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Public Statements

Tax Talk 2012: Buddy Roemer

Interview

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With the Florida primary just days away, the race for the Republican nomination feels like it could be anyone's game. The state of the economy remains a chief concern among voters. It's important to understand what it is that each candidate hopes to bring to the table in terms of tax incentives, tax policy and tax proposals. With that in mind, I contacted each of the candidates who has officially declared an intention to run for president. To keep it simple, I asked each of the candidates the same six tax-related questions.

Next in the series is Republican candidate Buddy Roemer. I had the opportunity to speak to Roemer by phone on Friday. He previously served as the 52nd Governor of Louisiana (1988 to 1992) as a member of the United States House of Representatives from 1981 to 1988.

It was a great chat. Here's what he had to say:

taxgirl: What's the single most important tax issue facing Americans today?

Roemer: Trust. Taxpayers can't read the Tax Code and they can't trust it. It's written by lobbyists and taxpayers don't think it's fair. When a company like GE can make $5.2 billion in revenue and pay no federal tax while the average working taxpayer pays a rate close to 25%, that's not fair. We need clarification, simplicity and fairness in our Tax Code.

We need a system that is fair, simple, trustworthy and understandable.

taxgirl: If you could only make one "quick fix" in terms of an extra credit, a disallowed deduction or the like, what would it be?

Roemer: A flat rate. Under my plan, there would be a flat rate. There would be a $50,000 exemption for a family of four and there would be a flat tax of 17% on income beyond that. That means that those making less than $50,000 would pay no income tax while those making more than $100,000 would have an effective tax rate of 8.5%.

That leaves money left over to pay their property taxes, sales taxes and expenses. There would be no other federal taxes.

It is clear and simple. There are no deductions or other exemptions.

Companies and individuals would pay the same rate. There would be no double tax, no marriage penalty, no alternative minimum tax.

I would also make it a rule that a 2/3 vote would be required to change the rate. It would take 2/3 vote in the House and 2/3 vote in the Senate. Taxpayers need that consistency. I helped rewrite the Louisiana Constitution and we put that 2/3 rule in there.

It is simple, clear, fair and encourages growth.

taxgirl: The current federal estate tax exemption is $5 million for individuals or $10 million for married couples. Do you recommend lowering the exemption, boosting the exemption, keeping it at its current rate or something else altogether?

Roemer: No double taxes. No estate taxes. Under my system, you would be taxed once, not twice.

taxgirl: It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?

Roemer: No, that doesn't make sense. The IRS needs to be restructured, not eliminated. The IRS does a lousy job but that's a reflection of the Tax Code.

Under my plan, the IRS would be about 5% of the current size. With a more simple Code, there is no need for a complicated system. They would deal with business expenses, random audits. 

We need a light touch, a lot of trust.

taxgirl: Do you think that significant tax cuts are possible considering the current state of the economy, specifically with respect to the issues surrounding the debt ceiling and the federal deficit?

Roemer: Excessive debt shrinks a nation. Under Obama's current budget, there are deficits for each of the next ten years. The smallest projected deficit is one half trillion dollars. We are a nation in trouble.

We can have fairness and growth out of a flat tax. My plan allows for an explosion of growth. Growth is what we need to get over our debt hurdle.

With my plan, there would be a flat rate. It is fair, simple, trustworthy and understandable. No tax on dividends, no depreciation schedules: you would expense what you spend. We need to encourage growth, encourage modern technology.

You cannot restore wealth by raising taxes. A flat tax is more fair, more simple and everybody pays.

taxgirl: And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?

Roemer: Save it or pay down my debt. That goes for me as well as for the country.

I'm an investor and a banker, with a background from Harvard BusinessSchool. I come from a business background: money is what I deal with.

We are a consumer society. We're takers, not makers. That used to not be the case. "Made in America" used to mean something. It needs to be important again. And it can be.


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