This week, Senator Voinovich sent a letter to the Chairmen of the National Commission on Fiscal Responsibility and Reform reiterating the need for long overdue tax reform and outlining what he hopes the Commission will consider when it comes to taxes during their deliberations.
Senator Voinovich urged the Commission to strongly consider the importance of transportation investment to job creation and this Nation's future economic competitiveness and the face that the federal fuel tax rate has not been increased for 17 years--since 1993, when it was raised by 4.3 cents to 18.4 cents per gallon. The purchasing power of the current fuel taxes has decreased over this time period and thus, the federal government's contribution to the transportation system has continued to fall behind.
"As you continue your deliberations, I urge you to consider a fuel tax increase as one of your recommendations for securing the financial future of our country."
Please find the full text of the letter and attachments below.
August 3, 2010
The Honorable Erskine Bowles, Co-Chairman
The Honorable Alan K. Simpson, Co-Chairman
National Commission on Fiscal Responsibility and Reform
1650 Pennsylvania Ave. NW
Washington, DC 20504
Dear Chairmen Bowles and Simpson,
As you know, I have long advocated the creation of a fiscal commission to deal with our Nation's expanding entitlements, growing debt, and federal budgets that are not balanced as far as the eye can see. I was disappointed that the Senate did not pass legislation earlier this year to create a statutory commission that could have guaranteed a vote in Congress on a broad fiscal reform proposal, but I was pleased that the President created a panel through Executive Order, and I thank you for your service in this critical matter of aiming to restore fiscal responsibility to our Nation.
In addition to my concern about entitlement spending as a driver of our rising debt and deficits, I also believe that tax reform is long overdue. In 2005, when Connie Mack and John Breaux were asked by President Bush to lead the President's Advisory Panel on Federal Tax Reform, they found that since the Tax Reform Act of 1986, over 15,000 provisions had been added to the Internal Revenue Code, and that as a result only 13 percent of taxpayers were filing their returns without the help of either a tax preparer or computer software. But reforming the tax code is not just a matter of saving taxpayers' time and effort. It is about saving real money. In fact, the Tax Foundation then estimated that comprehensive tax reform could save Americans as much as $265 billion a year in compliance costs associated with preparing their returns. Simplifying the tax code would be a real tax reduction that would not cost the Treasury one dime.
The Mack-Breaux Panel produced a variety of great ideas for improving the tax code. More importantly, a bipartisan tax reform done well would strengthen the revenue side of the federal ledger while also spurring economic growth and encouraging saving. Unfortunately, the report was shelved, but as you and your fellow commissioners now study options to address our Nation's fiscal crisis, this may be the time to reconsider the Panel's proposals. I have enclosed a copy of the report's Executive Summary for your review, which I think you will enjoy reading. I have also enclosed a copy of a recent article by Martin Feldstein that highlights our massive tax expenditures--amounting to approximately $1 trillion this year--as an area of federal spending ripe for significant trimming, but often overlooked because of its hidden form in the tax code. I hope that you will find these thoughtful policy options to be helpful resources for your Commission's pressing work.
I also urge the members of the Commission to strongly consider the importance of transportation investment to job creation and this Nation's future economic competitiveness. Fuel taxes today fund the vast majority of the federal government's investment in infrastructure projects. Due to dwindling fuel tax receipts, Congress has had to transfer billions of dollars from the General Fund to the Highway Trust Fund to maintain our current level of federal involvement. While there are many reasons for these dwindling receipts, one critical factor is that the federal fuel tax rate has not been increased for 17 years--since 1993, when it was raised by 4.3 cents to 18.4 cents per gallon. The purchasing power of the current fuel taxes has decreased over this time period and thus, the federal government's contribution to the transportation system has continued to fall behind. The lack of investment in our crumbling bridge, highway, and transit systems is a missed opportunity for the creation of thousands of well paying jobs and long term economic growth for our Nation. As you continue your deliberations, I urge you to consider a fuel tax increase as one of your recommendations for securing the financial future of our country.
Again, thank you for your service to our Nation. If I may be of any help in the future, please let me know.
George V. Voinovich
United States Senator