From Ed
Ed's March 20, 2008 Remarks Announcing His Candidacy
Good morning and thank you for coming. My name is Ed Matthews. I have some brief remarks and will then take questions.
We live in the greatest country in the world and have much to be thankful for. I am concerned, however, about our Nation’s fiscal health and economic climate. In particular, I am concerned about the level of federal spending, Congress’ failure to make the 2003 tax relief permanent, and the federal tax system in general. After analyzing these issues last year, I realized that I have a knowledge base and skill set that lends itself to tackling these issues. I am a Certified Public Accountant, and prior to earning my J.D. at William Mitchell, I had the opportunity to work as a financial analyst for two Fortune 1000 companies. In those roles, I was responsible for analyzing and prioritizing capital spending based on defined financial metrics. Since college, when I wrote my honors thesis on the flat tax, I have been keenly interested in tax policy. Now, as a defense attorney, I advocate for clients every day. I believe that I would be an effective advocate for common sense and fiscal responsibility in Washington. And so today, I announce my candidacy for the United States House of Representatives for Minnesota’s Fourth Congressional District.
The federal debt is approximately nine-and-a-half trillion dollars. The interest on this debt consumes approximately ten percent of the annual federal budget. Despite this massive debt, our government runs a budget deficit nearly every year. For fiscal year 2008, the deficit is projected to be over $400 billion. All of this deficit spending could be avoided if those in control of Congress were better stewards of the people’s money.
I am particularly concerned about Congressional earmarking. The last spending bill included over 11 thousand earmarks totaling $17 billion. You have all heard the examples: the rain forest in Iowa, fruit fly research in France, the Woodstock Museum in New York.
Most of these projects lack merit and serve no purpose other than to reward members’ supporters and favored political constituencies. For those projects that do have merit, they should go through the normal appropriations process, be debated on the House floor, and voted on out in the open. We need much more prioritization, rigor and transparency in the budget process. This is where my skill set would come in handy. Our government should live within its means like every responsible American family does. We need to end deficit spending and pay down the national debt. This is a moral as well as an economic issue. Our children and grandchildren should not be expected to pay for our bills. Just last week, Congress failed to pass a one-year moratorium on earmarks. Shame on them.
Because of this uncontrolled spending and the so-called “pay as you go” rules implemented by the current leadership, the House has failed to make the 2003 tax relief permanent. As a result, a family of four in the Fourth District making $60,000 a year will have a $1,800 tax increase come 2011. The absolute worst thing Congress could do in tough economic times would be to raise taxes on America’s working families. Taxes on small businesses would go up by an average of about $4,000. Retirees will pay higher taxes on their investment income. None of this should be allowed to happen. No country has ever taxed its way to prosperity.
The House should also take action to reduce the corporate income tax. At 35%, the corporate rate is the second highest in the industrialized world. We can and must do better. A reduction in the corporate rate would promote increased capital formation, lead to more job creation and retention in our country, and ensure long-term economic growth. If we are to continue to prosper, we must have a pro-growth tax code.
There’s an old saying that no one can consume until someone produces. I take that maxim two steps further. No one can produce until someone invests. No one invests until they believe that their projected after-tax rate of return justifies the risk inherent in their investment. This is basic economics. Lest anyone think only the wealthy have investment income, I would point out that 79% of all tax returns reporting capital gains in 2005 were from filers with incomes of less than $100,000.
Our economy will be strong only if we maintain and implement pro-growth policies. Theseinclude lower taxes, a repeal of onerous regulations like Sarbanes-Oxley, and a simplified tax code. One time stimulus packages like the one just passed will not lead to sustained, long-term growth. Decisions like whether to send one’s children to a better school, start up a new business, or hire additional workers are made based on a long-term outlook, not short-term gimmicks. The recent stimulus added $152 billion to the budget deficit. It cost $140 million just to mail notification of the stimulus, and will undoubtedly cost much more to print the actual checks. Wouldn’t it make more sense just to let the people keep their money in the first place? We should cut tax rates for all Americans and then leave those rates alone so people can make sound long-term decisions, confident that the tax code will not change tomorrow.
Our federal tax system is the most complex in the world. It contains a bewildering patchwork of rules for special interests. It imposes double taxation on investment earnings. Itdisrupts and distorts many business and investment decisions. It lowers the productive capacity of the economy and reduces our standard of living. It is incredibly complex and difficult even for trained professionals to understand. The current code numbers some 60,000 pages and costs Americans over 7 billion man hours and $140 billion in fees each year.
The only legitimate purpose of the tax code is to raise the funds necessary to fund the legitimate expenses of government. It should not be a place for social engineering or rewarding favored political constituencies. When the federal income tax was implemented in 1913, Congress adopted a one-page filing form and a maximum rate of 7%. We should return to where we started and replace the current system with a flatter, fairer, simpler and more efficient system. Twelve industrialized nations, including Hong Kong and Korea impose no capital gains tax. We should join them. Russia has a flat tax. We should too.
The current House of Representatives is not focused on the people’s business. The hyperpartisan leadership is more focused on conducting investigations – over 400 to date – and issuing subpoenas than on balancing the budget and implementing pro-growth economic policies. This must change. The campaign for common sense and fiscal responsibility begins today.
This election should be about ideas for moving toward a more perfect union. The people ofthe Fourth District deserve no less. To that end, I intend to give a major policy address each month this year. I also suggest that the incumbent and I come together on a regular basis to debate these and other key issues at venues around the District.
One final word to the press corps assembled here: This will not be an error-free campaign.We will undoubtedly make our share of missteps and stumble along the way. After all, we are only human. We will fight the good fight, on the issues. And this campaign will be transparent. I will never mislead you. I will make myself available to you and I look forward to your interest in this critical election.
I am happy to take questions.