560 East South Temple, C-103
March 27, 1996
Representative Cardon
House of Representatives
House Office Building
Washington, D.C. 20010
Dear Representative Cardon:
Caught your hearings on C-Span this morning regarding a possible shift to a consumption tax as replacement for the income tax. I thought your Harvard Professor panelist didn't fully respond to your question about the effect of a national consumption tax -- VAT or otherwise -- on existing state and local community sales taxes. With you, I believe it would be far more efficient to fold state and local community sales taxes into any new Value Added Tax -- or other national consumption tax. I enclose a paper I prepared some years ago for the Burea of he Budget some years ago suggesting just suchc a solution (see page 2, para 2). The paper also contains a number of other "revenue enhancers" which you and your committee staff might wish to consider. I think the notion of stamp taxs on legal documents -- pariticularly on wills, deed, and personal checks, would have an important effect on reducing check fraud. I have had considerable personal experience with the administration of social security payments abroad and believe my notion for variable social security payments remitted abroad, related to local living costs, could be implemented with minimal political repercussions and considerable balance of payments and budgetary benefits.
I am somewhat distressed that at a time when we are introducing a newly designed $100 bill, the Treasury has not taken advantage of this extraordinary event to upvalue the dollar, indtroducing an entirely new issue of currency (see p. 4, para 5). I have sent this section of the paper to the last three Secretaries of the Treasury, and have corresponded with a close friend who is a senior rreasury Department advisor, who assured me he'd raise the matter in a departmental committee meeting on the subject -- but apparently without effect. Revaluing the dollar upward would have significant effects on our position as a leading financial center (and hence on our invisibles earnings) as well as on inflation.
As an ancillary issue, I enclose copies of a couple of letters to The Economist magazine arguing for the application of offsetting "second best" measures to help remedy our deteriorating trade balance. I think Pat Buchanan has been voicing a genuine concern, even though he's not been expressing it in terms acceptable to the economics profession. In a world of significant trade distortion, we are just pubishing ourselves by trying o "show the way" to the Japanese and Germans who are more interested in pursuing their own national trading intrest. From Reagan to Clinton our Trade Reps have edged up to implemmnting Super 301remedies, only to back away out of fear of retaliation. Why are we willing to go into shooting wars in the Gulf, Haiti, and Bosnia to uphold supposed rights, while we're afraid to engage in less bloody confrontations which affect jobs and worker incomes?
Sincerely,
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