> Cover Sheet
>
> Kenneth G. Doerbecker
>
> 239 Ridgeview Drive
>
> Wexford, PA
>
> Phone: 724 935-0300 x702
>
> e-mail:kdoerbecker@psipc.com
>
> 55 Year old Caucasian male
>
> Father of 3 adult children
>
> Husband of my first wife of 34 years
>
> Private citizen
>
> Homeowner
>
> Small business owner
>
> Republican County Committeeman
>
> Viet Nam Era Veteran (Army -- Spec5)
>
> Date of Submission: March 4, 2005

Dear Chairman Mack;

First let me thank you for your many contributions to youth sports. All
of my children have benefited from your selfless volunteering efforts
and it has made them better and more successful human beings.
Unfortunately, that will be the last positive thing I have to say in
this comment.

A brief word about my youngest child. Suzy is normally a very confident
young lady. She recently graduated magna cum laude from a well known
university with two degrees in 5 years. Suzy worked all 5 years while in
college to help support herself. In her last college job she managed one
of the local restaurants part time. She was the leader of her fraternity
and a homecoming queen candidate. She was a leader of her local high
school basketball team and selected as an area all-star several times.
Suzy is smart, capable, motivated, positive, and above all, Suzy is not
afraid.

I received a phone call from Suzy two weeks ago. Her voice was quaking
and she was on the verge of tears. She had been trying to complete her
first tax return as a non-dependent for several weeks. Suzy said it
looked like she owed several thousand dollars but didn't really
understand what she was doing or how this could be. She had been saving
for a year to buy a laptop computer to use in her job as a graphics
designer and now that was all trashed -- it would have to go to the IRS.

After calming her down we decide to get together and see what the
problem was. You see, she was unable to find employment after graduating
so she took an unpaid internship which she supplemented with a waitress
job. Then she got an opportunity to work as an independent contractor
for a very small design firm, who finally was able to offer her a
traditional job. Well, you think she was General Motors! It took me
three nights and several phone calls to get to a point where I think I
have it right. Her original return was completely wrong. She didn't
understand business expenses - what's allowable, what's not, what the
limits are, and where you put this stuff on the return or why its even
anybody's business but hers. She didn't understand self-employment tax
or why that was even an issue. The poor kid worked for nothing for half
the year, as an independent for a quarter and finally the last quarter
in a real job. She worked 3 jobs to make about \$15k total, not enough
to live on, and now had to take her meager savings, which she wanted to
invest in her future, and give it all to the IRS. She put the computer
on her credit card.

What's wrong with the current tax system? Simply put:

1.  It's too complicated and expensive to comply with. The best among us
    can not understand how to comply. Suzy's return took 2 competent
    adults 40+ hours over 5 weeks to complete. I don't have a chance of
    doing my own, even my CPA isn't sure he gets it all right and it
    costs me over \$2,500 each year in preparation fees to account for a
    small business, and investment property, and myself. I gross about
    \$75k.

2.  It's too easy to avoid. After all, what's income? Barter, trade, do
    favors, take cash. One man's business expense is another man's
    non-deductible is another man's unreported income. Average law
    abiding citizens feel it's OK to avoid taxes (cheat) because the
    rates are ridiculous and the rationale incomprehensible. Give me the
    name of one drug dealer, prostitute, or Mafia king-pin that pays
    income tax. Doesn't that make me feel special? Suzy could have
    easily not completed the Self employment tax form and then had
    enough money to buy that computer. There was nothing in the forms to
    guide her there. She chose to do the right thing (do you think?).

3.  It absolutely kills the little guy - see the Suzy example. Despite
    the graduated tax rate, it's regressive -- don't kid yourself.

4.  It hides the incredible cost of government through withholding.
    People just don't realize how much they pay. If they had to write a
    check each month to the IRS, there would be riots in the streets!
    Spending (wasting?) is out of control and the average American
    doesn't even know it.

We desperately need a system that meets these goals:

1.  Simple to administer and comply with. This will preclude using
    income as a tax base, because determining income is a huge,
    inaccurate, unwieldy task that encourages fraud. The cost of
    collection (financial, time, and emotional) to both the government
    and the citizenry needs to be dramatically reduced.

2.  Progressive -- no one should be taxed on what they need to basically
    survive.

3.  After subsistence is achieved, we should all pay our fair, equal,
    share -- no special deals for the rich, the poor, or the middle --
    everyone equal.

4.  No business should be taxed -- it just complicates and hides the
    real issues. In the end all business taxes are, by economic
    necessity, passed on to the consumer in the price of the products
    and services they buy.

5.  Congress should not be able to use the tax code to manipulate or
    socially engineer the citizenry. Tax rates and legislator's
    salaries/perks/retirement should be approved by referendum of the
    popular vote.

6.  The citizenry should be painfully aware of the true total cost of
    government. Tax payments should be made by individuals to the
    government or its agent on a transaction by transaction basis. There
    should be a single tax, such as a final consumer based consumption
    tax, not a portfolio of taxes that can be used to hide the true cost
    of government and confuse the citizenry.

7.  Does not cause individuals to make stupid financial decisions just
    because of the tax consequences.

Thank you for the opportunity to voice my opinions. This is probably the
single most critical issue to the economic and social future of our
great country.

Respectfully submitted,

Ken Doerbecker