Friday, April 08, 2016

Billy Long: We need the fair tax

(From Seventh District Congressman Billy Long)

Earlier this month, President Obama tallied what some are calling a “major victory” when the U.S. Treasury announced new rule proposals, which resulted in the termination of U.S. drug maker Pfizer Inc. from finalizing a $160 billion acquisition agreement with Botox provider Allergan Plc. If carried out, the merger would have meant the largest tax inversion – relocating a corporation’s legal address overseas to avoid higher taxes – in history, and the movement of American jobs overseas.

On its surface, the administration’s rules may seem to have steered in the right direction. Agreeably, America’s tax code should not provide statutory incentive for companies looking to sidestep their taxes and move jobs elsewhere. However, federal intervention in these situations can be slippery-slopes toward economic burden.

In the case of Pfizer and Allergan, these health companies were blindsided by the administration after countless costly hours had been put into merging the two companies. Allergan CEO Brent Saunders divulged that, “It really looked like they did a very fine job of constructing a rule here – a temporary rule – to stop this deal, and obviously it was successful.” He added that “for the rules to be changed after the game has started to be played is a bit un-American.”

Seven other inversion deals worth more than $700 million in potential merger & acquisition firm compensation also face the threat of termination under the decision. Experts have predicted that blocking the mergers would cause future hurdles across the industry and leave less-diversified small firms facing the threat of financial misery. However, these ‘boutique’ firms are facing imminent financial turmoil in addition to future threats, as their stock values suffered immediately following the Treasury’s announcement.

Most importantly, inversions like these are indicative of a much bigger problem with our tax code: it is an onerous and complicated web that’s full of loopholes that breed issues like inversion. If we truly want to attack the root of the problem, we must comprehensively reform our tax code. It’s critical that corporations aren’t allowed to avoid paying-up by moving overseas, but America’s leaders can’t pretend to be shocked when they do so while being subjected to the highest corporate tax rates of any industrialized country. Furthermore, American companies that inverted previously have collectively stashed more than $2 trillion in foreign accounts, where it’ll likely stay due to these companies’ fear of having it overtaxed if it were brought back.

Still, taxpayers have every right to be livid with these companies for shirking the same civic responsibility families adhere to each April. From large corporations to small businesses, and from CEOs to Missouri families, Americans who pay their taxes with honesty deserve a simpler and more transparent system.

I have voted numerous times in Congress to cut spending and reduce tax burdens on middle-class workers. These votes mean progress, but we must balance our budget; cap the federal government's yearly spending to less than yearly income; and limit taxation of citizens above a fixed percentage of America's Gross Domestic Product. Also, American companies parking fortunes abroad doesn’t help our economy; we need new standards that will incentivize this money’s return to boost industries at home without the government overtaxing it.

The “Fair Tax,” which I have co-sponsored in every Congress since being elected, could provide much-needed solutions. This plan would replace income, business, and employment taxes with an at-the-counter consumption tax. Savings, investment, tax compliance, and economic freedom would prosper. Similarly, America’s industries investing less time and money navigating the IRS would attract more foreign business partners and incentivize companies to create jobs here rather than moving them abroad through inversion.


Anonymous said...

There is nothing fair about the fair tax and Blubba knows it. Consumption taxes always target the poor with a disproportionate percentage of taxes paid to income earned and does nothing to address the wealth inequality because capital gains seem to be magically ignored.

Joe OHara said...

You will hear a lot of misleading information about FAIRtax(SM). One claims that its rate is much higher than the FAIRtax base-rate of 23%.

But these false-claimers never discuss the following benefits of FAIRtax:

• You keep the federal income taxes that are now deducted from your pension/paychecks.
• Social Security and Medicare are fully funded, yet there are no deductions for them as some currently have.
• Every legal household - including the poor - receives a check each month refunding the taxes already paid for the purchase of essential items.

FAIRtax puts your money back in your pockets - where it belongs - not in the government's coffers.

Please, invest a little of your time at to get an idea of what your real FAIRtax rate is. You'll find that it's usually much less than the 23% base-rate.

The annual indignity of playing the forced tax-return game is upon us. So please pay a visit to to learn how you won't be subjected to this game, and too discover the many other benefits of FAIRtax(SM).

Anonymous said...

If you go to this web site it will fully explain how Fair Tax is great for the well to do, Billy Boy's friends. It is another way of messing with the lower and middle income people and to fleece their money while giving the wealthy more breaks and better plans. If Billy is for it a reasonable and intelligent person should be wary and understand it is not for the average Joe. Be wise and start your education on him and others like him before November. Congrats to Billy's office staff for writing all his wonderful news releases as obviously they could not find him in Vegas.

Anonymous said...

These people will never stop trying to shift attention from Capital Gains, which is the gift that keeps on giving to the very rich.

Anonymous said...

Here's a project.

Did Billy Long do what these folks did?

He has been rather vocal on the issue.

Pro-TPP Op-Eds Remarkably Similar To Drafts By Foreign Government Lobbyists

OPINION COLUMNS PUBLISHED in California newspapers over the last year in support of the Trans-Pacific Partnership use language nearly identical to drafts written and distributed by public relations professionals who were retained by the Japanese government to build U.S. support for the controversial trade agreement.

Anonymous said...

It is a zero sum game and you are ultimately trying to get the same amount of revenue. Thus, if the marginal effective tax rate goes down for the wealthy it must go up for the lower and middle class.

The proposed 23% base-rate is in fact higher than 23% because it is inclusive. The fair tax calculator you referenced even illustrates this at the bottom of the page.

That being said I do like the idea of gaining control of your tax burden by lowering consumption. The devil is in the details... If the "prebate" to tax rate ratio is right you could get to a point where it is "fair". There is also the provision that debt payments are not taxed (equivalent to pre-tax in our current system). That might actually help out people who are struggling with debt (student, home, auto, credit card) a lot.

Bottom line is I assumed I would hate the idea more than I actually do now that I have researched it more.

Anonymous said...

Just remember we are a Consumption based economy. Every time you raise taxes on goods and services, you take a bite out of GNP.