Richard Francis Pimentel

82 Jacobs Well Road

Epping, NH 03042-2517

\(603\) 679-8339

Rpimentel@Peoplepc.com

To: The Presidents Advisory Panel on Federal Tax Reform

1440 New York Avenue NW

Suite 2100

Washington, DC 20220

Subject: Individual comments on Tax Reform

Dear Tax Reform Panel Members, 12 March 2005

I have attached my Tax Reform comments for your review and
consideration. I feel that tax reform is most critical at this point in
our Nations history and besides making taxes more fair it will help in
resolving the long term viability of Social Security.

As a background on myself, I am 58 years old. I have an Associates
Degree in Business Administration. I am married with no children living
at home. My wife and I own our home. I served in the US Army and
currently draw retirement pay. I currently work as a Truck Driver. I
also worked for H&R Block as a tax preparer for two years in the early
80's. My wife does not work. Last year I paid \$6909.00 in Federal
Income Taxes. I also paid \$4588.00 in State and local taxes (mostly
property taxes). I paid \$3051.00 in Social Security and Medicare Taxes.
This makes my federal tax burden \$9960.00 and a total tax burden a
total of \$14548.00.

I hope you will take my comments into consideration in making tax reform
a reality.

Sincerely,

Richard Francis Pimentel

I recently completed filing my 2004 Federal Income Tax. The current
filing system is very complicated. For example I own mutual funds on
which I received less than \$100.00 in interest and dividends. It took
me several hours of additional time to compute whether I had to file a
Schedule D and then to compute how much of these dividends to report as
income.

I file Schedule A to itemize deductions. This requires year round record
keeping which usually turns out fruitless as I do not have enough
deductions in the areas of Medical and Dental Expenses, Job Expenses and
other Miscellaneous Deductions. Once again this is time consuming. Even
in the areas which I can deduct I have to take time to keep track of the
expenses.

I would also like to note that it is easy to make up deductions even
though you are required to keep records for most of the deductions. A
good area is in Gifts to Charity. For example you can claim you gave
\$249.00 to the Salvation Army in cash on a particular day. The only
record is your note you made saying you did it.

You donate clothes to Good will and claim their value more than they are
worth. I often think of when President Clinton's Tax return was
scrutinized

when donated used underwear and deducted an amount for that. Quite
frankly I see no value in used underwear.

As a general comment I always do my own taxes. I do not like the
additional expense of having to pay a tax preparer a fee of \$100.00 to
\$150.00 for a tax preparation service. When our tax system is so
complicated that millions of common citizens find preparing the Federal
Income Tax Forms too complicated for their education level and have to
resort to a tax preparer which they can least afford we need to change
the system.

Another reason the common taxpayer feels that this system is unfair is
when they hear of the very wealthy paying very little or no taxes
because the current system of deductions and tax shelters that only the
very wealthy can use. The wealthy can put money in tax free government
securities and bonds. Most of the common people are lucky if they have a
passbook savings account and then they pay taxes on the small amount of
interest they receive. No wonder personnel savings in this country are
small. What is going to happen to the younger generation when they have
no savings to use in retirement?

What I also find unfair with the current tax system is that it is easy
to avoid not paying taxes. This tax system has created a great
underground economy. Examples of this are numerous but I will explain
how this economy works.

You hire a carpenter to do some work on your house. The bill comes to
\$1700.00. The carpenter tells you he will discount \$100.00 off the
bill if you pay him in cash. You think it is a good deal so you pay him
\$1600.00 in cash. The carpenter then deducts his expenses of 600.00 for
material he used. That leaves 1000.00. He then reports \$500.00 as
income. He now has \$500.00 of untaxed income for his personal use.

A waitress in a restaurant receives \$125.00 in tips. She then reports
(if it is even reported) \$75.00 as income. She now has \$50.00 as
untaxed income.

These are just two examples of how people avoid paying taxes. This
system leaves two many opportunities for this underground economy to
thrive.

Another area that may be a problem is with illegal aliens. If these
undocumented workers are being paid as day laborers or under the table,
then

they are not paying taxes. The person that is employing them is also
avoiding the matching Social Security and Medicare taxes.

How does our tax system effect business. A company doing business in
this country hires workers. Besides paying the worker a salary the
company also has to include in that salary both the taxes the worker
pays and their matching Social Security and Medicare taxes. All taxes
for laborers are a cost of doing business. The end result is that
products made in this country cost more than products made overseas
where there is not a tax burden for goods exported. The big term is
outsourcing of jobs. Taxes are a reason why.

Attached are my individual comments on tax reform. Thank you for your
consideration.

Richard Francis Pimentel

Epping, New Hampshire, USA

A decendant of:

Pimentel, Teixeira, Carvalho, and Rocha

From Sao Miguel, Acores

Sat 3/12/2005 11:07 AM