Winter/Spring 2015

TAXWATCHTAXWATCH NTLC’S

NTLC Leads Fight for a Federal

Balanced Budget Amendment

A powerful movement is underway in the states to

control federal spending and deficits through balanced

budget fiscal discipline amendment. This renewed

effort has been christened

“The Reagan Project,”

because years ago

Ronald Reagan endorsed

state power under Article

V to propose such an

amendment.

Twenty-four state resolu-

tions have been obtained.

Ohio Governor John

Kasich has been on the

road in several western

states to help obtain the

10 more resolutions nec-

essary to force Congress to call a convention of the

states to prepare an amendment. (Please review the

full story, the players, the target states, and the

Reagan endorsement on pages 13-14.)

President Ronald Reagan proposed a balanced budget

amendment (which NTLC helped to design and pass)

that was approved in the US Senate in 1982, but was

defeated in the House. Had it been approved and rati-

fied, America’s fiscal situation would be much im-

proved today. (For a full analysis, see the Uhler/

Ferrara op.ed. on page 15—The “Elixir” article.)

Herman Cain and Lew Uhler at South Carolina Article V

BBA rally

1

America Needs Major Tax Reform

End to the Death Tax With a corporate tax rate of 35% and a death tax rate

of 45%, America has “priced itself out of the market.”

Is it any wonder businesses and investment capital are

fleeing through so-called corporate “inversions,” and

we are facing a job and brain “drain.”

Cong. Kevin Brady (R-TX) has reintroduced his bill

to kill the death tax, and NTLC, Jim Martin’s 60 Plus

Association and many other of our colleagues are

working closely with him.

Now that conservatives/death tax opponents have tak-

en control of the US Senate, we’ll be able to confront

President Obama with a vote killing the death tax by

April 15th. Obama proposed in his State of the Union

message to increase the death tax, so he will likely

veto our bill. But that will set the stage for the 2016

presidential election when we can make this a pivotal

issue in the race, creating a mandate for killing this

hated, unfair, counter-productive death tax once and

for all … “black flag dead,” as we like to say!

And we must reform the US tax code in its entirety,

reducing rates substantially for individuals and corpo-

rations, creating a “flat tax system” which taxes only

the portion of your income – and that of a corporation

– which you consume, but doesn’t tax what you and

businesses save and invest. It will be a consumption-

based tax that will induce explosive economic growth

in America. (See Tax Reform article—page 17.)

Rep. Paul Ryan (R-WI), former vice presidential candidate and new chairman of the House Ways and Means committee, and

NTLC President Lew Uhler, have worked together for years.

Ohio Governor John Kasich and

Herman Cain Join the “Reagan Project”

Kill the death tax “Black Flag Dead”

BBA Rally on the Yorktown in Charleston Harbor

2

In This IssueIn This Issue

President’s Corner

Dear Friend of NTLC –

We are very pleased to mark the occasion of conservative control of the

114th Congress with reissuance of NTLC’s TAXWATCH.

This year is NTLC’s 40th anniversary. We founded our Committee

(501c4) and our Foundation (501c3) to carry out the advocacy, research

and education on taxes and spending we had begun for Ronald Reagan

when he was Governor.

With the assistance of Milton Friedman and other of our founders, we

developed constitutional tax limitation/balanced budget solutions, start-

ing from a narrow base of advocates and supporters expanding nation-

wide and to Washington, DC.

Realizing that resources were thin—there were no Heritage, Cato, CNP,

CEI, ALEC, SPN and affiliates or other conservative intellectual and

activist assets—we sought to “multiply” our conservative/libertarian

base. Following Ronald Reagan’s prescription for success: “There’s no

end to the good you can do if you don’t care who gets the credit,” we have worked across the Nation with a multi-

tude of national and state conservative leaders and organizations, helping to coordinate (with Jim Martin [60 Plus

Association] and Dan Mitchell [Cato], the Tax Cut Working Group Coalition in DC.

The conservative/libertarian movement, with the recent addition of Tea Partiers nationwide, has matured and prov-

en its mettle in capturing the US Senate and increasing its numbers in the House. We must continue to multiply to

assure the presidency in 2016 in order to begin restoring “American exceptionalism.”

That multiplication contemplates more volunteers and more financial resources to carry out our many vital initia-

tives and the rapid economic growth which our plans and policies can achieve. (See page 18 for our elements of

NTLC’s strategic plan.)

Please spend a moment to give us the benefit of your thoughts on key issues on page 19 and help us with your most

generous contribution, identify others who may appreciate TaxWatch and return in the enclosed prepaid envelope.

Many thanks for your continued support.

Kindest Regards…..Lew Uhler

We must multiply to assure the presidency in 2016 and restore “American exceptionalism”

NTLC Leads Fight for BBA ............................................ Cover

America Needs Tax Reform ........................................ Cover

President’s Corner ..................................................... Page 2

Ryan and Gingrich New Books ................................... Page 3

NTLC State/Local Issues—Dennis Hollingsworth ....... Page 4

Use Resources to Grow Economy & Pay off Debt ..... Page 4

Abolish IRS—Congress to COLLECT taxes .................. Page 5

World TP Leaders Salute Bjorn Tarras-Wahlberg ...... Page 5

Return EPA Functions to Congress ............................ Page 5

Fetal Alcohol Syndrome Disabilities Project .............. Page 6

New Federalism & Congressional Hearings ............... Page 6

Freedom Fest Frolic ................................................... Page 7

3

Ryan & Gingrich Chart Route to American Exceptionalism

Recent polls confirm that the President, Congress and the federal bureaucracy are trusted with America’s future

by as few as 20% of our electorate. A vast majority of people are looking for answers the old-fashioned way:

through their communities, their churches and other institutions close to home; and through their states and lo-

cal governments, and especially through the private sector with its creative, market-driven, responsive organi-

zations and institutions. It is as if Alexis DeToqueville were walking among us today and currently writing

“Democracy in America,” rather than nearly 200 years ago. For this we can all be thankful.

And our special thanks should go to our good friends and comrades-in-arms over the years: Cong. Paul Ryan

and Former House Speaker Newt Gingrich, both of whom have new must-read books available. Both Paul and

Newt underscore the need for rapid, sustained economic growth to work our Nation out of bankruptcy, to ex-

pand the size of our economy and our Nation’s wealth, producing more federal revenues at lower rates of taxa-

tion. Please read these books – you won’t be disappointed!

RYAN: In his new book, “The Way Forward: Renewing the American Idea,” Paul talks about his formative

years, the untimely death of his father, as well as his family, faith and work ethic. He wants the federal govern-

ment out of local problems which should be the province of states, local govern-

ments, the private sector and especially our churches, as our Founders anticipated.

He emphasizes self-government under the rule of law, valuing each individual and

protecting them from the time of conception – equality under God and government

with the consent of the governed, securing the inalienable rights that are the inher-

itance of a free people.

Paul wants reform of our so-called “entitlement” programs in a way that protects sen-

iors, soon-to-be seniors and younger Americans in a fair and equitable way through

private sector and “pay-as-you-go” solutions. Paul’s re-

forms start with what NTLC has been urging for years:

devolution of domestic programs to the states and local

governments.

NEWT: In his book, “Breakout,” Newt, as always the

college professor and historian, as well as former Speaker of the House, looks at

many of the same issues as Paul – with many of the same solutions – but is prodi-

gious in his recommendations for the use of modern technology, computers and

“the cloud” to reform the way government does business. Maybe we need to start

all over because the bureaucracy and its bureaucrats are so change-resistant that

they simply can’t keep up with the pace of the real world. He refers to them as be-

ing stuck with manual typewriters in the age of hand-held computers—and produc-

ing accordingly. So force-reduction and turnover are essential at the federal level if

we’re ever to have a modern civil service.

113th Congress TAXFIGHTER Awards........................ Page 7

Deficit Reduction Action Plan .................................... Page 8

113th Congress Scorecard ........................ Page 9, 10, 11, 12

“Reagan Project” BBA Resolution Status Report .... Page 13

Reagan Article V Support Letter .............................. Page 14

Op Ed—Reagan’s Tax Limit Plan .............................. Page 15

Op Ed—Abolish the IRS ............................................Page 16

Op Ed—Tax Reform and Economic Growth .............Page 17

NTLC’s Strategic Growth Plan ..................................Page 18

“We Need Your Advice & Help” ...............................Page 19

Ronald Reagan Blesses Article V State BBA Resolution Project ............................Page 20

In This IssueIn This Issue

4

NTLC Protects Citizen Interests

at State and Local Government Levels

“All politics are local,” professed long-time Reagan era Speaker of the House the late Tip O’Neill (D-MA).

And he was right—what happens at the local level influences the states and, ultimately, Washington, DC.

NTLC has long been involved in local government battles and lawsuits that influence state capitals and

Washington, DC.

Issues in California include:

Enforcing the property rights “promises” of the Southern California City of

Escondido. A failed golf course with existing residential zoning was purchased by

a developer. Some citizens petitioned to stop development, and the City Council

concurred. In the face of the developer’s lawsuit, NTLC sided with citizens who

put Measure “H” on the ballot to protect private property rights (per zoning) and

to build homes generating property tax revenues for the City instead of costing the

City and its taxpayers $100 million to compensate for lost property value.

A “bag tax” (they call it a “fee”) on grocery bags provided by local markets.

NTLC has opposed this tax and is involved in a referendum to kill it.

Stopping the “bullet train” to nowhere in California, for which the funding and

local support are entirely lacking.

Opposition to a “rent-seeking” bill by California pharmacists who are trying to

prevent purchase of prescriptions out of state at lower cost.

Water legislation to “take” and subject to regulation, the subsurface waters

which have always “run with the land” of California.

California Air Resources Board (CARB) imposition of “fees” on all alleged producers of “air pollution”

under California’s AB-32 (global warming claims). NTLC is one of several parties plaintiff in Pacific Le-

gal Foundation’s lawsuit declaring that the cap-and-trade (CARB) fees are taxes and are illegal because

they were not passed by a 2/3 vote of the Legislature, as required by Proposition 13. We think we will pre-

vail and protect all working Californians from huge – and totally unnecessary and preventable – increases

in gasoline prices and home heating/air conditioning costs.

NTLC continues to fight for individuals, families, small businesses and all others who believe in our Found-

ers’ concept of freedom.

Domestic Fossil Fuel Exploitation will Seed

Rapid Economic Growth America sits atop the world’s most abundant supply of fossil fuels—oil, gas, and coal—and the investment and jobs they

will bring – if only we can restore common-sense policies that will allow us to exploit this opportunity for an economic

renaissance in America. Recent declines in the price of oil per barrel have underscored that America can continue to

produce oil profitably at or below the price that undermines our enemies around the world, including Russia and enemy

Arab states.

Equally important is opening up federal lands and resources to development, as we have for past generations through

homesteading, land grant colleges, railroad rights-of-way, etc. The proceeds of leases and royalties should be placed in a

special fund dedicated exclusively to paying off the national debt and seeding private Social Security accounts for our

grandchildren, leaving them wealthy, not debt-ridden. (See NTLC’s strategic plan for the US on page 18.)

Develop Natural Resources on Federal Lands to Pay Off National Debt

Dennis Hollingsworth, for-mer Republican leader in

the California State Senate, is NTLC’s Executive Vice

President and focuses on California state and local government issues and

state projects.

5

Abolish the IRS —

Create a Congressional Bureau of

“Tax Collection”

President Obama has mocked the constitutional sepa-

ration of powers by changing federal laws through

executive orders and edicts, while failing to faithfully

execute the laws of Congress as required by the Con-

stitution. Speaker

John Boehner chose a

lawsuit over im-

peachment to chal-

lenge Obama’s usur-

pation of congres-

sional authority.

We feel there is a

better way to restore

the separation of

powers. Congress

should simply reverse

its nearly 150-year delegation of rule/law making

authority and management to administrative agencies

and begin re-establishing its powers by abolishing the

hated IRS and replac-

ing it with a tax collec-

tion bureau within and

reportable directly to

Congress, pursuant to the constitutional mandate that

“Congress shall lay and collect taxes.” Then when

Lois Lerner refuses to cooperate with Congress, they

simply fire her.

For a full discussion of this issue, see the Uhler/

Ferrara op.ed., “Putting Congress in Control of

Tax Policy Again,” The Washington Times, July

2014, on page 16.

If Congress collects the taxes, Members don’t ask her to

testify, they fire her

TAXPAYER LEADERS RECOGNIZE

BJORN TARRAS-WAHLBERG

The recent Vancouver, BC, meeting of the World

Taxpayers Association was unique. Biennially,

starting in Sweden in 1990, the World Taxpayers

Association has come together to share ideas, chal-

lenges, successes – and yes, failures.

But over the past decades, the creator of the world-

wide association -- Bjorn Tarras-Wahlberg -- has

provided

leadership

and inspira-

tion, helping

to bring

down income

tax rates in

nation after

nation – in-

cluding his

native Swe-

den – as well

as in many of

the nations

that emerged as independent republics following

the breakup of the Soviet Union.

The former conservative leader of the Canadian

National Government praised Bjorn who urged a

15% corporate tax rate for Canada, one of the low-

est in the western world, creating a free market re-

naissance in Canada. Bjorn has joined NTLC in

urging that the US compete with the lowest corpo-

rate and personal income tax rates in the world –

10% -- to make America a magnet for investment,

job creation and corporate expansion.

Lew Uhler with Bjorn Tarras-Wahlberg at the WTA meeting in Vancouver, BC

EPA Functions Must Be Retrieved and Administered by Congress

The Environmental Protection Agency (EPA) is another runaway executive bureaucracy, created by congres-

sional action in the Nixon era, which has far exceeded its legislative authority. It is threatening to shut down

major segments of American energy/electricity sources which will cost our Nation dearly in jobs and in-

creased family and individual energy costs.

It is time Congress repealed the legislation which created EPA. Congress should transfer or devolve to the

states environmental, water, air pollution and other regulatory issues that can and should be handled closest to

the people. Only truly national environmental regulatory issues should remain in Washington but be con-

trolled directly by Congress through the relevant House and Senate committees Any “rules” proposed by the

committees would have to be fashioned into legislation and voted on by the committees and the full Congress.

Most such rules would never be approved, and our Nation would be far better served and our people more

prosperous.

“Congress shall lay

and collect taxes”

6

NTLC has long believed that the over 200 means-tested entitlement programs of the

federal government would be much better managed at the state and local level using

the 1996 welfare reform model of Ronald Reagan and his California welfare director,

the late Bob Carleson (a founding sponsor of the Nat’l Tax Limitation Committee).

Lew Uhler, NTLC President, and Peter Ferrara, NTLF advisor and scholar, coau-

thored a study confirming the need for and effectiveness of the devolution of these

federal means-tested entitlements to the states. (Review the Executive Summary

of that study: “Deficit Reduction Action Plan,” on page 8 of this TaxWatch.)

Through field oversight hearings we can communicate and educate taxpayer/voters more effectively in their re-

spective districts. NTLC has launched this effort and is recruiting like-minded organizations in DC – such as

Charlie Sauer’s Marketing Institute --which are plugged into the committee structure in the House.

Cong. John Mica (R-FL) and

NTLC Pres. Lew Uhler at

recent oversight hearing in

Detroit, MI

FETAL ALCOHOL SYNDROME DISABILITY:

National Tax Limitation Foundation Mounts

“TotallyPreventable.Org” Campaign

While the NTLC and NTLF have historically fought excessive government spending, taxes and regulations to

limit government’s size and intrusiveness in the lives of our citizens, we tend to forget that many problems that

result in calls on the public treasury can and should be dealt with at origin.

We know that children of intact families, as contrasted with those born out

of wedlock, are much more likely to live successful lives, avoiding foster

care, special education, the juvenile and adult criminal justice systems and

other gigantic social and financial costs to society. We are taking steps to

heal a broken welfare system that has fractured, not nurtured, intact fami-

lies, creating what is known as the “poverty trap.”

Now we have learned from extensive international research and analysis

that one of the major sources of dysfunctional and anti-social individuals is

alcohol consumption by mothers during pregnancy. This is known as

FASD – Fetal Alcohol Spectrum Disorder – and it affects 1-2% of babies

born in the US, with higher numbers in some states and on Indian Reserva-

tions. Studies reveal that in addition to the social/family “costs,” the dollar

costs to the taxpayer are extraordinary over the life of such individuals, averaging from $800,000 to $5 million

per individual, with annual total costs for all such individuals exceeding billions of dollars annually. Yet,

FASD is totally preventable if women will avoid alcohol consumption during pregnancy.

NTLF, under the direction of Executive Vice President Dennis Hollingsworth, former Republican leader of the

California State Senate, is launching a vigorous public education campaign among young women in high

schools and colleges and in the restaurant/

bar and alcohol beverage industries, to

communicate the dangers of alcohol con-

sumption during pregnancy. The research

of Jim Uhler, a consultant to NTLF, has

uncovered this vast problem and societal need, in conjunction with the national organization, “FASWORLD.”

This is a special project for NTLF with details and needs to be found at “TotallyPreventable.org.”

DEVOLVE FAILED MEANS-TESTED PROGRAMS TO THE STATES

NEW FEDERALISM MUST PREVAIL

“Fetal alcohol syndrome disabilities (FASD) impose

enormous social and taxpayer costs we can avoid”

7

FREEDOM FESTFROLIC - July 2014

Economist Mark Skousen and others rally each year in Las Vegas to proclaim personal freedom and wealth

creation through the free market. NTLC President Lew Uhler presided at a general session with panelists Ste-

ve Moore (Heritage), John Goodman (foremost free-market medical system expert) and tax-and-spending re-

former/expert, Peter Ferrara, a NTLC advisor, scholar, consultant (above, shown left to right).

The lively session brought globe-trotting attendee George Gilder to the mike to ask penetrating questions, as

always. All were urging an end to Obamacare and a restoration of traditional American free-market, private

solutions.

Everyone on the panel agreed that with control of the US Senate, conservatives could pass powerful health

care reform, as well as tax and spending reduction legislation, framing the issues for the 2016 presidential

election, knowing that in 2015 and 2016 Obama is likely to veto any meaningful reforms. This will frame the

bankruptcy of the progressive movement in America which has waged a modern “Hundred Years War” start-

ing in1913 (and before) with the federal income tax, direct election of US Senators, the Federal Reserve and

the inauguration of Woodrow Wilson – to today’s Obama Keynesian policies imposed on Americans and our

economy, and enable conservatives to revitalize and re-establish American exceptionalism.

Tax Fighter Awards Presented to Members

NTLC’s 113th Congress Scorecard

For 30 years NTLC has been scoring Members of the US House and Senate on their voting records affecting

taxpayer interests. NTLC provides one of the longest-standing and most respected congressional scorecards,

emulating the American Conservative Union (NTLC President Lew Uhler

has served on ACU’s board of directors for a quarter-century).

Those Members who score 80% and above are given an “A” grade and pre-

sented with the NTLC “Tax Fighter Award” at a ceremony on Capitol Hill at

the end of each Congress. (The 113th Congress Scorecard is the centerfold of

this edition of Tax Watch. Please take the time to see how your Senators and

Representatives have scored.)

Those Members who have consistently received the Tax Fighter Award over

the years are honored with the “Lifetime Tax Fighter Award.” Recent recipi-

ents include Senators Mitch McConnell (R-KY) (average grade of 90% over

30 years), Sen. Pat Roberts (R-KA) and Sen. Jim Inhofe (R-OK). Senator Mitch McConnel re-

ceives NTLC Tax Fighter Award

8

9

113th CONGRESS SCORECARD (2013-2014)

10

11

12

13

The “Reagan Project” - A Status Report on State Article V

Balanced Budget Amendment Resolutions

Introduction

Washington’s continued profligacy is driving – or renewing – efforts to impose fiscal discipline through a bal-

anced budget amendment initiated by the states.

In their wisdom, our Founders provided two ways to propose amendments in Article V of the US Constitution:

by Congress with a two-thirds vote of each House, or pursuant to the action of a convention of the states to be

convened by Congress per resolutions of two-thirds of the states on a particular subject.

In August 1982 NTLC—with major assistance from Senator Orrin Hatch (R-UT)—succeeded in passing Presi-

dent Ronald Reagan’s Tax Limitation/Balanced Budget Amendment (S.J. Res 58) in the US Senate, only to

have it ambushed in Tip O’Neal’s liberal House of Representatives. That precipitated an intensified effort at

the state level for balanced budget Article V resolutions, but we reached only 32 resolutions by 1996 when the

effort was aggressively countered by forces on the left and right, and the need for an amendment was under-

mined by Gramm-Rudman and a series of actual balanced budgets.

The New “Reagan Project”

In 2010, re-starting from a base of 16 valid and subsisting (un-repealed) state resolutions, the Balanced Budget

Amendment Task Force, led by David Biddulph of Florida and Scott Rogers of Virginia has been adding state

resolutions at a startling pace. Ohio – Number 20 (approved Fall 2013) and Michigan – Number 23

(approved Winter 2014) – had never before passed such resolutions. Because Ronald Reagan so favored the

Article V state resolution process, the renewed effort is now labeled “The Reagan Project.” (See letter from

Ronald Reagan to Lew Uhler of March 23, 1994 on reverse.)

The recent success of the movement has been aided by the wise counsel and aggressive legislative testimony of

Economic Advisor William H. Fruth, Dr. Barry Poulson, economist at the University of Colorado, Boulder,

constitutional lawyer/authority Rob Natelson, the Independent Institute, Golden, Colorado, and advisor to the

American Legislative Exchange Council (ALEC). Grass roots training and rallies have been spearheaded by

the “I Am American” organization, led by “Typhoon” Lou Marin and Loren Enns from Florida. And key to

its success has been the leadership and commitment of the members of ALEC .

Legislators Providing Leadership

A group of legislative leaders organized the “Mount Vernon Assembly” on December 7, 2013. More than 100

legislators from 30 states began creating rules for an amendment convention. A second assembly was held in

June 2014 at the Indiana Statehouse, with legislators from 33 states (this group met again in D.C. on December

8 and 9 to continue their work).

When the balanced budget amendment Article V state resolution effort was renewed, the 16 valid and subsist-

ing state resolutions included those from: AK, NV, CO, NM, TX, KS, NE, IA, MO, AR, MS, NC, IN, PA, DE

and MD . In 2011 AL approved and NH followed in 2012, as did OH in 2013. More recently FL, GA, MI,

TN and LA passed or revalidated resolutions. That’s 24 of 34 states necessary. One or the other house of the

legislature has approved the Article V resolution in AZ, WI and SC. Other target states include: OR, ID, MT,

WY, UT, ND, SD, OK, LA, KY, WV, VA and ME. We are working with legislators and others in all those

states, but the movement needs all the help we can get.

Anyone wanting to join the effort, please email the Balanced Budget Amendment Task Force as follows: Da-

vid Biddulph @BBA4USA.org, or Lew.Uhler@limittaxes.org. Phone contact: Balanced Budget Amendment

Tax Force (386-423-4744); Lew Uhler (916-765-9172).

14

15

Elixir article

16

UHLER & FERRERA: Putting Congress in control of tax policy again

Abolishing the IRS would rein in a runaway president By Lewis K. Uhler and Peter J. Ferrara - - Tuesday, July 8, 2014

House Speaker John A. Boehner is confronted by a president who has become virtually lawless: He runs roughshod over ex-isting laws and legislation by changing them or not enforcing them, in complete violation of the separation of powers under Article II, Section 3. Administrative agencies under his jurisdiction issue rules and edicts beyond the scope ever intended by Congress in its enabling legislation. He makes "recess" appointments that are clearly unlawful and declared so unanimously by the Supreme Court. The list goes on and on.

Mr. Boehner has several responses available, including impeachment. He has chosen a lawsuit against President Obama to en-force the separation of powers. There is a more immediate and contemporaneous route to restoring congressional legislative authority than awaiting the multiyear, uncertain outcome of the judicial process.

It begins with the recognition that Congress has voluntarily diluted its own legislative powers over the years, starting with the Interstate Commerce Commission in 1887, an "independent agency" that developed regulations for railroad and shipping rates and operations. However, Congress retained control over the commission and terminated it in 1980 in favor of rate competi-tion, setting a positive free-market precedent.

Subsequently, delegation of rule-making authority to agencies and bureaus under presidential control began the dilution of congressional authority and the separation of powers. Congress has walked away without any meaningful oversight over the rules these entities promulgate or how they are administrated. The rules issued by these agencies are a burden now estimated by the Competitive Enterprise Institute to cost our economy $1.9 trillion a year in compliance expenses, equal to more than half of our nation's annual budget.

Since the Constitution does not authorize Congress to delegate its legislative duties to others, Congress could redeem itself immediately by reasserting its legislative authority. A good place to start is with the Internal Revenue Service (IRS), which has become a runaway agency. The specter of the IRS commissioner smirking at outraged House Ways and Means Committee members seeking honest answers about Lois Lerner's "lost" emails should terrify law-abiding taxpayers. A very real option would be for Congress to abolish or defund the IRS — now with 90,000 employees and a $2 billion budget — and create a new tax agency wholly under congressional control.

The Constitution provides that only "Congress shall have the power to lay and collect taxes " (Article I, Section 8). The president has no authority over fiscal matters except through his veto power. Congress' exclusive tax-collection authority was reaffirmed with the ratification of the 16th Amendment in 1913: "Congress shall have the power to lay and collect taxes on incomes ." There was no mention of a presidential role in this process.

Congress' first mistake on taxes occurred in 1862, creating the commissioner of internal revenue in the executive branch (Treasury). Congress can remedy that error by creating a new tax-receipts office within and wholly under the control of Con-gress. Name it the Congressional Tax Collection Bureau, not a "service."

Members of Congress would be responsive to those constituents who run afoul of absurd decisions or arrogant conduct of the tax bureau personnel. Such intimacy with their taxpaying citizens might lead Congress to more quickly respond to the need for a simpler and fairer tax code. (One of the bureau's responsibilities should include estimates of the tax-revenue effects of pro-posed tax-law changes using a dynamic-scoring methodology, contracted out to private-sector sources able to fairly score Ken-nedy-Reagan-type tax reform plans.)

If the House were to send IRS-repeal legislation to the Senate, Majority Leader Harry Reid would surely sit on it. This would provide another powerful reason to "change the guard" in the Senate, and it would become clear to Americans that a signifi-cant change in the White House is essential in 2016. Meanwhile, Congress could — and should — use this model to reclaim its rightful legislative authority over runaway executive rule-making agencies and independent regulatory bodies, such as the Envi-ronmental Protection Agency, the Occupational Safety and Health Administration and the Securities and Exchange Commis-sion, which are destroying jobs and making a shambles of our economy while trashing the separation of powers and producing a result resembling those European nations ruled by a parliament and a "professional" civil service.

The current members should be angry at the relinquishment by earlier Congresses of constitutional responsibilities and author-ity to administrative agencies and the president. They can restore congressional authority by abolishing the IRS and reorganiz-ing tax collection under the direct control of Congress. This would be the strongest act by Mr. Boehner to restore power to Congress and discipline a runaway president.

Lewis K. Uhler is president of the National Tax Limitation Committee. Peter J. Ferrara is a senior fellow at the foundation and at the Heartland Institute.

17

Want Explosive Growth, America? Reform the Tax Code

Voters affirmed that rapid economic growth and job creation remain the nation's top priorities. The new Congress should adopt personal and corporate tax reform that will launch maximum, sustained economic growth. The president, who'd like to "rule America" without congressional "annoyance," may veto such a measure. But let him become the president of "no" as battle lines are drawn for 2016.

Congress has an opportunity to follow the lead of state tax reformers who have demonstrated the political appeal of tax-rate reductions and reforms. Govs. Scott Walker of Wisconsin, Rick Snyder of Michigan, Sam Brownback of Kansas and North Carolina's Senator-elect Thom Tillis all won handily largely because of leadership on state tax reform.

We convened a group of the nation's top free-market tax experts in Washington to develop the most pro-growth tax re-form. The consensus was to refocus our current income-tax system on consumption, rather than savings and investment, the lifeblood of capitalist economies and the economic foundation for job creation and rising wages and incomes.

That can be accomplished first by allowing all families and individuals to deduct from taxable income all capital invest-ment, savings, debt-reduction and retirement-account contributions. Second, allow capital "expensing" for all business, which means replacing depreciation with deductions each year for all expenses for plant and equipment.

Corporate Rate

For individuals and families, the income-tax rate structure would be a modified version of the tax reform included in the budgets of Paul Ryan, chairman of the House Budget Committee. That would involve a tax rate of 10% on earned income up to the maximum taxable income for the Social Security payroll tax, currently $117,000 this year, and 22.4% for income above that.

Social Security's maximum taxable income is automatically indexed to rise with wages each year, which means that infla-tion would not push working people into the higher income-tax bracket. That means 90% of all wages would remain sub-ject only to the 10% rate for income taxes.

This would create essentially a flat rate for the income tax and the 12.4% total Social Security payroll tax combined. Work-ing people would bear a total income tax and Social Security effective tax burden of 22.4% on the first $117,000 of wages this year. The 12.4% payroll tax would then drop off, but the income-tax rate would rise to 22.4% for wage income above $117,000 for the year. The current personal exemption of $3,000 would be raised to $6,000, exempting the first $24,000 annually from income taxes for a family of four.

The plan would retain deductions for home mortgage interest and charitable contributions, but eliminate deductions for state and local taxes, which just subsidize state and local tax increases. Multiple taxation of capital would be addressed by killing the egregious, hated "death tax," and taxing dividends, capital gains and business income at a single rate of 10%.

For corporations, the federal corporate income tax rate would be reduced to 10%, as would the capital gains tax and the tax on corporate dividends. That would be close to the revenue-maximizing rate. When President Bush cut capital gains from 20% to 15% in 2003, capital gains revenues soared in the following years.

Higher GDP

We'd be first worldwide in business-friendly tax policy, eliminating "tax inversions" and spawning waves of companies, capital ($2 trillion currently sheltered offshore) and jobs flowing back to America. Every dollar not taken in taxes from cor-porations provides about 50 cents for increased wages and jobs, increases earnings of pension funds, and decreases prod-uct and service prices.

Such reform was not designed to be "revenue neutral," but a major tax cut under static scoring, ultimately revenue-positive under dynamic scoring considering the pro-growth effects of the reform. A standard dynamic economic model in fact scored the tax reform.

Over the first 10 years, nearly 80% of the revenue losses from the dramatic rate cuts would be recovered from the re-sulting dynamically increased savings, investment, job creation, wage increases, and economic growth.

After 10 years, GDP would be 16% higher than otherwise, producing $2.6 trillion more for American families and working people. Wages would be 11% higher than otherwise, with 5.2 million more full time jobs. The net revenue loss after 10 years would be only 2% ($111.4 billion) of the then-projected budget ($5.9 trillion). The private economy would gain $24 in increased output and production for each dollar of net revenue loss.

This is tax reform you can believe in!

• Uhler is chairman of the National Tax Limitation Committee and National Tax Limitation Foundation.

• Ferrara is senior policy adviser for budget and entitlement reform policy to NTLF.

By Lewis K. Uhler and Peter J. Ferrara ** Reprinted from Investor’s Business Daily, November 24, 2014

18

NTLC’S STRATEGIC PLAN TO ACHIEVE NATIONAL PROSPERITY

THROUGH SPENDING REDUCTION AND REGULATORY CONTROL

(continued from the “President’s Corner” on page 2)

We’ve learned from our mentors, Ronald Reagan and Milton Friedman, the policies essential for America’s future. NTLC is providing leadership on or assisting with:

Reducing the size of the federal government and federal spending by devolving means-tested entitlements to the states and local governments: The New Federalism (see articles on pages 6 and 8).

Major tax reform to reduce corporate and individual rates and kill the death tax (see articles on pages 1 and 17).

Controlling future federal spending through a tax limitation/balanced budget amendment imposed on Washington by the states through Article V state resolutions, reducing the size of the federal government as a share of the economy (see arti-cles on pages 1, 13 and 14).

Restoring the separation of powers and the huge burden of federal regulation on our economy by abolishing the IRS and creating a tax collection bureau under the direct control of Congress – and ending EPA, OSHA and other law-making ad-ministrative agencies and placing their functions under the direct control of Congress (see article on page 3).

Clearing away the EPA and other administrative roadblocks to full development of our national resources to create a vi-brant economy with low-cost energy (see article on page 5).

Development of federal land resources and sale of federal lands with proceeds dedicated to paying off the national debt for our children and grandchildren and seeding individual retirement accounts for them , using the highly successful Chile-an Social Security reform model (see article on page 4).

And we are working with and assisting health care experts to end Obamacare and advance free-market, pro-doctor/patient relationship solutions to the Nation’s health care derailment, including long-term solutions to the unfunded liabili-ties of Medicare.

NTLC and NTLF will continue to collaborate and assist those who share our hopes and vision for a bright future of America. We have long since adopted the Ronald Reagan philosophy that there is no end to the good you can do if you don’t care who gets the credit.

We are also mindful that we live in an increasingly dangerous world and must adapt to it with key principles in mind:

We must reduce the domestic-issue time demand on the President and the Congress so they can more effectively deal with defense and foreign

relations which our Founders intended to be the primary focus of our national government. We have to free their “management time” for issues which only they are empowered to address.

We must recognize that the jihadist threat is real and that our Nation is in danger because of the nature of Islamic teach-ings and Sharia Law. Beheadings are only the most visible and egregious manifestations of the anti-woman, anti-civilized society, anti-Judeo-Christian traditions of Jihad. The fight for human freedom and the dignity of man never ends. NTLC and NTLF will not falter in this eternal battle.

We must restore the Reagan defense and foreign policy philosophy that we can assure “peace through strength” without having to deploy or exercise that strength in constant combat engagements.

In a 1989 letter regarding the Article V balanced budget amendment

effort, Milton wrote: “For many years I have worked with the National

Tax Limitation Committee to prompt an amendment to the US Consti-

tution requiring a balance budget and limit on government spend-

ing… The surest way to achieve such a constitutional amendment is

to allow the public at large to express its wishes through the state

legislatures by a call for a convention to propose a balanced-budget

amendment. That is the democratic way.”

Milton Friedman, a Founder and sponsor of NTLC, and NTLC President Lew Uhler greeted guests at

NTLC’s Washington Office gala during the January 1981 Ronald Reagan Inaugural Celebration.

19

________National Economic Growth

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________Controlling Federal Spending

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through Action of the States

________Reducing Federal Regulations

________National Defense

________Jihadist Islam

________Right to Life

________Ending Obamacare

________Restoring Separation of Powers

________Abolishing the IRS

________Developing America’s Energy Resources

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Ronald Reagan Counted on State Article V Resolutions to

Achieve a Federal Balanced Budget/Tax Limitation Amendment

Ronald Reagan firmly supported the Article V

state balanced budget resolution process to

achieve a federal fiscal control amendment. In

a letter to Lew Uhler in March 1994, Ronald

Reagan reconfirmed his commitment: “You are

absolutely right. We can’t depend on Congress

to discipline itself .. We must rely on the states

… that is the only strategy that will work …

You have persevered in this effort … but I

know you can’t do it alone … Now it’s time to

discipline Washington through the power of

state resolutions … Our opportunity has never

been greater … As I have said before: If not

now, when? If not us, who? (For the full letter

and discussion of this project please see

pages 13 and 14.)

President Ronald Reagan and NTLC President Lew Uhler at Reagan’s Century City office in California in 1989, shortly after Reagan had left the White House. Uhler worked for Reagan when he was Governor and assisted him during his presidency with tax, spending and balanced budget amendment issues.