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.