[Congressional Record Volume 142, Number 69 (Thursday, May 16, 1996)]
[Extensions of Remarks]
[Pages E821-E822]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            THE WALTERS PLAN TO BALANCE THE NATIONAL BUDGET

                                 ______


                          HON. J. D. HAYWORTH

                               of arizona

                    in the house of representatives

                         Thursday, May 16, 1996

  Mr. HAYWORTH. Mr. Speaker, I would like to take this opportunity to 
continue the dialog on balancing the Federal budget. As my colleagues 
know, the national debt now exceeds $5.1 trillion. Children born today 
will pay over $185,000 in interest on the debt alone if we do not rein 
in the Federal Government's excessive spending.
  Later this week, the House of Representatives will consider the 1997 
budget resolution, which will put us on the path to balancing the 
budget. However, as you know, Mr. Speaker, the budget resolution is 
only an outline for balancing the budget. There are many different ways 
to accomplish this important goal.
  In that spirit, Mr. Speaker, I offer to my colleagues a plan which 
one of my constituents, Arthur Walters from Payson, AZ, conceived to 
pay off the national debt. The Walters Plan to Balance the National 
Budget focuses on cutting spending and replacing the income tax with a 
national sales tax. I hope my colleagues will give this plan the full 
consideration it deserves.

            The Walters Plan to Balance the National Budget

                         (By Arthur M. Walters)

       This plan addresses the key points of this difficult 
     problem.
       1. Congress spends more than the Treasury collects.
       2. The Federal Government cannot accurately forecast 
     revenue. It is always low.
       3. The government prepares its ``wish list budget'' and 
     then tries to predict where the funds will come from to pay 
     for it. It is always optimist to say the least. The revenue 
     never materializes. As the budget year progresses, the 
     Treasury borrows money to pay its bills because the funds are 
     not there when needed.
       4. The IRS is incapable of administering the hodge podge 
     Tax Code. It was carefully written so no one can understand 
     it. This allows an army of tax experts to negotiate the tax 
     obligations of everyone. It imposes a large expense on every 
     tax payer just to figure this tax.
       5. The author believes every single person should take 
     personal responsibility for Federal spending. No one should 
     escape. For those who have escaped so far, there will be 
     great cries of injustice. Everyone has his own story of why 
     he should be exempt. This must stop. This plan won't work if 
     it does not stop.

[[Page E822]]

       6. There is no formula for budget cutting that can be 
     agreed upon. The military, Social Security, defense 
     contractors, welfare, etc., all have a bottomless need for 
     money, as do thousands of government departments.
       A fresh, firm plan based on equality is needed. The public 
     will accept fairness. To date, there never has been fairness 
     in the Tax Code.


                                THE PLAN

       1. A Constitutional Amendment must be passed that requires 
     a balanced budget.
       2. Prior to the Amendment, Congress should immediately pass 
     a law or establish a policy that says:
       2.1  The National Budget cannot exceed 90% of last year's 
     revenue.
       2.2  Revenues in excess of the budget must be applied to 
     debt reduction.
       2.3  When all National debt is paid off and there is one 
     year's budget (minimum) in the Treasury, then the annual 
     budget cannot exceed last year's revenue.
       3.  Since no one will ever agree on whose budget is to be 
     cut, the only thing that will work is to cut all department 
     budgets equally. Then everyone has an equally valid 
     complaint.
       No doubt it will hurt--we need to live within our means. 
     People are reasonable and can be convinced to accept this.
       If possible, the military cut should be more than the other 
     cuts: 1.1 to 2.0 times the percentage cuts of other major 
     departments. This would be a tough thing to ``sell,'' but 
     would free up a huge sum of money.


                                REVENUE

       There shall be a National Sales Tax of 1% of sales. This 
     tax will be imposed on every sale by every business. To work, 
     there can be no exceptions (wholesale, retail, professionals, 
     doctors, dentists, lawyers, engineers, architects, inter-
     corporation transfers where P&L centers exist, etc.)
       The tax will be added to every transaction and is to be 
     paid by the buyer. Companies who never pay Federal taxes will 
     now be making a contribution through their purchases. The 1% 
     sales tax thus is 1% tax on the Gross National Product. The 
     money is to be paid within 14 days after it is collected. The 
     money is to be deposited into local Federal bank accounts. 
     Banks who collect the money will be allowed to keep the 
     deposits 2 weeks for their trouble, before forward it to the 
     Treasury.
       The Treasury must use this revenue to retire outstanding 
     debt only.
       Benefits:
       1. We now have a steady flow of cash into the Treasury 52 
     weeks per year.
       2. Minimum paper work and collection expense. We have an 
     almost real time measure on the nation's economy week by 
     week.
       3. There are to be NO LOOP HOLES in this tax or it won't 
     work.
       4. The paper work load on business will be minimal--
       Funds received from gross sales this week 0.01=tax due next 
     week.
       No complex accounting is required; just a simple deposit to 
     a local Federal Bank account. The IRS is out of the loop; 
     they will not be needed.


                       LONG TERM FUND COLLECTIONS

       After the 1% sales tax has been running for one or two 
     years, all the kinks will be worked out and we now have a 
     clear real time picture of the Nation's economy. We will 
     eliminate most of the effort now used to try to figure out 
     where the country is, based on gathering a lot of data from 
     many sources that is history. Because a lot of businesses, 
     such as wholesale businesses, don't pay sales tax, there is 
     no direct way to monitor business activity.
       Revenue from the IRS will be compared to Sale Tax Revenue. 
     It will be a simple calculation to see what National Sales 
     Tax is required to generate the revenue collected by the IRS.
       The sales tax can be raised and the income tax eliminated. 
     No more IRS. No more taxes on capital gains, etc. No more 
     complex accounting.
       This change will lower business accounting costs, 
     depreciation accounting, etc, etc. Federal revenue collected 
     will increase and taxpayer hidden costs will decrease. It 
     will be totally fair. Everyone will share the cost of Federal 
     Government.
       Again--this plan can only work if there are no exemptions.

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