FROM: Gregg Figgins, an individual DATE OF SUBMISSION:

February 17, 2005

44745 Adobe Drive

Hemet, California 92544-6718

Phone (951) 927-1019

TO: The President\'s Advisory Panel on Federal Tax Reform

1440 New York Avenue NW, Suite 2100

Washington, DC 20220

SUBJECT: Question 2: Aspects of the tax system that are unfair.

1\. The tax code provision to withhold Social Security tax of 12.4% up
to the \$90,000 income level needs to be amended to no ceiling of earned
income. At present the taxpayer who earns \$180,000 (for example) pays
this tax on the first \$90,000 of income but not on subsequent earnings,
thus paying at a rate half the amount of the \$90,000 earner. Further,
the taxpayer at the \$270,000 level pays only on his first \$90,000 of
income, not paying on the second two-thirds of his income, for a rate
one-third the amount of the \$90,00 earner. The taxpayer earning
\$360,000 pays only on his first \$90,000 as well but not on his
subsequent earnings, thus paying at a rate one-fourth the amount of the
\$90,000 earner, and so forth to infinity. The present tax is extremely
regressive, grossly unfair to those who pay the taxes because it\'s
unconscionably beneficial to taxpayers earning in excess of \$90,000.

The middle-class taxpayer is supporting the Social Security benefits of
taxpayers earning over \$90,000. Looked at another way, the upper-income
taxpayer\'s Social Security benefits are being underwritten by the
middle-class taxpayers earning \$90,000 or less.

Freshman college economics calls this taxation regressive, when the
burden is put upon lower-income taxpayers. Regressive taxation is no
secret from the public, and it leans to disaffection with the
government. If the government seeks public resentment, its penchant for
regressive taxation makes a clear statement that the government favors
the upper-income persons-I hesitate to call the taxpayers, for they are
able to avoid taxation to an extent not available to the middle-class,
similar to corporations. Most taxpayers I know think that there would be
no Social Security problem if everyone paid taxes at the middle-class
level of taxation.

It\'s counterproductive to talk about minimizing Social Security
benefits in an economy where the net number of jobs is shrinking.
Workers should be able to retire earlier, not later, to enable new
workers to come into the economy to take the retiring workers\' jobs. If
such requires additional taxation, so be it-the American people
understand economics better than politicians imagine.

2\. The inheritance tax is a fair tax. It can be paid through insurance
policies bought with that in mind and expensed by the donor. Passage of
wealth from one generation to the next in a democracy ought to be taxed,
not exempted to create a privileged high-income class-that\'s what
perpetuated the hereditary landed gentry in Europe until abolished by
democratic mandate. An inheritance tax at the same level that I pay
taxes is not confiscatory, but needs to be regarded as dues paid for the
passage of unearned property to a younger generation.

3\. The proposed tax-advantaged lifetime savings accounts and retirement
accounts are poor solutions in search of a non-existent problem to
justify them. The raison d\'etre for these proposals have to do with
eliminating an employer matching tax that we now have on Social Security
employer contributions. You simply can\'t strengthen Social Security by
diminishing money flowing into it from employer contributions. The best
solution to this problem might be to leave it alone, and if individuals
want to save additionally they should contribute to a Roth IRA, the
device so favorable to the taxpayer that I\'m surprised no-one has
proposed to abolish it. There\'s no way I would switch my account from a
Roth IRA to an account that would have federal taxation in it-that\'s
crazy! When the Roth IRA was created, we finally found a way to
encourage savings in the United States-make it tax-exempt (except for
state income taxes, when distributions are taken-and increasing savings
has been a goal for many years to strengthen our economy. It\'s clear
the government doesn\'t like programs like the Roth IRA because they
create \"revenue losses\" to the government. (How can you call something
a loss if you aren\'t entitled to it?) How do you get around that? Duh!
Simple. You increase your tax revenue from other sources, thus gaining
tax revenue now, and allowing the prudent citizen his reward to putting
his savings into our economy. These issues are not insoluble. If you
want people to have greater retirement income, raise the annual ceilings
on the Roth IRA considerably. Create a means test for Social Security
benefits-why should someone earning \$250,000 per year qualify for
Social Security-yet these same folks receive the social benefit of
making sure Social Security is solid for the lower income folks\' elder
years. Our problem here is attitudinal. Some in government (the \"R
folks\") think taxes are toxic, especially when upper-income people and
businesses pay them, and that they are owed the blessings of living in a
democracy paid for preferably by the others. Others (the \"D folks\")
know that taxes pay for those same blessings of liberty, including our
government (scorned by the \"R folks), our military, our courts, our
schools, and our infrastructure and see the value received through their
improved lives. I have never minded paying my taxes, because I know that
without them the United States would be a banana republic form of
government, for sale to whomever pays the mordita, or who seizes the
government by gunpoint. We\'d become another Venezuela. The President
has opened a box that he now wishes he hadn\'t-because you can\'t get to
where he, and the American people want to go, without paying for it.
Simply, he represents the power elite, and the power elite works for its
own advantage: as naturally as a dog barks. On the other hand, as a
retired teacher drawing minimal state teacher retirement and a reduced
Social Security amount (\$350 per month!) due to the offset provision, I
know that as an armed forces veteran, a teacher who worked with our fine
young people, and as a participant in the democratic process, I will
work toward a government that works on the behalf of all citizens, not
just those who earn much more than I do. In short, I think we wouldn\'t
have a tax problem in the United States if everyone paid the same rate
of taxes that I do.

Continued on next page\...

SUBJECT: Question 4: Goals that the Panel should try to achieve\...

1\. The goals of the Panel, being politically constituted, seem unlikely
to be achieved, but those of us concerned folks in the American public
who participate actively in public life can only hope that panelists
keeps one touchstone in mind:

FAIRNESS

Fairness means that everyone pays for the benefit. Fairness means we all
pay at the same rate. Fairness means you don\'t get it if you don\'t
need it. Fairness means we pay for wars we fight at the time we fight
them-I say this in a non-partisan way, not just because of George W.
Bush\'s war, but Lyndon\'s Johnson\'s hypocrisy, \"We can have both guns
and butter.\"-does anyone remember that whopper? It\'s cowardly politics
to run up debt for future generations to pay. And fairness doesn\'t mean
the flat tax-so don\'t even allow yourselves to think that the American
people are that stupid. I\'d be satisfied if the Panel, and our
President, could present a tax program to Congress that strengthened
Social Security by taxing sufficiently to fund it, as well as the same
for our entire government. Is there anyone out there who really believe
we should pay for what we want, are entitled to, and deserve as citizens
who support freedom in these United States of America?

Gregg Figgins, 44745 Adobe Drive, Hemet, CA 92544 Phone (951) 927-1019