Paul L. Caron

Tuesday, April 27, 2021

Senate Holds Hearing Today On Creating Opportunity Through A Fairer Tax System

The Senate Finance Committee's Subcommittee on Fiscal Responsibility and Economic Growth holds a hearing today on Creating Opportunity Through a Fairer Tax System at 2:30 PM ET (live video here):

  • Senate (2021)Abigail E. Disney (CEO & Co-founder, Fork Films, New York), Testimony:
    I will go to bat for the wealth tax with any and all businessmen who want to tell you that it impinges on the American dream. If you have $50 million and do not know how to invest it for more than 2% growth, you have bigger problems than a wealth tax. If you have a billion dollars and don’t know how to live on $999 million, you don’t need a better tax system, you need a psychiatrist.
  • Cheryl Straughter (Owner, Soleil, Boston), Testimony:
    Asking ultra-millionaires and billionaires to pay a small percent of their massive wealth is a no-brainer. If you have a huge fortune, and you benefit from all that this country has provided, you ought to be paying your fair share. It’s more than fair that they be asked to pay a small percent of their wealth – and I just can’t understand why the wealthiest and luckiest people in the world would be complaining about it being such a hardship.
  • David Gamage (Professor, Indiana University, Maurer School of Law), Testimony:
    I am primarily devoting this written testimony to discussing the Ultra-Millionaire Tax Act of 2021 and the broader case for levying a federal tax on extreme wealth holdings. As is well known, both wealth and income inequality have exploded over recent decades, with the gains from economic growth disproportionately going to the richest Americans. Meanwhile, as I will explain, our tax system is broken as applied to the ultra-wealthy, with many harmful consequences. A new federal tax on extreme wealth holdings, like the Ultra-Millionaire Tax Act, should be a central component of reforms for fixing this disgraceful state of affairs.
    Secondarily, I will more briefly write in support of both the Real Corporate Profits Tax Act of 2021 and proposals for improving IRS funding and for making it and other tax enforcement funding less dependent on the annual appropriations process. All of these proposals go together as reforms for raising revenues needed for public investment while helping to fix some of the ways in which our tax system is currently broken and easily exploited by tax gaming by ultra-wealthy individuals and families and by large corporations. For the reasons I will explain, I strongly support all of these reform proposals.
  • Scott A. Hodge (President, Tax Foundation), Testimony:
    A famous economist once said, “There are no solutions, there are only trade-offs.” That lesson is especially true in tax policy and in the choices lawmakers must make in funding public investments. The scales of justice may have two trays, but tax policy has three trays that lawmakers must balance—revenues, equity, and economic growth. But, these factors cannot be balanced equally. In other words, lawmakers must decide which is most important: (1) how much revenues a tax will raise, (2) progressivity, or who bears the burden of the tax, or (3) what impact those tax changes will have on economic growth.
  • Jeff Hoopes (Professor, University of North Carolina, Kenan-Flagler Business School), Testimony:
    My testimony will focus on perceptions of fairness in the tax code and recent proposals to fix such perceived unfairness; specifically, a tax on book income and the wealth tax. My main message is that corporations and individuals remit the taxes they do, including in situations some perceive as unfair, frequently because of explicit allowances in the tax code. In other words, the largest holes in our national tax revenue bucket are ones Congress has, itself, poked, and not the product of elaborate tax planning schemes, as is a current misperception. If members of Congress seek to change the tax system, they should do so in ways that make the tax code simpler, rather than layer on additional taxes that will add complexity to the tax code, be difficult to administer, have unintended negative consequences, and, ultimately, likely be eventually eliminated, making our tax system less stable. Taxing book income and the wealth tax are two examples of two such inadvisable taxes.
  • Kyle Pomerleau (Resident Fellow, American Enterprise Institute), Testimony:
    President Biden and other lawmakers have proposed a host of tax increases on corporations and highincome householdsto finance spending. Two revenue-raising proposals have gained prominence over the last couple of years: a wealth tax and taxing the book income of corporations. These taxes come with notable downsides. Lawmakers should consider broader-based taxes to finance new government spending and address the federal government’s fiscal imbalance. Raising the gas tax or enacting a VMT tax would be a reasonable way to pay for infrastructure. A carbon tax would help address climate change while raising revenue. A VAT could raise additional revenue with a limited negative impact on the economy.

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