29, and june 3rd on cspans and cspan. Org. Announcer this week on q a, author and journalist t. R. Reid. He discusses his book a fine mess a global quest for a simpler, fairer, and more efficient tax system. Brian t. R. Reid, better known as tom, in your new book, a fine mess, you start out in Chapter Three under taxes what are they good for . With on one saturday afternoon, a great teacher of ethics told his students , do you remember the rest of it . Tom of course. Said,t teacher of ethics lets get out of the classroom and go over to the synagogue for todays lesson because he has a lesson on paying for community goods, for taxes. What happened if the teacher and his students went to the synagogue and halfway through the service, they passed the collection plate and a guy in the front row with beautiful robes, the rich guy puts 1000 ducets in the plate. Maybe two rows back, an even fancier guy puts 2000 ducets in the plate. Finally, a gets back to the public row, where the poor people sit in the back, and the story goes that this poor widow dug into this motheaten bag and pulled out a coin worth two cents, and she dropped it into the collection plate, and that was the lesson through jesus christ said to his disciples, verily i say into you, that poor widow gave more than anyone else. Brian what was the point of telling that story in this chapter . Tom it is a basic point about fair, just taxation, that it has to be proportionate to wealth. The important question is not how much you pay, but how much you have left after you have paid your taxes. So if a multimillionaire gives 1000 and a poor person gives 10, under christs reading, the poor person gave more to the common good because it was more of a burden on him. And the lesson for tax policy is that tax rates have to be graduated. We have to ask the rich to pay at a higher rate. And that has been the case with the u. S. Income tax since its first day in 1913. We have always had the rich pay at higher rates. Brian you did a book on health care the last time you were here. When did you decide to write a book on tax . Tom i was living overseas and we were going to the doctor. I have three kids. And we were a little worried at first about going to a foreign doctor. I mean, we are americans. We know we do everything best, right . Turns out, the care was great. The facilities were fine. We did not have to wait very long. And the prices were very low. 1 10 what you would pay in america. And i just got interested in that. I had very good health outcomes. I thought how come they can cover everybody, Better Health outcomes than we have, and they spend way less . I went to my publisher. I said, hey, its a great idea for a book. Im going to go around the world to the doctor and see how they treat you and how much it costs. This was at penguin press. I could see her face. Oh my god, health policy. Those books never sell. But she believed in it. And it was expensive. She had to send me around the world. And it we brought that broke out book out during the debate on obamacare, and americans were interested in health policy. It hit the bestseller list the first week. It really did great. About one year later, the editor called me and said that book of yours is selling like mad, you know . She said im so glad i had that idea, but it was my idea. I said great idea you had. She said here is the new idea. We are going to have a National Debate on tax reform, so look at taxes to see what we should do and what we should not do. Brian when they tell you they want a book like that, who pays the aroundtheworld costs . Tom they give you an advance against royalties, and it is supposed to be an estimate of what i would learn on the first years sales, but it turned out to be a negotiable number, so you know, if you have to go around the world and spend a lot of money to do the reporting, then you can negotiate a higher number. Basically, they pay for it. Brian what is one stop when you went around the world to study tax was the most important for you . Tom new zealand. I went to the world bank and ims and the imf and i said what is the good tax code . Who has got a good one . And they know, and they said go to new zealand. And here is why. New zealand followed the fundamental printable of good taxation, which the economists reduced to four letters, bblr. And that means broaden the base so you can lower the rates. So here is what they did in new zealand. They used to have a tax code like ours, hundreds of exemptions and deductions, and therefore, very high rates. Then, they got rid of all of them. They said your salary, that his is income. If your Employer Paid health insurance, that his income to you. In new zealand, if you get free parking at the company, that is worth 20 per month. They tax you on that as income. Then, no deductions. You want to give to charity, that is great, we are all for it, but we are not giving you a tax break. If you tax everything and give no right off, then you can set the rates very low, so new zealand has the lowest rates on labor income of any developed country, yet they bring in more revenue per capita than we do. So that is really where i saw this principle. Then it turns out, around the world, other countries have recognized the principle of bblr, broaden the base, lower the rates. But thats where i saw it first. Brian donald trump back on december 1, 2016, after he had been elected, had this to say. Clip] video pres. Trump we are going to be lowering our business tax from 35 hopefully down to 15 , which would take us from the highest taxed nation virtually in the world this is terrible for business to one of the lower tax. Not the lowest yet, but one of the lower taxed. [end video clip] brian will we . Tom he often says the u. S. Is the highest taxed country in the world. Mainly, that is an alternative fact. That is not exactly right. A Standard Measure of tax burden is called overall tax burden, and here is what they do. They take total federal, state, and local taxes, add them up, and divide by the gdp what percentage of total wealth. By that Standard Measure, the United States is a low tax country. In fact, we rate 32nd out of the 35 richest countries in tax burden. Where he has a point is the Corporate Tax. Our Corporate Income tax rate is higher than almost any country. Frances is higher. He is right about that. That is a competitive disadvantage for american companies, plus because that rate is so high, 35 for most companies, they spend tens of millions of dollars on lawyers and consultants and accountants to figure out how not to pay the tax. Brian what is the story about the Caterpillar Corporation . Tom caterpillar is a very Good Corporation based illinois. How american can you get . They make these earthmoving machines used around the world. Caterpillar machines last 50 years. And people buy them and use them every day. The problem is, the crankshaft breaks or the plow breaks or something, and because people want to keep using this, caterpillar guarantees they will replace any part anywhere in the world within 24 hours. It is a great part of their business, and very profitable part of their business. The spare parts for caterpillar are designed in the United States. And then they ship them and make a big profit on this and they hired Price Waterhouse cooper to help them cut their taxes. And Price Waterhouse said, why dont you move the spare parts business to switzerland . Very low tax country. And they did not move any warehouses. They did not move many people, they didnt move any parts. They just move the titular head of the business to switzerland, saved them billions of dollars in tax. That is what companies do at a high rate. Brian did they still make the spare parts in peoria . Tom they designed the parts in america. The sales were basically made in america, but they were assigned to the Swiss Company and therefore, the profit was paid in switzerland, 6 instead of the 35 in america. Brian why would the congress allow that . [laughter] tom Congress Allows that because corporate lobbyists have power, and they have written the code. What we should have done i think, is take away all the gimmicks and ability to do that kind of thing, and lowered the rate, and you can bring in the same amount of money. But because the rate is high, it is in corporations interests to hire lobbyists who befriend a member of congress and get this clause in there. And as you know, brian, they hide them. They do not say, xyz corporation does not have to pay tax. They say a Company Incorporated in delaware on october 16, 1913 that would be general motors, but they never say that. They hide them. The tax code, there are hundreds of these. Brian where did the term rifle shot come from . Tom it means attached provision that only applies to one company. Boom. A lobbyist comes in and says my client needs to write off taxes, needs an exemption so they dont have to pay so much tax, and the members of congress do not want to give it to everybody because it would be too costly, so they designed it, they say there is one that says a Broadcasting Company owned by a religious organization south of the masondixon line well, there is only one. But instead of saying the name of the taxpayer, they write that in there. If these really were valid exemptions, if there was a good reason for them, they would put the name in. The fact that they hide the name tells you right there that they are hokey. Brian what is the story on apple . Tom apple is fabulous and at ducking tax. Apple has moved a great deal of their profits to ireland, where it is a tax rate between 2 and 12 instead of 35 . Apple makes its money, you know, from design, from software, from intellectual property. And you can assign that anywhere you want. So they assigned a lot of it to ireland, and then, when you buy an apple product in europe, a license fee goes to apple ireland, and that is where it is taxed. Brian what about google . Tom google, same thing. Google has a subsidiary in bermuda where the Corporate Tax rate is zero, that owns a subsidiary in ireland, that owns a subsidiary in switzerland. So there is a sub within a sub within a sub. It is totally complicated, but cuts the tax bill. Happened whents 35 tax rate. If that rate were much lower, it would not be worth it to pay a consultant millions of dollars to get you out of it. Brian here is the menu write about in your book, a man named steve forbes. Let us hear from him. [begin video clip] throw away the code and put in a single rate your we recommend 17 are generous exemptions for children so nobody gets a tax increase in this thing. You can literally do your tax return on a single sheet of paper or a few keystrokes on a computer. By the way, 40 countries and jurisdictions around the world, places like hong kong are not a country, but they are administering, have variations of the flat tax. This is not a laboratory theory. Clip]ideo president on for that. Tom he ran for president on that twice. He made the cover of time and newsweek in the same week with the flat tax. Brian who else ran on flat tax . Tom rick perry, carly fiorina, ted cruz, several of the republicans ran on flat tax. Donald trump said that it would not work. He said it was a giveaway to the rich. Brian what do you think . Tom the point of my book is, let us look at other countries and see people who have tried these ideas, and i do not know where steve got 40, but 12 or 13 countries have tried the flat rate tax, where everybody pays 18 . It works if you are a former soviet republic with no Capital Investment and very low labor rates, and everybody has about the same income, so you do not need to gradually tax rates. It works for seven or eight years until there is an economic downturn, so 12 countries in Eastern Europe tried it, and most of them had to give it up because here is what they found out. That 18 rate, 19 rate, you cannot set it high enough to bring in the rev you need but still low enough for average working families to pay. You have to raise rates higher on rich people to bring in the revenue. And some of the countries, most of them got rid of it. Some of them have kept it at great expense. Hungary has a 15 flat rate on income tax, and to pay for the government, they have the World Highest sales tax. 27 on everything you buy. Similarly, estonia was the first country to try the flat tax. Steve forbes cheered for them. Way to go. Their flat tax rate i think is 19 now. But their Social Security tax is 34 . Ours is 6. 5 . Brian you mentioned ted cruz. And i want to run a clip of him because he talked about another tax. This is back in early 2016. Clip] video ted cruz the Business Flat Tax is not a vat. Clip]ideo brian what is a vat tax . Tom a valueadded tax. A valueadded tax is a very good idea and just about all economists love it. It taxes consumption, it doesnt tax labor or savings or investment. It is an easy tax for government to collect and hard to evade. So, 176 countries have this, but republicans like ted cruz do not like the vat tax because they call it a money machine. It brings in lots of money for government. If you use it to reduce the rate of the income tax, fine. It comes out the same when youre taxing consumption. Republicans oppose it and democrats oppose it because they think it is regressive because poor people spend more on consumption than rich people. As a matter of fact, both of those problems are handleable. You can manage it. I think we ought to have a vat and use the revenues to lower the rates of the other taxes. This professor at ucla has designed tax plans for 40 countries. He said to me, you know, the vat makes so much sense even the u. S. Congress will eventually figure out the vat is right. Mark my words, within five years, america will have a vat. And then he said, of course i have been saying that for 20 years. Brian well, on that note, i want to run video of you, the last time you were here in 2009, talking about health care care. You made some predictions. I want to see how you did. Tom i would hate to see that. [video] brian one year from now, will there be a Health Care Bill passed in congress . Tom a bill will pass and the democrats with a victory, but i do not think we will get universal coverage, which is the goal. That is a ways away. It might happen statebystate, so five years from now, maybe well have everybody in America Covered . [end video clip] brian that would have been 2014, so how did you do . Tom i was right about the federal law. The past obamacare and the democrats declared victory, and it left 30 Million People uninsured, so it is not the answer we needed. I still believe that the by state the way we are going to get universal coverage. I mean, a lot of big things have happened in american history. In one state, female suffrage, minimum wage laws, interracial marriage, marijuana. And as i think you know, last year, i managed the campaign in colorado to try to pass a single state universal coverage plan. We lost. The Insurance Company spent 8 million to defeat us. But i still think i do not think washington, d. C. , can solve our health care problems, so i think it is going to happen statebystate. New york state has a plan that has passed one house of the legislature. The governor has endorsed it. If it passes the other, new york would come up with a plan to cover everybody. If they do it, the other states will follow. Brian why did you decide to get that involved in an issue in colorado . Tom because i wrote a book about health care. I am just a reporter. You know, an objective observer. It just became totally obvious that a decent ethical democracy ought to provide health care for everybody. And i started giving speeches around the country, and people would say what is a Good Health Care plan . I said he has a cover everybody. If you do, you save lives and money. All the other rich countries do. So i kind of became an advocate. And then a group of people in my state, colorado, put up a plan to cover everybody and came to me and said you run our campaign. Well i believe in this cause. How could i say no . Brian you say 8 million was spent by corporations to stop it. Is that all it took, spending money . To stop it . Tom yeah, our plan we had a state plan that would have cost 25 billion, but this year, coloradans are spending 36 billion on health insurance. We had to make the case that you are going to save money with our plan. And the insurers came in with tv ads, and they were good ads, funny ads, that said our plan is crazy, it is going to cost you more, you are going to be shafted, and that made the difference. We never had the money to get our story out, and they creamed us. Brian would you ever do it again . Not on that issue but any issue . Tom i would run another campaign if there was a cause i believed in. I certainly still believe in universal health care. I now know how we should do universal health care. You want to hear . We had a very detailed plan, a 35page book to explain it. There was a lot in there for people not to like. We need a twosentence constitutional amendment. Here it is. The first sentence is anybody in colorado who is sick shall have access to Adequate Health care. The legislature is mandated to affect this guarantee by january 1 of such and such. I think we could pass that one, and then they would have to do it, wouldnt they . We could go that direction next. Brian are you still reporting for the Washington Post . Tom i write for them, but i do not work for them anymore. But as a daily reader of the Washington Post, im very proud of my old paper. I think they are doing fantastic work. Brian for this book, he went around the world. What countries did you go to . Tom australia, new zealand. I thought new zealand was the marker for a good tax code. I went to canada, mexico, i went to probably 12 countries in western europe and seven countries in Eastern Europe. I covered the waterfront. I went to japan and china and malaysia for this book, so i sa