The following proposal was submitted to President-elect Obama's change.gov
Ladies and Gentlemen of the economic transition team,
We have begun the Friedman-Reich Project as a grass roots effort to end the double taxation of business and restore competitiveness, savings and investment to our economy. It is named after conservative economist, Milton Friedman who exposed the inequity of double taxation in his two books Capitalism and Freedom and Free to Choose, and after liberal economist Robert Reich who, 45 years later in his book Supercapitalism, endorsed and expanded on Friedman's idea to end double taxation. We propose this for the new administration’s consideration.
By ending double taxation, we believe you will create an environment of capital formation and, with it, business growth. We believe this is the fastest way we can make our economy strong and competitive without adding to the deficit, increasing Federal borrowing, or increasing taxation. Mr. Reich in his proposal also suggests corporations should not be permitted to lobby government because they are artificial entities, a fact the revised tax code would recognize. If Reich's proposal is adopted, it will solve two problems--capital formation and ethical reform.
This proposal would affect C-corporations, because other businesses—sole proprietorships, partnerships, and S-corps—permit their owners to recognize business profits directly and pay taxes only once on those profits Furthermore, it would end hedge fund "carried interest" tax shelters that President-elect Obama exposed in his campaign. Finally, it would cancel completely capital gains taxes, since all income is taxed equally, thus obviating prolonged debate on Mr. Obama's proposals regarding capital gains.
Ending double taxation will result in little or no immediate loss of revenue to the government, by my calculations. Long term, it may result in increased revenue as we get the economy and businesses going again. Additionally, it is the least expensive way to restore value to tax deferred savings plans--401(k), IRA, 529, etc.--as they will reflect the revised net-tax valuations of their equity holdings.
As this is an idea started by a conservatives and advanced by liberals (including Prof. Lester Thurow of MIT), we believe the proposal can advance across the political spectrum in Congress. It would redress systemic disadvantages our tax system imposes on businesses and capital markets, precisely at the time when both need help.
Please see the article on our site at http://americancivility.us and our FAQs for additional information.
Thank you for your kind consideration.
Best wishes for success!