\-\-\-\--Original Message\-\-\-\--

From: Tracy Mollsen
\[[[mailto:TMollsen@emkay.com]{.underline}](mailto:TMollsen@emkay.com)\]

Sent: Thursday, March 10, 2005 5:32 PM

To: comments

Cc: Gary L. Tepas

Subject: Tax Reform

To Whom It May Concern:

Please see the attached cover letter and tax reform suggestions
submitted to you by Gary L. Tepas, President and Chief Executive Officer
of Emkay Inc.

Thank you.

Tracy Mollsen

Asst. to Mr. Gary Tepas

Emkay Inc.

805 West Thorndale Avenue

Itasca, IL 60143

630-250-7400 Ph.

630-250-7077 Fax

[[www.emkay.com]{.underline}](../www.emkay.com)

March 10, 2005

**[VIA E-MAIL]{.underline}**

The President's Advisory Panel on Federal Tax Reform

1440 New York Avenue NW

Suite 2100

Washington, DC 20220

Re: Tax Reform Revisions

To Whom It May Concern:

Please see the following suggested plan to cut taxes.

Thank you in advance for your consideration.

Sincerely,

![](media/image1.png){width="1.9069444444444446in"
height="0.6861111111111111in"}

![](media/image2.png){width="1.3444444444444446in"
height="0.9590277777777778in"}

March 10, 2005

[TAX REVISIONS TO CONSIDER]{.underline}

> Tax Reform is on the table and a consumption tax seems to be a
> consideration. It seems if the following aspects of reforming the tax
> code are considered, there may be some chance of a major achievement
> for the administration. Those items are:

-   The tax code cannot be viewed as too regressive, and yet viewed as
    fair by 75% or more of tax payers

-   Certain deductions cannot go away such as mortgage or charitable
    donations

-   It cannot be viewed by Democrats as pandering to the wealthy

-   Indexing can make it a long term success

> With the above in mind, why not attempt to do a combination type
> reform? An example might be:

A.  Individual income tax rates at the following for a married or head
    of household and should be indexed annually.

-   40 - \$40,000 -- No tax

-   \$40,000 - \$80,000 at 10%

-   \$80,000 to \$1,000,000 at 21%

-   \$1,000,000 to \$5,000,000 at 35%

-   \$5,000,000 and Up at 46%

![](media/image2.png){width="1.3444444444444446in"
height="0.9590277777777778in"}

A.  Dividends and capital gains should be taxed at half the indicated
    tax rate with deductions allowed for mortgage and donations.

> Indexed -- Tax Exempt (Municipal Bond Income) should be restricted to
> \$250,000 indexed and taxed at half the tax rate thereafter.

#  C. A consumption tax of 10% with the following caveats:

-   No tax on food and medical items

-   No tax on any single item purchased less than \$250 indexed, 10%
    thereafter

-   No tax on vehicles purchased less than \$15,000 (indexed), 10%
    thereafter

-   No tax on purchase of primary or secondary residence, tax on third
    residence at 10% or rental property

## FOR CORPORATIONS

-   Tax on **Book Income Reported** -- All deductions permitted as is
    the case today:

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-   \$0 - \$5,000,000 at 10%

-   \$5,000,000 - \$50,000,000 at 20%

-   \$50,000,000 -- \$3,000,000,000 at 25%

-   \$3,000,000,000 and Up at 35%

    -   Consumption Tax for corporations

    -   No tax on buildings and plants, but on a purchase of any single
        item over \$3,000

![](media/image2.png){width="1.3444444444444446in"
height="0.9590277777777778in"}

**[CONCLUSION]{.underline}**

I believe this should be a starting point to revise both the corporate
and individual tax system. Other reforms on social security and Medicare
tax should also be pursued and should be modified to provide a long term
solution to include; raising the retirement age, individual savings
accounts, offering a benefit forfeiture whereby the social security
benefits could be forfeited and the corresponding amount be added to the
tax free estate provision to give any heirs, a deductible on Medicare
benefits and compensate with taxable income reported equal to 5% of the
prior years taxable income. This would include no deductibles for wage
earners of \$40,000 or less, but all participants would be required to
pay an enrollment fee of \$100 per month. Drugs would be separate and
included as the current plan allows.

Hopefully, some of the above ideas may be considered. If all or portions
of the above are put forward, bi-partisan support might be easier to
obtain and a success might be realized.