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Camp Opening Statement: Hearing on Tax Reform and Consumption-Based Tax Systems

July 26, 2011
Good morning and thank you for joining us today.  Today is the ninth hearing that we have held on comprehensive tax reform, not counting the roundtable discussion held by the Joint Committee on Taxation where we were joined by key architects of the Tax Reform Act of 1986.  During our very first hearing of the year – which was also our first hearing on tax reform – we discussed the need to transform our tax code so that it would encourage, rather than inhibit, job creation.  Six months later, as we continue to struggle in an economy where unemployment remains high and growth is virtually stagnant, the need to overhaul America’s broken tax code has never been greater.  

Clearly, the tax code is too complex, too costly, and takes too much time to comply with.  All this adds more burdens on families and employers – making it more difficult to create the jobs that 14 million men and women in this country need. 

Since the beginning of our discussions on comprehensive reform, I have cited three things I am certain of as we take on this endeavor.  First, I have no illusions that this will be an easy task – but then most things that are worth doing never are.  

Second, I don’t think this should be a partisan exercise. 

Third, and most importantly, we will talk to the American people – individuals, families, employers (large and small) – who are actually affected by the laws we pass here in Washington.

They are the real experts and that is why their voices are critical as we explore and develop tax reform policy.

That brings us to why we are here today.  

Although our current tax system does include some elements that are consumption-based, such as excise taxes, for the most part our Tax Code is thought of as being based on the taxation of income.

To this point, our hearings this year – including the joint hearing we held with the Senate Finance Committee two weeks ago – explored tax reform with an eye toward maintaining an income-focused tax base.  We have explored how the current system works and, in many cases, doesn’t work for employers and families.  

Today, we are shifting gears just a bit to explore a different basis for taxation – consumption.  We will examine two different consumption tax models that have emerged as potential alternatives to our current income tax system – the FairTax and the value added tax.  

Our first panel will discuss the policy arguments for and against adopting the FairTax as a replacement for existing federal taxes.  Our second panel will examine the advantages and disadvantages of a value added tax or VAT, whether as a supplement to or full replacement for existing taxes.  

We have some terrific witnesses on our panels, and I’d like to thank them for being here today.  We are anxious to hear from them and we look forward to an engaging discussion.  With that I will yield to Ranking Member Levin for the purposes of his opening statement. 

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