAX JUST INCOME.
AT OTHER TIMES, WE WANTO TAX SAVINGS,
OR THE RETURN TO INVESTMENTHROUGH CAPITAL GAINS
AND DIVIDENDS,
AND WHAT IT'S COME DOWN TO NOW
IS THAT WE JUST BASICALLY
TAX EVERYTHING.
Shaviro: EVER SINCE
THERE'S BEEN A TAX, THE PHRASE
"TAX REFORM" HAS BEEN
VERY POPULAR.
HOW CAN YOU BE AGAINST IT?
TO AN EXTENT, EVERYONE
WILL DEFINE TAX REFORM
AS "WHAT I WANT,
THAT'S TAX REFORM."
NOW, NONE OF LIKE
CRYSTAL-GAZING, SO LET'S
TAKE A LOOK AT WHAT IS
ACTUALLY HAPPENING NOW.
WE DO HAVE A TAX SYSTEM TODAY
WHICH IS A HYBRID.
WE CALL IT AN INCOME TAX,
AND THAT'S KIND OF FUNNY,
BECAUSE IT'S NOT.
IT'S ABOUT ONE THIRD INCOME TAX,
ONE THIRD CONSUMPTION TAX,
ONE THIRD NEITHER.
Burman: CONSUMPTION, SPENDING
IS BASICALLY JUST THE DIFFERENCE
BETWEEN THE AMOUNT YOU EARN
AND THE AMOUNT YOU SAVE
AND THE AMOUNT YOU PAY IN TAXES,
BUT UNDER OUR CURRENT INCOME TAX
THERE ARE A LOT OF WAYS
IN WHICH YOU CAN BASICALLY
GET A DEDUCTION FOR SAVINGS,
SO IT'S MOVING IN THE DIRECTION
OF A CONSUMPTION TAX.
SO, IF YOU PUT MONEY
INTO YOUR HOUSE, YOU GETO DEDUCT THE MORTGAGE INTEREST.
IF YOU PUT MONEY INTO AN IRA
OR INTO A 401(k),
OR YOUR EMPLOYER PUTS MONEY
INTO A PENSION,
THAT'S NOT INCLUDED
IN YOUR INCOME.
SO, AGAIN, THAT'S THE SAME KIND
OF TAX TREATMENT AS YOU GEUNDER A CONSUMPTION TAX.
YOU MUST UNDERSTAND.
EVERY ECONOMIST WILL TELL YOU
THAT MANY WILL FAVOR
A CONSUMPTION TAX.
BUT IF YOU HAVE AN INCOME TAX
WHICH DOESN'T TRY TO DO
ALL OF THE MANIPULATING
OF THE WAY IN WHICH WE BEHAVE,
STAYS OUT OF IT,
AND IT LETS THE MARKETS,
YOU KNOW, PRETTY MUCH CONTROL
THOSE THINGS, THAT WE'D HAVE
A STRONGER ECONOMY.
THAT MEANS HIGHER WAGES,
MORE SAVINGS, MORE INVESTMENT,
STRONGER COMPANIES, MORE--
MORE COMPANIES THAT CAN
COMPETE INTERNATIONALLY.
THAT'S A HUGE ADVANTAGE.
EVERYONE IN THE POLICY WORLD
WOULD PREFER A BROAD-BASED,
LOW-RATE INCOME TAX
TO ONE LIKE WHAT WE HAVE NOW,
BUT NONETHELESS, TAX REFORM
HAS KIND OF BEEN CONVERTED
INTO... IT'S NOW PREDOMINATELY
IDENTIFIED WITH
HAVING A CONSUMPTION TAX.
NOW, THERE ARE MANY WAYS
YOU CAN GO ABOUT CREATING
A CONSUMPTION-BASED TAX.
ONE EXAMPLE OF
A CONSUMPTION-BASED TAX
IS TO HAVE A NATIONAL SALES TAX,
BUT A FLAT TAX,
AT LEAST PROPERLY DEFINED,
IS ALSO A CONSUMPTION-BASED TAX.
THERE'S MORE TO ITHAN THAT, JOE.
THERE'S SOMETHING BEHIND THIS,
SOMETHING WE DON'T UNDERSTAND.
CERTAIN TYPES OF INCOME,
CAPITAL INCOME IN PARTICULAR,
DON'T GET TAXED
UNDER A CONSUMPTION TAX,
AND THAT WILL LEAVE
CERTAIN PEOPLE
WITH MUCH LOWER TAX BILLS.
MUCH, MUCH LOWER TAX BILLS.
RICH PEOPLE WILL PAY
CONSIDERABLY LESS,
UNLESS THE SYSTEM
IS DESIGNED CAREFULLY.
HA! WHAT AN IMAGINATION.
RIGHT. THAT'S JUST WHAIT TAKES MOST OF ALL,
CREATIVE IMAGINATION.
THE ADVANTAGE OF TAXING
SPENDING RATHER THAN INCOME
IS THAT IT'S THOUGHTO BE MORE EFFICIENT.
IT ENCOURAGES YOU TO SAVE.
THE CURRENT TAX SYSTEM
BASICALLY DISCOURAGES SAVING,
AND THERE'S NOT ANY PARTICULAR
REASON WE WANT PEOPLE TO SAVE
LESS THAN THEY WOULD OTHERWISE.
AND IF YOU LOOK ATHE HORRIBLY ANEMIC SAVINGS RATE
IN THE UNITED STATES,
IT CERTAINLY WOULD BE
A GOOD IDEA TO RAISE IT.
RIGHT NOW, IT'S AROUND ZERO.
WHEN WE RETURN
POWER TO THE PEOPLE,
OPPORTUNITY TO THE AMERICAN
PEOPLE, RESPONSIBILITY
TO THE AMERICAN PEOPLE,
THIS NATION IS GONNA MOVE AHEAD
IN A WAY THAT'LL ASTOUND
OURSELVES AND THE WORLD.
REST UP, BECAUSE, MY FRIENDS,
OUR JOURNEY HAS JUST BEGUN.
SO, I RAN FOR PRESIDENIN BOTH 1996 AND 2000
ON THE FLAT TAX.
FORTUNATELY, THE MESSAGE
DID BETTER THAN THE MESSENGER.
UNDER THE PROPOSAL
THAT I HAD, FOR EXAMPLE,
YOU'D HAVE A SINGLE RATE,
17%, THAT WOULD APPLY
AFTER GENEROUS EXEMPTIONS
FOR ADULTS AND FOR CHILDREN,
AND THERE'D BE NO TAX
ON YOUR SAVINGS.
EVERYTHING WOULD BE TAX-FREE
ON YOUR SAVINGS, AND THERE'D
BE NO DEATH TAX.
I THINK YOU SHOULD BE ALLOWED
TO LEAVE THE WORLD
UNMOLESTED BY THE IRS.
YOU PAID ENOUGH
DURING YOUR LIFETIME,
OR AS OUR FOUNDERS WOULD SAY,
"NO TAXATION
WITHOUT RESPIRATION."
YOU EARN YOUR INCOME,
YOU REPORT YOUR INCOME,
YOU DEDUCYOUR FAMILY ALLOWANCE,
YOU APPLY THE RATE,
AND YOU'RE DONE.
THE PERKS OF THE FLAT TAX
IS IT UNLEASHES PEOPLE'S MINDS,
THINKING, CREATIVITY,
ONTO PRODUCTIVE PURSUITS.
INSTEAD OF SPENDING
SIX BILLION HOURS, YOU COULD--
A YEAR WITH FILLING OUT FORMS,
YOU COULD WASTE THE TIME.
THAT WOULD BE MORE PRODUCTIVE
THAN, YOU KNOW, LETHE BRAIN REGENERATE.
IT JUST DOESN'T TAKE
MUCH TIME TO EXPLAIN
THE FLAT TAX.
IT'S JUST THERE.
THAT'S IT, MAN.
THAT'S ABOUT IT.
ANYBODY CAN DO IT.
( cheering )
AND I ENDORSE THE FAIR TAX,
BECAUSE IT'S THE BEST HOPE WE
HAVE OF FINALLY CHANGING
THE TAX SYSTEM IN THIS COUNTRY.
Boortz: THERE WAS THIS GROUP
OF BUSINESSMEN
IN HOUSTON, TEXAS.
THEY JUST HAD THIS LITTLE--
CALL IT A GAME, IF YOU WANT,
I DON'T KNOW, BUT THEY WOULD
TACKLE PROBLEMS.
TWO OTHER FELLOWS AND MYSELF
WERE HAVING LUNCH,
AND IN OUR USUAL WAY,
WE WERE COMPLAINING
ABOUT THE STATE OF AFFAIRS
IN THE COUNTRY.
AND THEY SAID, OKAY,
WE'RE GOING TO NOW HIRE
COMPLETELY IMPARTIAL EXPERTS,
AND WE'RE GONNA ASK THEM
TO COME UP WITH A NEW WAY
OF COLLECTING REVENUE
FOR THE FEDERAL GOVERNMENT.
WE ENDED UP TAKING TWO YEARS
AND $23 MILLION, UH,
TO COMPLETE THIS STUDY,
OUT OF WHICH CAME
THE FAIR TAX.
WE STOP TAXING INCOME,
AND START TAXING CONSUMPTION.
Boortz: YOU GET RID OF ALL
CORPORATE INCOME TAX. GONE.
NO PERSONAL INCOME TAXES.
IT'S GONE.
PAYROLL TAXES. GONE.
ESTATE TAX, DEATH TAX. GONE.
CAPITAL GAINS TAXES. GONE.
AND ALL OF THIS IS REPLACED
BY ONE EMBEDDED FEDERAL
RETAIL SALES TAX.
WHEN YOU BUY SOMETHING NEW
AT THE RETAIL LEVEL,
YOU PAY THE TAX. YOU KNOW
EXACTLY WHAT YOU'RE PAYING.
IF YOU BUY USED GOODS
AND SERVICES-- A USED HOUSE
OR A USED CAR--
YOU PAY NO SALES TAX.
EVERY HOUSEHOLD WILL GEA CASH DISTRIBUTION
AT THE BEGINNING OF EVERY MONTH
THAT WILL TOTALLY UNTAX THEM
UP TO POVERTY-LEVEL SPENDING.
IT ESSENTIALLY UNTAXES
EVERY POOR AND ELDERLY PERSON
FROM THEIR BASIC NECESSITIES
SUCH AS FOOD AND MEDICINE
AND BASIC UTILITIES.
AND I KNOW-- I KNOW TAXES
ARE BORING, BUT WHAT'S BORING
ABOUT GETTING 100%
OF YOUR PAYCHECK?
WHAT'S BORING ABOUT NOT HAVING
TO KEEP TAX RECORDS?
WHAT'S BORING ABOUT NOT HAVING
TO KEEP RECEIPTS?
WHAT'S BORING ABOUT NOT EVER
WORRYING ABOUT AN IRS AUDIT?
THOSE THINGS AREN'T BORING.
THEY'RE NOT-- THAT CAN BE
THE REALITY, IF PEOPLE
GET ON THE BANDWAGON
WITH THE FAIR TAX.
NOW, IN THE POLITICAL WORLD,
THE CONSUMPTION TAX IS
BASICALLY A CONSERVATIVE MOVE.
IT'S BASICALLY A WAY
OF SAYING WE'RE GONNA TAX
RICH PEOPLE LESS.
THEY SAVE MORE THAN POOR PEOPLE,
SO THEY HAVE MORE OF
THEIR INCOME COMES FROM SAVING.
WE'RE GONNA MAKE ILESS PROGRESSIVE
BY NOT TAXING THEM AS MUCH.
IN THE ACADEMIC WORLD,
IT'S VERY DIFFERENT.
YOU HAVE PEOPLE WHO ARE
LIBERAL DEMOCRATS WHO FAVOR IAS MUCH AS CONSERVATIVE
REPUBLICANS, AND THE ARGUMENIS FOR A PROGRESSIVE
CONSUMPTION TAX OF ONE KIND
OR ANOTHER, IT WOULD
APPROXIMATELY AS PROGRESSIVE
AS THE SYSTEM WE HAVE NOW.
REGARDING A VALUE-ADDED TAX,
IN EFFECT, A VALUE-ADDED TAX
IS JUST A DIFFERENT FORM
OF NATIONAL SALES TAX.
IT'S WHAT THEY CALL
A NATIONAL SALES TAX IN EUROPE,
AND THE REASON THAT THE EUROPEAN
COUNTRIES HAVE PUT IN
A VALUE-ADDED TAX
INSTEAD OF A NATIONAL SALES TAX
IS BECAUSE THE VALUE-ADDED TAX,
IN SOME SENSE,
IS SELF-ENFORCING.
ONE QUESTION IS WHY DOES--
WHY DO EUROPEAN COUNTRIES
RELY SO HEAVILY
ON VALUE-ADDED TAXES?
THEY RELY MUCH MORE
ON CONSUMPTION TAXES
THAN WE DO IN THE UNITED STATES,
AND THE REASON IS, I THINK,
THAT THEY DON'T RELY
ON THE WHOLE TAX SYSTEM--
THEY DON'T RELY
ON THE TAX SYSTEM
AS THEIR PRIMARY MEANS
OF PROVIDING PROGRESSIVITY.
I THINK IN
THE ADVANCED COUNTRIES,
THE DEVELOPED COUNTRIES
OF THE WORLD, THERE IS
MUCH MORE EMPHASIS
ON THE ROLE OF THE--
OF THE NATIONAL GOVERNMENT.
THEY FINANCE A LOOF THEIR HIGHER EDUCATION
THROUGH THE GOVERNMENT.
THEY HAVE UNIVERSAL HEALTH
INSURANCE THAT THEY FINANCE,
AND SO, UH, YOU CAN'T JUSLOOK AT THE TAX.
YOU ALSO HAVE TO LOOK
AT WHAT THE TAX PAYS FOR.
THOSE COUNTRIES TEND TO HAVE
MUCH HIGHER TAXES THAN WE DO.
SO, THEY COMBINED
THE INCOME TAX
WITH A CONSUMPTION TAX.
AND YOU SEE IN FRANCE AND ITALY
AND SWEDEN AND NORWAY
AND DENMARK AND ALL
OF THOSE COUNTRIES
MUCH HIGHER LEVELS OF TAX--
IN FACT, OUR CURRENT TOTAL
FEDERAL TAX BURDEN
IS AMONG THE LOWESOF ALL DEVELOPED COUNTRIES
IN THE WORLD, AND YEWE FEEL WE'RE OVERTAXED.
WELL, MAYBE WE FEEL OVERTAXED
'CAUSE WE DON'T LIKE
THE SERVICES, BUT RELATIVE
TO OUR INCOME, WE'RE VERY LOW.
SO, IN EUROPE, HIGHER--
MUCH HIGHER TAXES
AND HIGHER SOCIAL SERVICES.
SO, THAT'S THE TRADEOFF.
UM, ARE WE WILLING
TO EXPERIENCE THAT?
YOU KNOW, I NEVER REALIZED
JUST HOW MUCH
THESE THINGS MEANT...
UNTIL NOW.
Fox: ONE OF THE THINGS
THAT YOU REALLY KNOW IN--
WHEN IT COMES TO TAXATION,
IS THAT NO MATTER HOW BAD
THE SYSTEM MIGHT BE,
AND I THINK IT'S REALLY, UH,
INDEFENSIBLE, IT'S THE SYSTEM
THAT IN SOME WAY PEOPLE KNOW.
THEY DON'T REALLY KNOW IT,
BUT THEY-- IT'S WHATHEY'RE FAMILIAR WITH.
AND SO EVEN THOUGH THEY--
THEY'RE UNHAPPY PAYING
ACCOUNTANTS AND OTHERS TO--
EVEN THOUGH THEY KNOW
THEY HAVE TO KEEP
FAR TOO MANY RECORDS,
IT'S TOUGH FOR THEM
TO SAY, WELL, LET'S GO
TO A SIMPLIFIED SYSTEM
THAT THEY DON'T REALLY KNOW
AND THEY DON'NECESSARILY TRUST.
"ARE YOU GONNA CUT OUALL OF MY DEDUCTIONS,
OR MOST OF THEM?
TAX ME ON A LOT OF FRINGE
BENEFITS AND OTHER THINGS?
AND THEN ONCE
YOU HAVE THEM GONE,
ARE YOU GONNA UP MY TAX RATES
ABOVE WHAT YOU SAID?
CAN I TRUST YOU?"
SO, HOW DO YOU BUILD
A REFORM MOVEMENTHAT IS BUILT ON TRUSRATHER THAN JUST PROMISES?
AND I THINK THAT'S ONE
OF THE GREAT CHALLENGES.
IF YOU'VE AN ACTIVISOUT THERE AND YOU WANTO MAKE AMERICA BETTER,
YOU WANT OUR TAX SYSTEM
TO BE SIMPLE AND FAIR,
WHAT'S THE BEST WAY TO GO?
Man: WHAT WOULD HE LIKE
FOR DINNER?
HE JUST LOVES CHOCOLATE CAKE.
GO AHEAD, TRY ONE.
ALL YOU HAVE TO DO
IS FOLLOW THE RECIPE.
THIS IS GOING TO BE EASY.
LET'S SEE, WHAT'S NEXT?
THE GOAL OF FUNDAMENTAL
TAX REFORM SHOULD BE
SIMPLICITY, NUMBER ONE.
YOU KNOW, WE HAVE
AN AMAZINGLY COMPLEX
TAX SYSTEM, UH, THAT, UH,
BY SOME ESTIMATES
COSTS AMERICANS
OVER $280 BILLION A YEAR
TO COMPLY WITH.
YOU MUST STIR
THE INGREDIENTS
IN YOUR CHOCOLATE CAKE.
TO STIR IS
TO MIX FOOD MATERIALS
WITH A CIRCULAR MOTION
TO SECURE A UNIFORM
CONSISTENCY.
YOU REALLY HAVE TO THINK
ABOUT REFORMING THE TAX CODE
EITHER INCREMENTALLY
OR AS ONE BIG CHANGE.
UH, THERE'S REALLY ABOU50 REASONS, AND THEY ARE CHINA,
INDIA, JAPAN, MALAYSIA...
YOU NAME THE COUNTRY.
SOUTH KOREA
AND THE ENTIRE EUROPEAN UNION.
EVERYBODY IN THE WORLD
IS WORKING TO BECOME
MORE COMPETITIVE.
IT IS A COMPETITIVE
GLOBAL ECONOMY.
EVERYONE'S TRYING TO COMPETE,
BECAUSE IF YOU CAN COMPETE
BETTER, YOU PROSPER MORE.
BUT YOU REALLY HAVE TO ASK
IF THE ONLY PART OF THE COUNTRY
THAT'S REALLY BOOMING
IS THE CAPITAL, IS THERE
SOMETHING WRONG
WITH THE GOVERNMENT,
AND I THINK THERE IS.
IT'S TOO SELF-CENTERED.
IT'S TOO WORRIED ABOUITS OWN WELL-BEING,
AND IT IS NOT DOING
WHAT IS NECESSARY
TO MAKE THE COUNTRY GROW.
CREAM BUTTER MEANS
TO MANIPULATE
WITH AN INSTRUMENUNTIL IT BECOMES SOFAND SMOOTH.
WHEN YOU FIND YOURSELF
SITTING DOWN AND RUNNING NUMBERS
TO FIGURE OUT WHERE IT MAKES
MORE SENSE FOR YOU TO LIVE
AND WHAT KIND OF HOUSE
YOU SHOULD HAVE, YOU REALIZE
THE EXTENT TO WHICH TAX
ACTUALLY CONTROLS
YOUR DAY-TO-DAY CHOICES.
WE LIKE TO USE THE TAX CODE
TO DO LITTLE TOKEN THINGS,
AND WE'VE BEEN DOING
MORE OF THOSE IN THE PAS20 YEARS, AND THAT'S WHY
WE HAVE THESE FOUR-PAGE
TAX RETURNS.
THIS SOCIAL ENGINEERING
BUSINESS-- THEY GIVE YOU
A HOUSING INTEREST TAX CREDISO YOU'LL BUY A HOME,
AND THEN THEY GIVE YOU
A MARRIAGE PENALTY
SO YOU'LL LIVE IN IOUT OF WEDLOCK.
WHAT ARE THEY TRYING TO DO?
JUST LEAVE PEOPLE ALONE.
THAT'S RIGHT, POUR IT IN.
THE RECIPE SAYS "CREAM
THE BUTTER," SO PUT IN
LOTS OF CREAM.
WE USE THE TAX CODE
FOR A LOT OF THINGS
OTHER THAN JUST COLLECTING TAX,
AND ACTUALLY, A LOT OF TIMES,
WE'RE NOT VERY SERIOUS
ABOUT COLLECTING TAX!
THERE'S OVER
$300 BILLION A YEAR--
$300 BILLION A YEAR
OF TAXES THAT ARE NOT PAID
THAT-- THAT SHOULD BE PAID,
YOU KNOW, UNDER THE LAW.
SO, LOOK AT IT THAT WAY,
THAT MEANS EVERYBODY
THAT'S HONESTLY PAYING
IS PAYING 20% MORE
THAN THEY NEED TO
TO MAKE UP FOR THE $300 BILLION
THAT'S NOT BEING PAID.
SO, WHEN YOU ADD THAT TOGETHER,
THAT'S AN ENORMOUS INEFFICIENCY.
JUST LOOK AT THASILKY SMOOTH TEXTURE
OF THAT BATTER.
SNEAK, UH, TAXES.
WE SOMETIMES GET A TAX INCREASE
AND WE DON'T EVEN KNOW IT,
BECAUSE THE CODE
IS SO COMPLICATED.
I'VE BEEN HIT WITH SNEAK ATTACKS
MANY, MANY, MANY TIMES,
AND DIDN'T REALIZE IUNTIL AFTER THE FACT.
I THINK PEOPLE WANT A--
THE SIMPLEST--
THE SIMPLEST TAX SYSTEM
WE CAN POSSIBLY GIVE THEM,
AND-- AND-- AND ONE
THAT'S TRANSPARENT,
THAT THEY CAN UNDERSTAND, UH,
WHERE-- WHY THEY HAVE TO PAY
THE AMOUNT OF TAX
THEY HAVE TO PAY.
NO, MARGIE, YOUR CAKE
DIDN'T TURN OUT SO WELL
BECAUSE YOU MISUNDERSTOOD
A TERM IN YOUR COOKBOOK.
ONE OF THE THINGS
THAT, UH, PEOPLE TALK ABOUIN TERMS OF THE TAX CODE
IS WHETHER IT'S FAIR,
AND THAT'S, OF COURSE,
A VERY GENERAL TERM
THAT IS, UH, VERY SUBJECTO INTERPRETATION
AS TO WHAT EVERYBODY
THINKS IS FAIR.
WE HAVE TO RECOGNIZE
THAT THERE ARE INEQUALITIES
IN THE COUNTRY.
THERE ARE TENSIONS BECAUSE
OF ECONOMIC INEQUALITIES.
WE NEED TO DEBATE
WHY THOSE INEQUALITIES
HAVE COME ABOUT,
AND WE NEED TO DEBATE
HOW MUCH WE WANNA DO
TO LEVEL OUT THOSE INEQUALITIES,
BECAUSE ONLY IF WE HAVE
THAT DEBATE CAN WE PROCEED
INTELLIGENTLY.
LATER, YOU MAY BE REQUIRED
TO BEAT EGG WHITES STIFF,
BUT NOT DRY, OR SO THAT THEY
HOLD THE GREATEST AMOUNOF AIR WITHOUT LOSING
THEIR ELASTICITY.
YOU NEED TO MAKE SURE
THAT YOU'RE GENERATING
ENOUGH REVENUE, AT LEASOVER A BUSINESS CYCLE,
WHERE YOU CAN PAY
YOUR CURRENT BILLS,
AND WHERE, ULTIMATELY,
OVER TIME, YOU'RE PROJECTED
TO GENERATED ENOUGH REVENUE
THAT YOU CAN KEEP THE PROMISES
THAT YOU INTEND TO KEEP,
AND THAT'S WHAT WASHINGTON
HAS FAILED ON.
YES, EVEN MARGIE FOUND
THAT SHE COULD LEARN TO COOK
WHEN SHE DISCOVERED
THE SIGNIFICANCE OF THE TERMS
USED IN COOKING...
AND TIM WILL NEVER KNOW
SHE RUINED HER FIRST CAKE.
WHAT COALESCENCE OF THINGS,
WHAT CAN HAPPEN
THAT MAKES TAX REFORM POSSIBLE?
YOU NEED A STRONG PRESIDENT.
MY GUESS IS THAT IT WOULD HAVE
TO BE IN A SECOND--
A SECOND TERM.
UH, SECONDLY, YOU NEED LEADERS
WITHIN THE PARTY
WHO SAY IN THE BACK ROOMS,
"LOOK IT, THIS IS SERIOUS.
WE NEED TO GET TOGETHER
AND PROVIDE
THE CONGRESSIONAL LEADERSHIP."
AND, THIRD, IT NEEDS TO BE
SOME GRASSROOTS MOVEMENT.
MOST GREAT MOVEMENTS
ACTUALLY COME FROM
THE GRASSROOTS.
SO, YOU NEED ALL
OF THOSE ELEMENTS,
AND I'M STILL OPTIMISTIC ENOUGH
ABOUT THIS COUNTRY
AND ITS PEOPLE TO BELIEVE
THAT WE'RE CAPABLE OF THAT.
I DON'T KNOW THAT MANY PEOPLE
WHO LIKE TO PAY TAXES,
BUT TAXES ARE A NECESSARY THING
WHEN YOU ARE TRYING TO FINANCE
A GOVERNMENT, AND TO MEETHE BROADER INTERESTS
OF SOCIETY THAT OTHERWISE
CAN'T BE MEBY THE PRIVATE SECTOR,
OR AREN'T BEING MEBY OTHER LEVELS OF GOVERNMENT,
LIKE THE STATE
AND LOCAL LEVEL OF GOVERNMENT,
IN THE CASE
OF THE FEDERAL GOVERNMENT.
SO THEY'RE A NECESSARY EVIL.
THERE IS ANOTHER WAY
OF LOOKING AT TAXES.
THE OTHER WAY OF
LOOKING AT TAXES IS THAWHEN APRIL 15th COMES ALONG,
YOU'RE HAPPY BECAUSE YOU CAN
CONTRIBUTE AS A MEMBER
OF THE COMMUNITY TO ACHIEVING
THE COMMUNITY GOALS
THAT ARE ESTABLISHED
BY A DEMOCRATIC
PARTICIPATORY PROCESS.
IN THAT SENSE,
TAXES ARE A GOOD THING.
YOU KNOW, THE WAY YOU TAX,
A LOT OF PEOPLE ARGUE,
REALLY DEFINES WHAT YOU ARE
AS A COUNTRY.
WE'RE GOING TO HAVE
TO FIND A WAY TO-- TO PAY
NOT ONLY FOR ALL THE DEBTS
WE'RE ACCUMULATING RIGHT NOW,
BUT ALSO TO PAY
FOR ALL OF THE PROMISES
WE'VE MADE TO SENIOR CITIZENS,
UH, AND YOU NEED
A WORKING TAX SYSTEM.
YOU NEED A TAX SYSTEM
THAT'S PERCEIVED AS FAIR
AND CAN RAISE ENOUGH REVENUE.
IT'S GONNA NEED TO RAISE
A LOT MORE REVENUE
THAN THE CURRENT SYSTEM.
THE CONGRESSIONAL BUDGET OFFICE
PROJECTS THAT IF CURRENT--
IF CURRENT TRENDS CONTINUE--
HEALTH COSTS CONTINUE
TO GROW FASTER THAN THE ECONOMY
AND BABY BOOMERS AGE
AND RETIRE-- UH, THAT SPENDING
ON THREE PROGRAMS
FOR THE ELDERLY--
SOCIAL SECURITY, MEDICAID,
AND MEDICARE-- WILL TAKE UP
18% OF GDP.
THAT IS THE HISTORICAL AVERAGE
OF ALL SPENDING
FOR THE GOVERNMENT.
Fox: YOU'VE GOTTA COME
TO TERMS WITH THE FACTHAT OVER THE LONG RUN,
WE CAN'T AFFORD THE BENEFITS
WITHOUT INCREASING THE TAXES,
AND YOU CAN'T IMAGINE
ANYBODY SAYING THAT.
NOW, OBVIOUSLY, THE CANDIDATES
ARE SAYING, "WE'RE GONNA HAVE
YOU PAY LESS TAXES."
WE CAN'T AFFORD TO LOWER
ANYBODY'S TAXES,
AND THE ONLY WAY YOU CAN
GET REGULAR, AVERAGE PEOPLE'S
ATTENTION ABOUT TAX REFORM
IS IF YOU TELL 'EM
YOU ARE GONNA LOWER THEIR TAXES.
THERE-- YOU KNOW, IF YOU JUSSAY, "WELL, WE'RE GONNA
REARRANGE, AND YOU'RE GONNA
PAY ABOUT THE SAME AMOUNT,"
THEY'RE NOT GONNA WANTO LISTEN TO THAT.
SOMETIMES YOU HAVE TO MAKE
CHOICES THAT DON'T SOUND
POLITICALLY CONVENIENT,
BECAUSE THE ALTERNATIVE
IS JUST TOO DREADFUL TO IMAGINE.
UNTIL THERE IS A CONCEPTION
OF PARTICIPATING
IN A DEMOCRATIC SOCIETY,
AND A CONCEPTION WHICH IS REAL,
NOT JUST WORDS, BUT IT MEANS
YOU REALLY ARE PARTICIPATING
IN A DEMOCRATIC SOCIETY--
UNTIL THAT'S THE CASE,
DISCUSSION OF TAXES IS,
UH, FIDDLING WITH TECHNICALITIES
AND MISSING THE POINT.
Fox: WHAT'S HAPPENED IS
THAT WE FEEL LESS CONNECTED,
AND SO THE APPEAL
NOT TO PAY TAXES--
IT'S YOUR MONEY;
YOU CAN DO BETTER WITH IT--
MEANS THAT WHY ARE YOU HELPING
SOMEBODY ELSE WHO DOESN'HAVE SOME IMMEDIATE CONNECTION
TO YOUR FAMILY OR NEIGHBORHOOD
OR COMMUNITY?
IT USED TO BE PEOPLE WENTO SCHOOL WITH THE PEOPLE
THEY WORKED WITH,
AND-- AND MANAGERS, OWNERS,
THEIR KIDS, WORKERS,
YOU KNOW, BLUE COLLAR,
WHITE COLLAR--
THERE WAS AN ENORMOUS MIX
AND INTERACTION.
AND I THINK THERE WAS
A MUCH GREATER SENSE OF--
THAT WE'RE ALL IN THIS TOGETHER.
IN ORDER FOR THESE THINGS
TO HAPPEN AGAIN, SOMEHOW
WE MUST CAPTURE THAT SENSE
THAT WE ARE A-- ONE NATION.
YOU KNOW, WE ARE A COMMUNITY,
AND THEN WE HAVE TO DECIDE,
WELL, WHAT IS ITHAT THE FEDERAL GOVERNMENSHOULD DO, AS OPPOSED TO
THE STATE OR LOCAL GOVERNMENT,
AS OPPOSED TO OURSELVES
INDIVIDUALLY?
THOSE ARE TOUGH DECISIONS,
BUT WHAT CAN THE FEDERAL
GOVERNMENT DO BEST,
AND WHAT SHOULDN'T IT DO?
AND WE NEED THOSE CONVERSATIONS
TO BE GOING ON
THROUGHOUT THE COUNTRY.
Thorndike: YOU KNOW, THERE'S
A REASON WHY I'VE SPENT MY LIFE
ON THIS ISSUE.
IT'S THAT IT IS SIMPLY
TOO IMPORTANT TO IGNORE,
AND INERTIA IS SO STRONG
THAT IT REQUIRES ALL OF US
TO PAY ATTENTION
SO THAT THE TAX SYSTEM
DOESN'T JUST GET WORSE,
DOESN'T JUST GEMORE COMPLICATED,
DOESN'T JUST GEMORE INEFFICIENT.
OTHER PEOPLE WILL PAY ATTENTION.
THE WRONG PEOPLE
WILL PAY ATTENTION,
AND THEY'LL GET THE TAX SYSTEM
TO DO WHAT THEY WANT IT TO DO.
SO, IF AMERICANS AS A WHOLE
WANT TO PREVENT PEOPLE
FROM MAKING OUT LIKE BANDITS
AND WANT A TAX SYSTEM
THAT TREATS THEM FAIRLY
AND THAT IS GOOD
FOR THE COUNTRY AS A WHOLE,
THEY HAVE TO ENGAGE THIS TOPIC.
YOU CAN'T AVOID IT,
AND YOU CAN'T JUSCOMPLAIN ABOUT IT.
WHAT THE POLITICIANS FEAR,
IN THEIR HEART OF HEARTS,
THE WASHINGTON POLITICIANS,
I THINK, IS NOT A LOSS
OF REVENUE.
THEY KNOW, OVER TIME,
WASHINGTON WILL GET ITS--
ITS TAKE, WILL GET ITS CUT.
IT'LL DO JUST FINE.
WHAT THEY REALLY FEAR
IS THE LOSS OF POWER.
Boortz: WE HAVE A RIGHT,
WHEN GOVERNMENT BECOMES ABUSIVE,
OF LIBERTY TO ABOLISH
OR CHANGE GOVERNMENT.
THIS IS CHANGING GOVERNMENT.
UH, EVERY AMERICAN CITIZEN
SAY, "IF I DON'T LIKE
THIS TAX CODE,
I NEED TO SERIOUSLY DETERMINE
WHAT, IN MY MIND, IS A WORKABLE
OPTION AND GET BEHIND THAT."
IF TAXPAYERS DEMANDED IT,
THE POLITICIANS
AND THE POLITICAL LEADERS
WOULD RESPOND, AND WE COULD
GET A DRAMATICALLY BETTER
TAX SYSTEM FOR EVERYBODY.
WASHINGTON HAS OVERPROMISED
AND UNDERPERFORMED,
AND IT'S TIME THAT THAT STOP.
AND IT NEED TO STOP NOW.
I THINK EVERY AMERICAN
OUGHT TO START UNDERSTANDING
THERE IS A WAY TO FIX THIS.
WE DON'T HAVE TO LIVE
WITH THIS ONEROUS BURDEN.
WE DON'T HAVE TO CONTINUE
TO SAY, "OH, WE'RE LOSING GROUND
WITH THE CHINESE, LOSING GROUND
WITH THE MEXICANS." NONSENSE!
LET'S START GAINING NOW.
LET'S START EMPOWERING
AMERICANS AGAIN.
THE CURRENT SYSTEM
IS A DISASTER FOR OUR CHILDREN
AND GRANDCHILDREN.
DEMOCRATS AND REPUBLICANS ALIKE
CARE ABOUT THEIR CHILDREN.
THE REST OF THE WORLD
IS CHANGING.
THE REST OF THE WORLD
IS BECOMING MORE COMPETITIVE.
WE HAVE TO KEEP WORKING,
EVERY YEAR, TO BECOME
MORE COMPETITIVE,
AND A BIG PLACE TO DO THAIS IN THE TAX CODE.
I, FOR ONE, AM NOT CONVINCED
THAT UNHAPPINESS WITH
THE TAX SYSTEM IS GONNA BE
STRONG ENOUGH TO GET ITO CHANGE, UH, ON ITS OWN RIGHT.
I JUST-- I JUST DON'T THINK
THAT LAWMAKERS WILL MUSTER
THE WILL TO MAKE
A FUNDAMENTAL CHANGE
IN THE TAX SYSTEM
UNTIL THEIR HAND IS FORCED.
UM, WE'RE JUST WAITING
FOR THAT MOMENT.