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February 18, 2005
Unless The People
Rise Up, Here's What's Coming:
Federal Consumption Taxes PLUS The Income Tax
Conflicts of
Interest Apparent In President's Tax Panel
Panel Focused on Economic “Modeling”
NO Voice For The Constitution
Presidents Bush's Advisory Panel on Federal Tax Reform
held their first public meeting in Washington on Wednesday.
At that
meeting, the first witnesses appearing before the panel put forth facts and
professional opinions to establish the framework the panel will build upon
as it moves toward its recommendations this coming July.
The panel's discussion focused extensively on econometric “modeling,” the
rapidly growing federal revenue requirements and technical factors affecting
the efficiency of tax administration and enforcement.
Despite the full-page ads placed by this Foundation this week in the
Washington Times, and
information packages
sent by the Foundation to each individual panel member, NO discussion took
place regarding the impacts of the panel's recommendations on the protection
of the rights of People or the Constitutional limitations that explicitly
bind the taxing authority of Congress.
If the projections arising out of the financial “Perfect Storm” depicted by
the panel regarding the need for greatly increased federal revenues are
accurate, and if the President and Congress adopt the reforms apparently
already emerging from the panel, the People will soon experience a new, and
never-before-seen condition of economic slavery, openly achieved
through the tax "laws" of this nation.
Although the panel's work has allegedly only begun, it is likely, based on
the positions and information offered at this meeting, that the future life
for Americans appears to now include not only taxes on wages and salaries,
but NEW federal consumption taxes on the products that are purchased with
what remains of their paychecks, in order to fund the desires of those at
the public trough, those that serve them, and those that extend credit to
them.
One panel member, Elizabeth Garrett, a professor at the University of
Southern California, while commenting on the fact that corporate income
taxes have dropped to about 10% of federal revenues said,
"That’s good. Let’s not tax the corporations, let’s tax the workers who get
their money from the corporations.”
The balance of this
article contains a short chronology of events leading to yesterday's public
meeting and the comments of WTP Chairman Bob Schulz, who attended the 3-hour
session.
Chronology
President Bush announced he is making tax reform a key priority of his
second term. On January 7, 2005, by
Executive Order,
the President created an Advisory Panel on Federal Tax Reform, naming
nine members to the panel:
Connie Mack III (Chairman), Senior Advisor, Shaw Pittman LLP
and former U.S. Senator. Senator Mack served as Chairman of the Joint
Economic Committee and was a member of the Finance and Banking committees.
John Breaux (Vice-Chairman), former U.S. Senator. Senator Breaux
served on the Finance Committee and the sub-committee on Taxation and IRS
Oversight.
William Eldridge Frenzel, former Member of the U.S. House of
Representatives. Mr. Frenzel served on the Budget Committee and the Ways and
Means Committee. Mr. Frenzel is a Guest Scholar at the Brookings
Institution.
Elizabeth Garrett, Sydney M. Irmas Professor of Public Interest Law,
Legal Ethics and Political Science, University of Southern California. Ms.
Garrett served as Legislative Director and Tax and Budget Counsel to former
U.S. Senator David L. Boren.
Edward P. Lazear, Senior Fellow, Hoover Institution and Professor of
Human Resources, Management and Economics, Stanford University's Graduate
School of Business. Mr. Lazear is the founding editor of the Journal of
Labor Economics.
Timothy J. Muris, Foundation Professor, George Mason School of Law
and Of Counsel, O'Melveny & Myers LLP. Mr. Muris served as Chairman of the
Federal Trade Commission from 2001 to 2004.
James Michael Poterba, Department of Economics, Massachusetts
Institute of Technology. Mr. Poterba serves as Associate Department Head. He
has taught at MIT since 1982.
Charles O. Rossotti, Senior Advisor, The Carlyle Group. Mr. Rossotti
served from 1997 to 2002 as Commissioner of Internal Revenue. He formerly
served as the President, Chief Executive Officer and Chairman of the Board
of American Management Systems.
Liz Ann Sonders, Chief Investment Strategist, Charles Schwab. Ms.
Sonders joined U.S. Trust, a division of Charles Schwab, in 1999 as a
Managing Director and member of its Investment Policy Committees.
On January 31, 2005, Connie Mack III, the Chairman of the Tax Reform Panel
announced that the Panel will seek input from individuals, businesses,
associations, organizations and members of Congress and will hold its first
meeting in Washington DC on February 16, 2005.
On Monday, February 14, 2005, each member of the Panel received
written input from the We The People Foundation for
Constitutional Education, including a request for answers to 43 specific
questions regarding the constitutional and statutory authority behind the
current direct, non-apportioned tax on labor.
The Foundation advised the Panel members that there can be no meaningful
reform until the government answers those fundamental questions. The Panel
members were respectfully asked to let the Foundation know if they intended
to answer the questions.
They were further advised that Bob Schulz, the Chairman of the Foundation,
would be attending meeting on the 16th, and wished to receive a
note regarding the Panel’s intent to answer the questions. The Panel members
were advised that Bob would be identifiable because he would be carrying a
placard with the words “No Answers, No Taxes.”
On Tuesday, February 15, 2005, the Washington Times Daily edition ran our
Open Letter To The President’s Advisory Panel on Federal Tax Reform, a
full-page message to the Panel.
On Tuesday, February 15, 2005, Washington Times subscribers located all
around the country, began to receive this week’s edition of the National
Weekly Edition of the Washington Times, which also included our full-page
“Open Letter” to the tax reform panel.
On Wednesday, February 16, 2005, the Panel met in Washington DC to obtain
input from four witnesses:
Fred T. Goldberg, Jr., Attorney and partner at Skadden, Arps, Slate,
Meagher & Flom, LLP in Washington, DC. He first joined Skadden, Arps in
1986, following two years as Chief Counsel of the Internal Revenue Service.
Previously, Mr. Goldberg served as Commissioner of the IRS and Assistant
Secretary of the Treasury for Tax Policy. Mr. Goldberg received his B.A. and
his J.D. from Yale University.
Louis Kaplow is currently the Finn M.W. Caspersen and Household
International Professor of Law and Economics at Harvard Law School. Dr.
Kaplow received his B.A. from Northwestern University, his J.D. from Harvard
Law School and his M.A. and Ph.D. in Economics from Harvard University.
William G. Gale is the Arjay and Frances Fearing Miller Chair at The
Brookings Institution and the Co-director of the Urban-Brookings Tax Policy
Center. From 1991-1992, Dr. Gale served as Senior Staff Economist at the
President's Council of Economic Advisers. Previously, Dr. Gale was Assistant
Professor of Economics at the University of California, Los Angeles. Dr.
Gale received his B.A. from Duke University and his Ph.D. from Stanford
University.
Stephen J. Entin is currently President and Executive Director at the
Institute for Research on the Economics of Taxation. Mr. Entin is a former
Deputy Assistant Secretary for Economic Policy at the Department of the
Treasury. Prior to joining Treasury, Mr. Entin was a staff economist with
the Joint Economic Committee of the Congress. Mr. Entin is a graduate of
Dartmouth College and received his graduate training in economics at the
University of Chicago, majoring in macroeconomics, monetary policy, and
international economics.
The 3 hour and 9 minute program was covered by the print and broadcast media
and was taped by C-SPAN, which aired the program on February 17th. A copy of
the C-SPAN tape/dvd can be ordered on-line from C-SPAN at
www.C-SPAN.org
for $105.00 (Program ID 185571-1).
Schulz's Observations
Bob Schulz attended the meeting. The following are Bob’s observations:
The Panel is apparently not being guided by the limitations of the taxing
clauses of the Constitution as it considers
substantive changes to the federal tax system. The Panel is showing no
interest in looking into the fundamental questions about the
constitutionality of the operation and enforcement of the current direct,
non-apportioned tax on labor, questions that have been respectfully
submitted to every member of Congress, and to the President and other top
officials of the this and the former Administration, including Treasury
Secretary Snow and Commissioners Rossotti and Everson.
Conflicts of interest may not have been considered. For instance, the key
witness at the meeting was Fred Goldberg, a partner at Skadden, Arps, Slate,
Meagher & Flom.
Skadden, Arps (www.Skadden.com)
is one of the largest law firms in America with 1750 attorneys in nine U.S.
offices. They run substantial and lucrative tax litigation and trust-estate
practices, giving it a significant vested interest in the status quo – i.e.,
retaining the current income tax system. According to a New York Lawyer
article from 2003, Skadden equity partners averaged approximately $1.6
million each in profit sharing.
Another panel member with a readily apparent conflict of interest is Charles
Rossotti, the former IRS Commissioner who received a full pardon from
President Clinton for his allegedly criminal acts related to his direct
conflicts of interest as IRS Commissioner that arose from his financial
interest and selection of Rossotti-owned American Management Systems (AMS),
which was selected as the primary vendor to re-model the IRS’s computerized
data management and enforcement information systems.
To the extent Rossotti maintains a personal financial interest in the
entities that now maintain the IRS’s current income tax computer system (or
the vast array of other government and state tax related contracts related
to his interests), Rossotti would not want to see the IRS abandon the
current income tax system.
According to government watchdog group Judicial Watch, Rossotti's wife was
also a major shareholder in AMS at the time Rossotti was Commissioner and
prior to its sale to two outside technology firms, (CGI and CACI) for a
total of approximately $1.2 billion. Rossotti is now a consultant to the
Carlyle group which has strong ties to the Bush administration.
Each of the Panel’s witnesses gave a PowerPoint presentation and then
answered questions from the Panel members. Only copies of Mr. Goldberg’s
testimony were made available to the audience.
Mr. Goldberg (of Skadden) was the star witness and appears to have been paid
by the Treasury Department to prepare his testimony. Hundreds of copies of
Mr. Goldberg’s sixty-nine page presentation were
handed out to the audience by Treasury Department employees.
(RIGHT-Click to download
the presentation,
1.5 MB,
.pdf format)
The presentations by Messrs. Kaplow, Gale and Entin focused on central
concepts related to both “Income” and “Consumption” taxation. These
presentations were more “nuts and bolts” oriented than was the presentation
by Mr. Goldberg, and discussed the results of economic surveys and
theoretical modeling.
The most telling part of the meeting came during the lengthy Q & A sessions
that followed each presentation. Based on the questions from the Panel
members and the responses from the witnesses, the Panel appears headed
toward a recommendation to the President that a much broader based
consumption tax be added to the current mix of federal taxes, including the
current (and unconstitutional) direct, non-apportioned taxes on labor.
The Panel appears headed toward a recommendation that the current income tax
be made more efficient, in terms of enforcement and loopholes, but that a
federal consumption tax, like those already in place on every gallon of
gasoline, pack of cigarettes and bottle of alcohol, be added to most of the
other goods and services that individuals and corporations routinely
purchase.
Mr. Goldberg made it very clear that the federal government must raise more
revenue and do it soon, because the “Perfect [financial] Storm” is taking
shape. He pointed out that federal expenditures are approaching 28% of the
Gross Domestic Product with entitlements (money transferred from those who
earn it to those who do not) and interest on the national debt as principal
factors.
When the Chairman of the Panel asked Mr. Goldberg if he thought it would be
possible to move entirely to a new consumption tax and scrap the existing
system, Goldberg replied, “Impossible. It would be a waste of time to
even consider it.”
Some of the Q&A focused on existing and anticipated problems associated with
compliance and enforcement of the existing income tax and a broader based
consumption tax.
Panel member Elizabeth Garrett appeared to have at least one personal
preference -- taxing workers rather than corporations. In commenting on the
fact that corporate income taxes have dropped to about 10% of federal
revenues she said, “That’s good. Let’s not tax the corporations, let’s
tax the workers who get their money from the corporations.” (Click
to read
Garrett's opening speech.)
Panel member Rossotti, the former IRS Commissioner, appeared disinterested
in, or unable to comprehend the fine points of the presentations. However,
he gave a clear signal as to what he favors. One of the witnesses (not
Goldberg) said one of the options is not to adopt a new consumption tax but
to continue to rely on the current income tax, making it more efficient. At
that point, Rossotti leaned back in his chair and moved his head up and down
as if to say, “Yes. Yes.”
With placard in hand, Bob arrived outside the main entrance of the Reagan
Building at 8:30 am. Bob and his sign were on hand for the duration of the
meeting. No representative from the Panel approached Bob to let him know
whether the Panel intended to answer the Foundation’s questions.
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“More revenue is
urgently needed by the self-anointed ruling class of intellectual, political
and financial elite to support a behemoth, out of control central government
with its addiction to money, power, control and social engineering here at
home and imperialism abroad,” said Schulz.
“Unless the working men and women of America find their voice in the next
few months and take serious offense over the government’s breach of our most
fundamental legal and moral codes, the yoke of involuntary servitude will be
tightened.”
The next public
meeting of the tax advisory panel is scheduled for March 3, 2005 in
Washington.
WTP intends to continue its campaign to put forth provocative educational
messages to force public discussion of the Constitutional issues related to
the income tax fraud and any proposed tax reform.
Get Color
Reprints &
Run The Ad In Your Local Paper
Several individuals have already contacted WTP so that they can run the
recent full-page WTP ad in their local papers. The ad is pictured just
below. RIGHT-click here to download the readable version.
The most cost effective way to run the ad is to call your local paper and
obtain a price quote for a non-profit, tax-exempt ad. If you donate
the funds to the 501(c)3 WTP Foundation (tax deductible!) WTP will contract
with the paper to run the ad and work with the paper to get them the correct
electronic format.
One paper in Wyoming already ran the ad this week for about $600 . Others
are being scheduled.
We have also ordered thousands of full-size color reprints so that you can
distribute them at your local freedom events or in your neighborhoods, etc.
We are making these available for a $30 donation for a bundle of 100.
This includes USPS shipping (media rate). Click here to go to the
WTP on-line store to order
a bundle or three.
You can also order the reprints by mail using cash, check or money order:
We The People
Foundation
2458 Ridge Road
Queensbury, NY 12804
Click here to access selected pages of the "Press Information" kit
containing
the opening statements of the tax panel's Chairman and Vice-Chairman. (272
KB, .pdf)
(RIGHT-Click to download
the presentation,
1.5 MB, .pdf
format)
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Click Here to
help
WTP continue its ongoing campaign of
provocative educational messages to expose the income tax fraud
and to insure that any tax reform proposals are fully Constitutional.
Please consider making a
one-time OR monthly
tax-deductible
donation
and help us pay the costs
of bringing these crucial messages to the attention the media,
our government officials and the members of the tax reform panel.
Our Sincerest Thanks.
All donations to
the 501(c)3
tax-exempt Foundation are tax deductible.
Click here to access the special
link contained in
last week's full-page
Washington Times ads. The link contains copies of the ad
and copies of the information packets WTP sent to every tax panel
member. |
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Click Here to read the
Second Circuit's recent decision
in Schulz v. IRS where it tells IRS,
"No Court Order, NO Enforcement."
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