The Honorable Nancy Pelosi United States House of Representatives 235 Cannon House Office Building Washington, D.C. 20515-4322

February 24, 2007

Dear Congresswoman Pelosi,

As you work to develop our next National Budget, I would like to present a suggestion for a novel way of looking at tax reform. I am writing to you, as well as other members of Congress, because to date I have not heard mention of any other idea that would be as useful, practical, and informative for United States taxpayers.

In the past, efforts to reform the tax system have failed to recognize or deal with the System’s two primary functions. The first function, of course, is raising revenue. That part is straightforward-you have to pay the bills. That is the function people usually thing of when they hear the word taxes’. But the second part is bigger. The second function is the fairness function’. This is the mechanism where the tax system takes the money from those who earned it, and give it to those who did not earn it. The tax code currently accomplishes this redistribution of income in many ways, including progressiveness, phase-outs, and the granting of the child tax credits to non-taxed taxpayers’. I don’t know if you will get this, but isn’t the Earned Income Tax Credit’ a funny oxymoron? Anyway, efforts by Steven Forbes et al. in the past have fallen flat’ in part because of their failure to adequately address this second function.

I realize that you will initially be against my idea, as the tax system as it stands stymies conservative Republicans in at least two ways. First, attempts to reduce the size of government cannot win public support if the majority of the voting public pay nothing when government is expanded. There is no public stake in such a reduction beyond Keynesian economic principles, which will never be appreciated by the majority of the voting public (or by Democrats, for that matter). Second, under the current system the issue of tax cuts is effectively destroyed by the sound-bite of tax cuts for the rich.’ This claim ironically becomes more believable as the progressiveness of the system increases, because as you know, any tax cut can be criticized as for the rich’ if only the rich pay the taxes! Brilliantly, progressiveness then increases with each round of tax cuts. And so yes, the ultimate effect of the current system is great for NPR et al., and you would take some flack from them if things changes. And yes, you would be tossing a bone to all those idiots who believe in the principle of public stake in government. But hear me out. I think that many of the complainers will be satisfied in the end.

The basic essence of my idea is to replace the current tax system with two systems, each designated to address one function of the tax code. The first system would be radical, but quite straightforward: every adult (and child?) would pay an equal amount to support the spending of the federal government. I can imagine you rolling your eyes, and this will shock you even more: I am not suggesting a flat tax based on income, but rather a flat amount per person. Yes, I know, why should people who don’t work have to chip in? But believe it or not there are people out there who have this pay your own way’ philosophy, and it might actually end up being a popular idea. If nothing else, it would make sense to anyone who has ever tried to explain the present progressive system to their 12-year-old daughter using the analogy of a group of friends going out for pizza.