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Recent Quotes By and About Ernest Christian
on Fundamental Tax Reform

Quotes from Ernie Christian in the article by Jim McTague entitled "At Last, Sensible Taxes" in the October 24th edition of Barron's.

-- "'It is a remarkably good plan; the president ought to seize it,' says Ernest Christian, a tax lawyer who long has argued that the existing code dampens growth and competitiveness."

-- "Christian says that the plan is especially attractive for companies because it eliminates the complex corporate income tax, along with its onerous double-taxation of dividends, and replaces it with a lower-rate system that is simpler to administer."

-- "Christian suggests that [Secretary] Snow take the reforms for individual taxpayers in Plan A and combine them with the… [cashflow] tax approach for corporations in Plan B to produce a hybrid that would reduce the rates and spur savings, corporate investments and exports."

Read the full article (PDF)

Quotes from Ernie Christian in the article by Brian Mitchell entitled "Tax Panel Backs Moderate Tax Reform, Revenue Neutral And A Bit Less Complex" in the October 19th edition of Investor's Business Daily.

- "Ernest Christian, former assistant treasury secretary for tax policy and founder of the Center for Strategic Tax Reform, was upbeat."

- "It's definitely the thinking man's approach to tax reform," Christian said. "They have covered all the bases and kept the focus largely on economic growth, which is what tax reform is all about."

Read the full article (PDF)

Quotes from Ernie Christian in the article by William Tucker that appeared in The American Enterprise magazine July/August 2005 edition.

- "By putting a bull's eye on income, our current tax system encourages people to consume instead of invest. 'Savings are taxed twice -- once as earnings, and once when they earn interest in a savings account,' says Ernest Christian, executive director of the Center for Strategic Tax Reform. 'Corporate profits are likewise taxed twice, once as business income, once as personal income of shareholders. Capital gains are generally taxed at 15 percent. At the same time, interest payments on debt are a deductible expense.'"

- "The result of our tax incentives, Christian notes, is to discourage savings and encourage debt. 'There's a shift away from riskier investments and toward more conservative corporate borrowing,' he says. 'This works against innovative companies and makes it harder to improve productivity.'"

- "On the other hand, many conservatives see a danger in the Earned Income Tax Credit, which has created a whole class of low-income voters who actually take refunds out of the system. 'It's very dangerous to exempt large numbers of people from income taxes,' says Christian, of the Center for Strategic Tax Reform. 'You create a whole segment of the population that can vote to raise taxes without feeling any pain.'"

- "An alternate to complete overhaul of our tax system may be incremental reform…All these incremental improvements would add up. 'Every tax reformer's inclination is to propose something dramatic that captures the public's attention,' says Ernest Christian. 'But real tax reform is not about dramatic proposals, it's about dramatic accomplishments.'"

Read the full article (PDF)

"The Wiggle Room"

"The problem with the sales-tax idea, according to tax lawyer, Ernest Christian, is that too many people find parts of it to be unpalatable . . . .

Christian claims the existing tax system can be fixed so that it promotes growth and reward savings by making just five changes - the so-called Five Easy Pieces.

Bush and the last Congress implemented the first piece when they reduced tax rates. What are the remaining four pieces?

First, Congress must restore the provision that allows businesses to write off equipment in the first year rather than over a longer period, making equipment purchases more attractive and stimulating the economy. It expired Jan. 1.

Second, Congress must stop taxing exports, Christian says. The Europeans don't tax theirs; as a result, U.S. exporters suffer a government-imposed disadvantage.

Third, Congress must figure out a way to reduce taxes on corporations' overseas income and still comply with World Trading Organization trading rules, a tricky but not impossible task, Christian says.

Finally, Congress must eliminate taxes on savings. President Bush's first-term proposal for tax-free lifetime savings accounts would satisfy this end, the lawyer asserts."

-- "The Wiggle Room" by Jim McTague, Barron's, 1/10/05

"'Simpler, Fairer' Corporate Taxes"

"According to a now-famous plan that tax lobbyist Ernie Christian laid out years ago, advocates of fundamental change in the tax code can achieve many of their goals through the "five easy pieces" of tax reform, retaining the current income-based system while cutting rates and increasing deductions. Bush tinkered with three of the five pieces in his first term: He lowered individual income tax rates, temporarily sped up depreciation of business investments, and cut dividend taxes. Bush already has a detailed proposal for the fourth piece - exempting much of savings from income taxation. By adding in the fifth piece - a way of cutting taxes for exporters that builds on a current year's foreign-sales corporation tax law - and extending the tinkering with the others, Bush could claim to have achieved significant tax reform."

-- "'Simpler, Fairer' Corporate Taxes" by John Maggs, National Journal, 1/8/05

"Tax Overhaul Faces Good Odds, But Details, Timing Aren't Near"

"People need to get over these brand-name ideas and just deal with generic concepts of tax reform, which isn't all that complicated. It does not involve all these horrible things like doing away with itemized deductions and charitable contributions and home-mortgage interest. Those things do not serve any simplification purpose."

-- Ernest S. Christian as quoted in "Tax Overhaul Faces Good Odds, But Details, Timing Aren't Near" by Brian Mitchell, Investor's Business Daily, 1/3/05

"Another Whack"

". . . But there is almost certainly more to it than that. Experts on both the right and the left say Bush appears to be following a version of a strategy known as Five Easy Pieces. The approach was first laid out in a 2001 essay by tax expert Ernest Christian of Washington, D.C., and economist Gary Robbins of Fiscal Associates, Arlington, Va. Christian was a tax specialist in the Ford administration and gave advice to Ronald Reagan. Robbins was a career tax specialist at Treasury when Reagan was in office.

Rather than engage in a protracted and doomed effort to overhaul the entire tax system, Bush instead is gradually removing what conservative economists have identified as five major impediments to economic performance. The Five Easy Pieces plan calls for:

  • Lowering marginal rates to increase after-tax income and encourage work. Bush already has done it, though the cuts are set to expire in 2011. Bush is pushing to make those and other cuts permanent.

  • Ending "double taxation" of corporate earnings. Bush has partially achieved this with cuts in dividend and capital-gains rates.

  • Speeding up write-offs on business equipment, ultimately letting firms deduct 100% of the cost in Year One. Bush has made headway, but a 50% depreciation bonus for some equipment expires this year. Some in Congress are pushing for an extension.

  • Removing taxes on most personal savings. Bush has proposed it, but Congress has yet to approve.

  • Excluding export and other foreign-trade income from corporate taxation.
Bush has yet to propose this, but probably would in a second term. Each of these five items has its own merits and a powerful constituency, according to Christian and Robbins. Therefore, Congress is more easily motivated to make these changes than it is to overhaul the entire system . . . ."

". . . .Christian predicts a two-term Bush also would move to significantly cut taxes on exports and foreign-source income -- the last of the Five Easy Pieces. Christian is forming a coalition of exporters to push the case for tax breaks on trade.

'We tax our exports to the rest of the world, but the rest of the world doesn't tax its exports to us,' he says. This puts the U.S. at a trade disadvantage of between $120 billion and $150 billion a year, he figures. 'It isn't the marketplace alone that is causing the transfer of U.S. jobs abroad,' he argues. 'A very heavy government thumb on the scale is working against us. . . .'"

". . . But Christian says that adding just half a percentage point of GDP growth over the years would eliminate the projected budget deficit in about 10 years. He says that an additional three-quarters of a percentage point of growth over the same period would result in a surplus . . ."

-- "Another Whack," Barron's by Jim McTague, 2/16/04

"Sorting Through a Shift Toward a Consumption Tax"

" . . . 'George W. Bush is the first president to actively understand and embrace the fundamental core principles of tax reform,' says Ernest Christian, a founder of the Center for Strategic Tax Reform in Washington . . . . "

"Mr. Christian would like 100 percent depreciation in the first year. He also wants to excuse from taxation export and other foreign-trade income of US multinationals, as many other nations do. . . . "

"Sorting Through a Shift Toward a Consumption Tax," Christian Science Monitor by David Francis, 6/30/03

"Anti-Tax Crusaders Work for Big Shift"

". . . Last year, Ernest S. Christian, a Treasury official in the Reagan administration and founder of the Committee for Strategic Tax Reform, devised a plan for stealth tax reform in 'five easy pieces.'"

"Placed against the tax cuts of the past three years, Christian's agenda is beginning to look like a road map: lower marginal income tax rates, including capital gains tax rates; eliminate taxes on dividends; accelerate the speed with which businesses can write investment expenses off their tax bills; expand the Roth Individual Retirement Account to all personal saving; and exclude export and other foreign trade income of American companies from taxation."

"The first piece, lower rates, has now been accomplished in dramatic fashion. The top income tax rate of 39.6 percent in 2001 has now fallen to 35 percent, while the tax rate on most capital gains has fallen from 20 to 15 percent. The second piece took a substantial leap toward completion when taxes on corporate dividends were cut last month from a top rate of 38.6 percent to 15 percent for most dividends, and 5 percent for others. A year ago, the concept of the "double taxation of corporate earnings," as opponents refer to dividend taxation, did not exist in the political lexicon. Now it is front and center."

"As for the third piece, tax cuts in 2002 and 2003 drove up depreciation rates to the point where companies can now write off at least half the cost of their investments in the first year."

"And with his 2003 budget, Bush appeared to have followed Christian's fourth recommendation precisely by proposing "lifetimes savings accounts" that would allow everyone, regardless of age or income, to shield $7,500 a year from investment taxation. The accounts would be accessible at any time for any reason. A family of five could put away $37,500 annually, a figure that very few Americans could even contemplate saving."

"'If you beat your breast, jump up and down, and come in with some revolutionary idea to change the tax code overnight, you're just going to scare the devil out of everyone; we don't do revolutionary things,' Christian said recently. 'Now, the last stage, three years or so from now, is that we say we've done the substance [of tax reform] already, but the code is still complicated. Let's really simplify it a lot and finish the job.'"

"Anti-Tax Crusaders Work for Big Shift," Washington Post by Jonathan Weisman, 6/14/03

"Tax Cut Embodies Political Agenda"

". . . The changes also achieve another long-cherished goal of conservative reformers by lowering marginal rates to encourage work and risk-taking.

"In effect, Mr. Bush's tax strategy follows what veteran Washington tax lawyer Ernest Christian has labeled the "Five Easy Pieces" approach - breaking tax reform down into its components parts and pushing them separately. That has proved to be a successful tactic in recent years, particularly for issues like repeal of the estate tax. . . ."

"Tax Cut Embodies Political Agenda," Wall Street Journal by John McKinnon, 5/27/03

"Slow Burn"

". . . Norquist and many of his allies among the tax reformers have recently become Christians, but not in the spiritual sense. They've singed on to an approach to reform championed by Ernest Christian, a business lobbyist and former Treasury tax official who has been one of the most tireless advocates over the years for fundamental reform. In 1999, after the failure of another stab at sweeping reform, Christian said he decided that the 'political system is just not prepared to swallow something this big.' Instead, he spent time identifying the most important steps toward fundamental reform that could be enacted one at a time and then imposed without much adjustment to the existing system of income taxes and deductions."

"He came up with five changes, and called them 'the Five Easy Pieces of tax reform.' The five are:

1) lowering marginal tax rates;
2) eliminating the double taxation of corporate earnings;
3) speeding up depreciation so that all capital investment is immediately tax-free;
4) expanding the Roth IRA to cover all personal savings; and
5) ending taxes on exports and on income that corporations earn abroad.

Christian says that these changes would almost entirely accomplish the goal of making savings and investment tax-free and flattening tax rates so that people aren't discouraged from additional earnings by having to pay tax at a higher rate than on the first dollar earned that year . . . ."

"Slow Burn," National Journal by John Maggs, 1/11/03

"Inching Toward Tax Reform"

". . . None of these tax proposals would be dramatic on its own. They will probably be proposed under the rubric of tax cuts geared toward giving the economy a lift. But cutting taxes isn't the Administration's only goal. Taken together, the proposals also add up to a broad if 'stealthy' reform package aimed at easing the current revenue code's bias toward taxing savings and investment rather than consumption. 'You'll never be able to do Big Bang tax reform,' says Ernest S. Christian, a corporate lobbyist and veteran of Washington's tax wars. 'But you can do it in five easy pieces . . . .'"

"Inching Toward Tax Reform," Business Week by Howard Gleckman, 12/16/02

"Tax Reform in Five Easy Pieces"

". . . Ernest S. Christian and Gary Robbins, two former Treasury Department officials, offer a very attractive alternative, which they call the "five-easy-pieces" approach to tax reform. None of the components is strange or exotic, and the president doesn't need to pore through a catalog of past recommendations; he already endorsed the five easy pieces right after the Waco economic summit last summer.

Messrs. Christian and Robbins suggest a method of maintaining the American tradition of taxing income while lowering the exorbitantly high marginal tax rates that discourage work, penalize personal saving and depress business capital investment, which substantially depress productivity and wage gains.

Their approach also would eliminate the perverse aspects of the current tax code that greatly disadvantage American manufacturers and exporters. Consequently, the five-easy-pieces approach would also eliminate tax incentives for U.S. companies to move offshore.

The five incremental amendments to the current tax code that would begin the reformation process and simultaneously give the economy an immediate boost are: (a) lowering marginal rates (including capital gains tax rates); (b) eliminating the double tax on corporate earnings; (c) accelerating depreciation, ultimately to the point of 100 percent first-year expensing for business capital investment; (d) expanding the Roth IRA to all personal saving; and (e) excluding export and other foreign trade income of American companies from tax in much the same way that other countries already do in the world marketplace . . ."

-- "Tax Reform in Five Easy Pieces," Washington Times by Jack Kemp, 12/5/02

"Crossing the Tax-cut Divide"

". . . Of course, key White House decisionmakers, including the president, have not yet weighed in. As is the case in so many areas, Vice President Dick Cheney's view on a tax package will be crucial. Mr. Cheney's top staffers are enthusiastic about broad-based tax cuts. In fact, they like Ernest S. Christian's "five easy pieces" proposal that is now circulating through Washington.

Mr. Christian, a veteran Washington tax reformer, believes fundamental reform encompasses lower marginal tax-rates, 100 percent first-year expensing of business-equipment purchases and a major expansion of Roth IRAs that permit after-tax savings deposits that are never taxed again. The other two pieces of his plan include a reduction in the double tax on corporate dividends by equalizing the treatment of debt and equity, and measures that would exclude U.S. exports from double taxation overseas. . . ."

-- "Crossing the Tax-cut Divide," Washington Times by Lawrence Kudlow, 11/24/02

"The Tax Man Goeth"

". . . But a drumbeat of proselytizing by economists and academics is nevertheless pushing the idea that the corporate levy just isn't working. 'The rules are arcane, archaic, and nonsensical,' says Ernest Christian, a Washington attorney and Ford administration tax official . . . ."

" . . . Part of the problem with the corporate tax is that benefits for specific industries and companies have created a labyrinth 'beyond the mind of man to comprehend,' says Christian . . . ."

"The Tax Man Goeth," U.S. News & World Report by Leonard Weiner, 8/19/02

"He's Deep in the Heart of Taxes"

"'The present tax system borders on being absurd.' Ernest S. Christian says with an air of authority. 'It is very interfering, it is economically irrational and it tends to represent most of the bad things that our people are reacting to' in their beef against Washington . . . ."

" . . . Christian recently withdrew from his longtime partnership in the Washington law and lobbying firm of Patton Boggs to open his own shop. And he brought with him an important client to which he is devoting an increasing share of this time: the Center for Strategic Tax Reform; a Washington-based advocacy group . . . ."

". . . And he's the primary author of a "prototype" tax system for businesses and individuals that was recently published as a 92-page special supplement to Tax Notes, the trade bible of tax policy wonks. The article drew an invitation for Christian to present his views at a Harvard Law School seminar . . . ."

" . . .'I think Ernie sees himself more as a tax theorist and policy guru than as a straight lobbyist,' William Morris, a veteran Washington lobbyist at the law firm of Rogers & Wells, said."

"The rarified environment of Harvard Law School is a long way from Gonzalez, Texas, a small town some 60 miles southeast of San Antonio where Christian was born in 1937. His father ranched a few cows: Christian said that he was 'probably' the first family member to attend college. He received both his college and law school diplomas from the University of Texas (Austin)."

"Christian hungered for a career in politics - in college, he'd been president of the Young Democrats group on campus. (He long ago shifted loyalty to the Republican Party.) But after leaving law school, he became immersed in the world of corporate tax law in Washington - a world he has never really left, except for a stint in the Treasury Department during the Nixon and Ford Administrations."

"At the Treasury Department, Christian got to know a fellow Texan, the legendary Charls E. Walker, with whom he later joined forces in lobbying battles on such issues as safe-harbor leasing."

"An important ally these days is Barry K. Rogstad, the president of the American Business Conference, a lobbying group in Washington. Rogstad has hired Christian to do work on behalf of USA Alliance, a new lobbying coalition he formed to advance the Nunn-Domenici proposal. Christian has 'an extraordinary knowledge of the corporate income tax and how the income tax system works - best of anyone I know,' Rogstad said."

"Also working with Christian and USA Alliance in the push for tax restructuring is economist Rudolph G. Penner, a former director of the Congressional Budget Office. Penner was an adviser on the Tax Notes paper and has been invited with Christian to appear at the Harvard Law School form. "'For a poor country boy from Texas, I was quite honored' to get the invitation, Christian said . . . ."

". . . In his mind, the complaints of his corporate clients against the tax system echo the populist protests of ordinary citizens. The revolt against government has put a bounce in his step. 'I think, frankly, we have already crossed the Rubicon about whether we are going to restructure the tax system,' he said. 'The answer is yes.'"

-- "He's Deep in the Heart of Taxes," National Journal by Paul Starobin, 4/8/95


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