I wasn't I was here in the home and

I was OK or she doesn't

even want to hear

that so soon but it was

we'll work together to complement
each other as research and to try and

national home and see where she works

or you know government service or
it's up for

eight years or five years and

they've been kind of all three sourcing
a project that's Christine grace

he has been active here in
the state of Georgia and

is serving time for this mission there and

special care for her and

Chris is going to talk to us about her
experience appreciate it very much.

I'm innocent I didn't.

This was for you because you're here and

we are taking in enough here.

There are others you can
see that kind of you know

Kate Chris thank you for.

This all started about two
years ago last May and

I got a phone call from the speaker
of the House of Representatives

in at the state legislature asking what
was actually from his staff member

saying he wanted to speak with me and
could you call me later in the day and

of course I said yes and he never called
and the next morning I was written into

a law that said I was going to be on this
council and they apologized and said well

we didn't get the time to ask you if
you want to take your offer you can.

And one of the reasons that
was really surprising and

puzzling is that my background is in
global corporate financial management and

that means I have always
dealt with companies and

to some extent global companies and
local governments but

in the last several decades that
demand in emerging markets so

I will go into like a stone or when
the wall came down the Czech Republic and

talk to work with Parliament or research
tanks think tanks about the idea about how

to get the economy going in particular
understanding companies and

get companies and
corporate investment going in the country.

So you can get so that's sort of
you know you sort of think well

OK I don't even do my own Georgia state
taxes I don't do any of my own taxes so

here I am honest tax reform council.

Having worked in you know basically all
over the world in all these developing

countries emerging market countries and so
you sort of think are OK You know it's my

time for service and
I pretty believe you are SOL part

of my role was representing companies in
this that if we're thinking about economic

growth which is what the whole point
of it was they call it jobs jobs jobs.

If you think about economic growth.

I know about companies I know how
companies interact with Capital Markets.

I know how companies interact
with governments and

so I thought well that is obviously
a big part of the whole picture.

So that will be my role this.

I know I do not want but again.

OK off.

OK So is there a problem problem for
the state of Georgia.

That's the bottom is Georgia.

The dark black line Georgia US G.D.P.
growth since two thousand and two.

I'm going to make the case because we're
focused on tax burden and tax reform so

we're looking at all this from the point
of view of tax that is certainly not

the only thing that affects growth but
you'll see it's really significant and

something that we can
actually do something about.

So here's George's G.D.P. percentage
growth since two thousand and two.

Here are the states with
the highest tax burden and

here are the states with
the lowest tax burden.

Terms of growth rates tax
is clearly important and

we actually have not done more to to look
at if we took the tax burden from Georgia.

You can just imagine shifting this
line up to here we still wouldn't be

anywhere near we would be near to
where the high tax states are but

this is just too big a spread in terms of
the growth rate of growth state product.

If you look at where you
see this is an example.

One of my first assignments was to look at
what other states are doing you will first

want to always compare what
the situation is this is an example.

New Mexico New Mexico decided and you have
states going into two categories one state

one kind of state is one so
type one raising taxes and

that's going to be Illinois California
to some extent Maryland and so

on and then you have states that are
trying to lower taxes and so New Mexico

was one that actually lowered taxes so
here we have the tax rate in Georgia and

that is six percent for
personal and corporate six percent.

It's pretty flat there are some brackets
up to about ten thousand dollars but

pretty flat six percent income tax for
everybody.

OK And then if you look at what happened
here in New Mexico it lowered its rate

down and it got it went from about
eight percent down to five percent and

look at the difference in growth rates and
this is one example.

But you see it state by state you
see when you lower you see it by.

Country by country when I presented this
to the legislature I presented a dumb

number of countries and you just see it
again tax rates are really important.

This is income tax.

One of the things that you're going to
hear that I'm going to say in this session

that I always say is that if you if you
want more of something don't tax it.

Or if you have something you tax
it you're going to get less of it.

This is just simple basic might read
not exactly if you want income and

you want capital gains and you want
innovation you want growth don't tax it.

If you tax it you'll get less of it and
this is just another case of it.

So there's personal income.

Turns out that this isn't
explained by per capita.

And if we look at personally
again personal income in Georgia.

Here we are and
with tax rates corporate and

personal income tax rates
declining in New Mexico.

They're like that again just as one
example and you'll see it state by

state and I'm going to make the case
that what I'm talking about here is not

politics science when we do these studies
they're obviously empirical studies and

this is just fact based science and
I'm also going to say later on that

what when I saw my job entering
into this policy arena.

This Well I had actually absolutely no
idea how crazy it would be but when I saw

my job injuring into it I entered into
with the idea of politics aside I am

a scientist my job is to think about
the most how to create the most efficient

economy for the state of Georgia how to
make Georgia competitive as possible.

B. And all I'm going to bring
to that table is science.

So.

Here is another example.

This is states with without any
personal income tax and so top person

income tax rate is their and look at
the difference in top rate of growth here.

I think this is over ten years and
I remember right.

So personal income tax
income tax per capita.

And population growth so
good we see in the last census we saw

I believe it was eight
representatives leave some states and

get reassigned in the House of
Representatives in the U.S.

reassigned to other states
because of population shifts and

guess what those eight left places
like California and Oregon and

Washington that have high taxes and
they went to low tax states.

So we picked up one representative.

Texas picked up two and the states that
had no income tax ended up picking

up population and therefore picking
up political representation.

So you'll see you see a flow
of the high tax the low tax

states are attracting population
attracting businesses.

Let me just sort of go from there.

So you see the difference in growth
rates can really be substantial So

States with our personal income tax
anybody you know which of our neighbors

neighboring income neighboring
states Florida Tennessee.

OK we have Texas we have Alaska.

OK.

And one of the things that folks say
when you say you know Florida or Texas.

They say well they have natural resources
they have all or they have some china and

tourism and so they can afford
not to have an income tax and

in an article that I wrote
I actually argued that

we had several such advantages
that need to be developed.

One is the port there port combination so
on.

So we can do this we
can do this in any way.

There you are.

And some of the things
that kind of one look at

today is this movement from science.

What we absolutely know about tax reform
and how that gets into policy and

then the part that I had had very little
background I'd always just argued.

I think good science to policymakers and
then counted on them to kind of make

it happen with the idea
that the truth will out and

the you know if it's the good science
it'll actually come through here.

And to be made law.

So could science isolated from personal
interests and political persuasion.

Create legislation that takes
those good scientific principles

draw us on the knowledge that we have and

brings that over here to bring that
through the politics into the law.

Well you know I'm not completely naive and
and

by the way we have seen this recently
almost mirrored exactly in the special

commission that President Obama
created the deficit.

Right.
A special commission because the Congress

couldn't fight these issues
out couldn't deal with them.

So it's really a special commission and
will blame them.

I guess.

So everybody said to me
when I was appointed.

Nothing ever happened.

Special commissions
never get anything done.

And they're just doing this because they
want to put the blame on you if it does

get done and whatever so what they were
trying to do was I think to substitute.

In here the special commission for
the politics part and go right to law and

I think it's really interesting
I'll share with you.

How how they did that.

OK So
this is what I woke up to the morning

after that phone call and it's what
is it House bill fourteen zero five.

And it's to create a system or

process by which tax reform will be
considered and hopefully in acted.

In the state of Georgia.

So it's to create a special council on
tax reform and fairness for Georgians and

a special joint committee and Ga Ga
revenue structure and that is supposed to.

Get the good science into law.

OK I've taken a couple of
key points out of this.

So it has been many years since there's
been a summit systematic study of

Georgia's revenue structure.

But if you know when the last systematic
structure study was done of dirge

nine hundred thirty six.

And I want to be honest.

One of the things that drove me and

really when I mean this was a very
difficult job and in the current code.

Is a statement about sales sales tax for

businesses that says it's either
if you can't see how you go.

You cannot deduct sales tax.

If you buy one of the tractors
with steel wheeled tires.

That you can deduct if it's real tires or
vice versa.

One of us.

But there is actually in our current tax
code which work a pedia tells me was one

of the major technology improvements that
brought us out of the Great Depression

because after before the Great Depression
all the tractors had steel wheels and

when they created rubber wheels it really
enhanced the productivity American any way

it's in there and so I said to myself.

There is no way I'm going to be associated
with something that closes its doors and

leaves my kind on the books I just I would
be so embarrassed if I walked away after

the reform was done and we still had
steel wheels tractors in the reform.

So it had not been systematically
reviewed since one thousand thirty six.

So they wanted us to look
at the tax structure and

basically that's the revenue structure.

So what they were looking at is tax
revenue coming into the state and

where should you draw from what
balance what parts of the community.

How should you pull that revenue in and
the idea that as we perceive it.

We were all told that we were put
in as an excuse to raise taxes.

But they were going to do do do do do and

then they were going to say and
lo and behold.

It's a tax increase.

We didn't go along that we set our
job was not to make fiscal policy and

decide on how much the government
spent our job was to talk about

the structure how those
taxes would be brought on so

revenue neutrality is really important
to all this and it goes on and

it gets into the politics of what we were
looking at changing the structure of how

revenue was being brought on to this into
the state and I just taken parts of this

of the numbers well so
study the current states current read.

The structure.

Now after we make our
recommendations which were

surrounded by leaks and
requests for what do you ask for

the media asks for the open records.

Then I mean really.

And we had all talked about
the process here in a little bit but

after we did that we were
going to put in a proposal and

the legislation would be
referred directly and only.

To the special joint committee
which is made up of the House and

Senate leadership.

OK so
we were going to report directly to them.

And then they were going to write.

Legislature legist legislation
that was something gets here or

later is essentially our recommendation so
they weren't allowed to change it.

But we just put our recommendation into
legislative language and vote up or

down so we reported to them they

as the joint committee put it into
legislative language and voted up or down.

So does that make us for
your politics right well we did so

during the concert during our meetings
constantly throughout the six nine months

we worked and six months worked out
we paid attention you know is this

if we actually do this is this going
to actually bring the whole thing down.

But we would always say no no no we're
doing principles we have we set up

principles in the very beginning we said
going to follow these principles and

everything we recommended we went
back to the principles and so

does it meet that principle.

And then you know let somebody else worry
about the rest of it was supposed to

be an up or down vote.

You know noticing that someone like
the president's special commission on

the fiscal situation budget has
that same kind of thing where they.

There's a limit to what you
have to put in the thing and

you either accept it or don't.

If you don't there's consequences.

OK so

there were initially three economists
appointed Jeff Humphries is the.

Receive George and we're hoping to
have lunch with your super guy.

Roger Tucker over Mercer myself and later
the at a day show quest of Georgia state

now Dave is really essential because this
comes up later to the state government.

Whenever they have a bill that
they're pushing through the system.

They have to do a fiscal
note on that bill.

And if this could now it has to say what
are the consequences for tax revenue.

So they do something and

they'll say well this for
the budget the spending over this.

This is what will happen to taxes and
here's the result so

they produce hundreds of fiscal notes and

it's one group run by Dave show course
at Georgia State who does that.

So I'm going to argue it was a monopoly.

The information flow into the committee
and into the legislature.

I'm also going to argue here that
they are using old technologies and

not taking advantage of big data and
big data set type issues and

that's really what created.

The whole problem I think.

Because they simply weren't able to
respond so then we had Governor do have

a story about him and Mitt So
Miller couldn't join us because he was

ill somebody from Georgia Chamber of
Commerce independent businesses for

small businesses which is essential and
as you may not know small businesses.

Almost all of them file their taxes not as
corporations but on personal income tax.

So when you talk about personal income tax
rich people you're primarily talking about

small businesses and
small businesses hire seventy five to

eighty percent of
the people in the country.

So we have that group is really
the job creators engine of

growth this small business.

OK And then there were two other other
people appointed there was no lawyers no

lawyers this one accountant
where she would It

was just absolute wonderful a guy from the
farm bureau who's become a good friend and

taught me a lot about agriculture and
steel will tractors and so

on and this is the one I'm never quite
sure about this chapter she'll stay.

And until July first two thousand and
twelve.

So I don't know whether it's
on the council or not but

you know nobody said we weren't which is

interesting because of the open meetings
rule we can never have more than a quorum.

So no more than five of us can ever be
a room in a room together at the same time

without it being previously advertised in
which case five hundred people show up

in all the T.V. cameras so
we do have to kind of pay attention to it.

OK so you're going from our science
policy politics to the law.

OK all of science versus new science

fundamentally what

we need to do is to think about if we

suggested a change in
the entire tax structure.

Not only what is that going to do to tax
revenues and I've always said we said we

were not setting fiscal policy or spending
policy we're going to be revenue neutral.

So literally on my spreadsheet.

Web site thing I have the revenue
that we're going to have without any

text changes so that every tax change
has to balance something else.

So not to be public at all but

right now actually yesterday I
was doing one that would look

at a two percent sales tax increase and
a reduction in income tax to three and

a quarter percent and
then a low income tax credit and and

so all of it is balancing to
this revenue neutral same

amount of taxes coming out of everybody
but it's all balance the more from this

group less from that group more from
this activity less from that activity.

OK.

And so the authority and

the accountability was with the people
who did the state just going to start.

State.

They're not supposed to say Georgia State.

I'm supposed to forget
the president didn't want me to.

Explicitly So the other university that
is the physical they have the contract.

So our fiscal authority for
the for producing these notes and

producing the studies that have
authority is in one place.

And they do and

that's an interesting question because
they have a traditional economics model.

I am going to guess it's twenty
years old and they use S.P.S.S..

And they modeled the system
as an economist would.

And that they modeled it.

You know they have this you know this
coefficient affects this coefficient.

And so they put numbers in and

can you imagine having built
this model in S.P.S.S.

model and then you're going to change
something in the struct basic structure.

You know I always said who's going to
know that you've got all the right

code who's going to know that you've
got the right answer and in fact

on about a seventeen
billion dollars budget.

They made errors to the tune of about
four billion throughout the process and

part of that you will see that the process
still has not gotten out of committee.

Part of the reason was that
the legislature completely lost trust

in the ability of the community
to give them good numbers.

No wonder I mean I would be walking
along with myself I'm going to get it

OK OK four hundred million
They're all that's good.

Now we lost two hundred million about what
they were up six hundred million honestly

and all of this was.

I mean we know the future is uncertain.

And so on.
However it was errors in the calculation

because they used the old science.

OK And so I want to talk about that and

I have I have right here and
I actually might do that on myself and

I suppose I have tax returns for
everybody in the state of Georgia.

And I'm my own model on here that
is a more of a big data model and

have successfully gotten
the state to broaden

a base from which it gets data and
gets advice.

So we're not going to have a monopoly
anymore the state's going to get a range

of estimates like other some
other states do and getting it so

that was one problem is that we're a very
frugal state and they're using very

old models and you can just see how they
would make one mistake after another and

in fact they did to the tune of
billions and billions of dollars and

that that generated tremendous
distrust of months legislature.

OK So that brings up the question of
issue to research your science that

you're delivering the results of the state
is it going to be a monopoly one group or

do you get some kind of
distributed authority and

I'm going to take it even farther and
say that what I have argued is that we

need to get this out to the public
because with big data and

the dispersion and comic to video and
the dispersion of analytical ability.

People can figure this out for themself
they can do a lot of it for themselves and

that's what I'm working on right now.

OK So science broadly stated says.

We need to tax broadly.

And less deeply you will
hear again if you ever

in fact tax reform is the big new thing.

Now the president just came out
with a new thing this week and

all the candidates are coming out with new
things and so you will hear several times

on the news broadly based lower the rates
broaden the base lower the rates and

everybody really greased on that but
I want you to point I want to point out

that's really a trade off for everybody
because basically if you broaden the base

fundamentally that means some things are
going to tax the didn't get tax before.

Hello.

It's really hard.

And then you're going to lower the rate.

So I would give you an example.

When we first put our our plan out there.

There was a writer in the A.J.
see that went into Publix.

And we had argued that we
should extend our tax to

cover groceries right now the state
sales tax which is four percent.

We pay more in Atlanta because we
keep adding these other taxes on top.

But it's four percent.

Six or
seven years ago it covered food also and

undersell Miller he said was the worst
mistake you were made under seal Miller we

took the sales top tax
off groceries groceries.

So that's

six hundred million dollars that's
maybe a percent off your income tax.

OK so the A.J.C.

report goes into Publix and he says Do
you want to pay more for your groceries.

When he gets four or
five people say no I really don't.

And he put that in the A.J.C.

So I called him up and they said not for
your game right you go to the bank.

And ask people at the bank whether they
want to have their income tax cut by half

and so for
a family of four you're talking about.

About fifty dollars more
a month in groceries and

the possibility of having income
taxes cut by half state income taxes.

So there's your tradeoff.

There is your tradeoff.

And you know you think.

But it gets it gets complicated.

I learned a lot as we went
through the rest of this but so

there's tradeoffs like that for everybody
and some more important ones coming up.

So I said going to ask
the question you know if.

Do you want a fifty percent cut
in your income tax rate and if so

are you willing to pay fifty
dollars a month to get it.

Plus you're now unemployed.

There are probably going to
be a lot more jobs around but

in the base lower
the rates what that does.

In terms of an economist is
it creates less distortion.

So prices signal the allocation
of resources and you

know we stitch that again and again and I
think we kind of let it roll roll past us.

But what you really want to
have in your state is every

decision maker every buyer or seller says
here is the economic environment this

tells me what I should do they don't want
that you don't want them to go on and

say but I can get a better tax rate
if I do something else instead.

Thank you want to stick with it.

This is really the right.

To do and not have that if I do this I'm
going to change my I won't invest here all

invest there you just don't want that
because it create creates inefficiencies

we call a good part of that.

What it might.
It's not some cost.

I'm going to miss the triangle.

But weight loss their weight loss.

So right away.

I'm sitting here in these legislative
hearing some saying dead weight loss I bet

if I use that term everybody in this
room is going to completely shut down so

I had to go back and
say well what you know what

we have to gain here is something
that hasn't been taken away from you.

It's something you don't have
now it's a lost opportunity.

It's sales and
prices that would have happened.

But for
the intervention of the tax system and

that's why we want to get the tax
rate low and spread over many things.

So the individual distortion is not so
bad and

that is basically what releases
the economic growth that's there.

That's been taken away or

we never was because we had the system
since one thousand thirty six right.

OK so here.

So we go through this and

this is our website special counsel.

And so

we started off we had meetings that five
hundred people came to this presentation.

Here's my tax reform in other states.

I put some of the slides in and
we had to post it.

It was public religion really had
five hundred people and reporters and

and so on.

Every time we met and
then we did fact finding sessions

where we were just this is
the place where I fell in love

with figure Georgia literally we went to
all these communities and we would have a.

Big table with a big tablecloth
up in front high and

the taxpayers would come up and they'd
have to give us a type statement and

they would make testimony about their
particular situation and why they wanted

us to understand what we did with taxes
was going to affect them and one day

I don't remember which one it was
I see this man in the background

dressed nicely and he's got another man
with a misspelling this teeny little baby.

And he comes up and he says that I'm
sorry that I have my baby here my

brother in law is watching her but
my wife she's six weeks old.

My wife is having her check up and

so so he says I'm I'm a farmer we have
a family farm we have one employee.

We have twenty two head of cattle and
one hundred twenty five chicken houses and

he gave us a little income state and
showed us his cost and

he said if you change the tax to
the sales tax exemption for fertilizer.

I will lose my family business and
I could see.

Well it's like you know it's like
eighty percent of its costs.

I looked at it and you said he's
not lying to me I was actually so

the whole idea that you're in
there making these decisions but

you're actually meeting these people
telling you what the situation is I have

story after story like that and
just just such fine smart people.

It was really wonderful to learn
that much about the state.

So so we did that we collected
all that information and

area that I particularly worked like
that to show you this endorsements.

You'll see a lot of the egg
indorsements there and

that was really getting the agriculture
mining and manufacturing.

And forestry groups together.

To look at sales taxes and

come up with a very simple
simple quote I challenge

them to put it in one sentence which they
ended up doing from hundreds of pages.

Because the hundreds of pages where
this example this example that.

But they all said basically one thing
I think you can make it all basically

say this one thing.

So we got tremendous endorsements and

that farm bureau is about two hundred
thousand families in Georgia.

So I sort of figuring this is going
to push it right over the top or

you know it was you know

we didn't get it through so

evidently not enough there to
streamline powerful features they are.

Some of them extremely powerful I
think we don't have a Chamber of

Commerce there or do we.

I think that could have
come in manufacturing.

Yes.

Yeah well we did we talked
about with the sales tax for

businesses changing we now tax
energy consumed we have a sales tax

on energy consumed by manufacturers and
we're losing businesses like crazy.

We also have a great deal of our
population is on the border border

of other states.

So our share of population a lot of us
on border so it's very easy for for

companies to just cross over and
go to the other side.

So we lose them.

If we're not really
completely competitive.

And there's a caterpillar
story about that too.

So let me see if I can get back here.

OK it's the No it's OK but

we're minutes from we're minutes and
then I can do it.

OK So two weeks ago shifting estimates and

forecasts untimely delays
by unknown University.

You are sitting in
Atlanta not Georgia Tech.

OK forced taxpayer sensitive
Georgia House to forgo.

Consideration of the important
tax reform and job creation bill.

Rapidly.

Changing information breeds
suspicion complicated plan so

we recommended a plan that
everybody who looked at it said

my gosh that is like the perfect
tax plan it is the most efficient.

It is what a scientist would design.

And what was interesting with this is so
it.

It was in committee.

I mean we're just thinking
about it all the time.

It never was able to
come out of committee and

then they sort of started revising it and
looking at it again and so on.

So it just it just didn't go anywhere.

However there are proposals out there.

So last Friday at four.

I got a phone call after the caterpillar
announcement in the morning.

Caterpillar announced they're
going to put a big facility for

two hundred jobs near Augusta and they
drove the county commissioners here and

police cars and they get here for
the governor's announcement ten.

Well somebody realized that they
promised him this tax cut on energy and

manufacturing that is part
of our tax reform plan.

So four o'clock I get
a phone call tax reform

is hot again we might be able to
turn around within a week or so

it's that's the thing about the
constituencies changing all of a sudden if

we have to admit that we really aren't
looking like we're going to make that one

change which is one of the ones we had so
it's hot again and

I don't know how much will be reading
about it but we have a substantial because

the constituencies really
are the legislators themselves and

you kind of have to see really
a political climate you have to go on.

Yeah yeah.

And some not powerful and Dan Dan right.

So it's a lot more complicated than
a science would hope it to be but

a scientist would hope it to be OK So.

What I discovered.

Part of the reasons part of the reason
here is that we have a system so

that there are tradeoffs for
everybody but everybody.

These tradeoffs are affecting
everybody else's tradeoffs.

So it was not easy to model
it's not easy to think about

and let's see the Baptist
church came out against it.

Much of the Tea Party
came out against a couple

big that they just they flood these guys
with ten thousand phone calls and letters.

In a day and so
that I mean if the Congress

if a state legislator gets ten thousand
letters they're going to stop.

Or go right.

So my brother who.

Repairs appliances for Sears and drives
around thinking all day he said to me.

Did you notice that you
have both the left wing and

the right wing are opposed to this policy
which is really an excellent policy.

What's going on.

And so I've spent a lot of the last year.

Going out and talking about this and
talking about and

just explaining the policy.

Why base and low rates and
a big part of the problem is.

So it's really turning out to be.

Explaining these things deadweight
loss get more of what you don't tax.

Trying to explain to the grassroots
who are now activated.

And they have meetings and
they get together and

they'll turn out those ten thousand
letters like you wouldn't believe.

Trying to explain to them.

The new new interest groups I
guess that every word emerge but

trying to explain to everybody.

What the science is
telling us about taxes and

a big part of the problem is trust and
constituency.

So a lot of groups don't trust
anything the government can do and

as I stand opposite professor I see some
one to one meeting there are three women

in the front row and they hated me.

They hated me until I said you know I
don't trust the government either and

then they start small.

You know but they just figure everybody's
out to find some way to raise

taxes on them or to hurt them or
take more from them.

And they're just not going
to listen to anything.

So we.

That kind of dressed distrust out there.

So the A.J.C. article I read before said.

People are going to have to
prove it to themselves and

not only that people have to play
with this that they can see it for

themselves but
not only that we can do that.

And here's why.

Just quickly show you what I'm working on.

OK so I said that I have and

I am using not sophisticated
technology but Big Data Technology.

So here are all the tax returns for

everybody in the state of
Georgia personal income tax.

They're all it has to be
very confidential and

private they're all grouped in groups so
I can't identify any individual tax payer.

I had to pull major strings to get this
but a couple other people have it now.

So now when the legislature wants
me to check with all of us.

To see whether we're on the same ballpark
so you can see just you know thousands and

thousands of this one is
joint tax payers find jointly

here singles here is married filing
separately here is that a household.

OK so what I have been working on and
just keeping organized is a major

issue here is a simulation I did yesterday
three and a quarter percent flat rate.

Limit itemized deductions.

These amounts single These
would be personal exemption.

Dependent exemption and

I didn't put it here but I have a type
with a tax create credit in this one.

So then up here.

I see if I find one that's
more of the analysis.

These are mostly being copied over.

But I think best to show you here.

So here is the underlying model where

I have all the tax payers
types filer types and

then all the possible things you could do
or maybe they'll think of others that we

have to put in here yet but all the things
you could do to those tax returns so.

Fundamentally this goes and
recalculates everybody's tax return.

I push a button I change one thing it
recant calculates everybody's tax return

and the other university in Georgia
is still using their big S.P.S.S.

program that has got all these
interlocking equations and everything and

I'm coming out to within about five
percent of them and when they're off.

It's almost always they're missed it
is always their mistake they've done

something they haven't
calculated an equation.

So the next plan here is to take this and
take the findings So here are.

I've compared the simulations for
various approaches so

what I came up with the tax
low income tax credit.

We were talking about yesterday and
I guess the number is not here.

I think it's what I thought I put it down
here and there we go lower income tax

credit by filing Type two hundred
seventy eight million dollars.

OK And so
then I sent that in the small yesterday

actually to some of the guys of
the legislature but my point is that this

is now what I am trying to do which I wish
I could find a Georgia Tech is I have

a website and
I would like the website to query

the state of base because I can't give
out this model for a number of reasons.

I certainly can't give out the data.

So I would like somebody
to come come in and

be able to slide from three percent to
four percent to five percent or check.

Yes itemized deductions or check this and
check this no tax on food whatever and

have it come up with tradeoffs.

So everybody could play with it and
see what the tradeoffs were for

themselves and everybody could say tax on
food that's fifty dollars a month for me.

Geez that's going to lower tax rates
by half and if I look at other states

that means that we could get our
employment rate down by two percent but

I think I think and this is the kind of
point I want to make about public policy

and science is I think we're in
a realm now with distributed.

And I mean people citizens are out doing
this stuff people call me all the time you

can't you tell me this
number can you tell.

That number of people do this is not just
us anymore but I think with all this

distributed analytical capabilities
out there if we really want to move.

I mean get out of here if
we really want to move from

biggest data S.P.S.S. version grassroots.

OK.

If we really want to move back
to where I hear science policy.

If we really want good
science to go that way.

We can't use the established routes.

Especially if you're working not through
agencies but directly as I would but

if it's going to get passed by the public
public's going to have to understand it

and they are at the point where
they're just not going to vote for

something I understand.

But we can make them understand it and
I think it's going to take some speed

work here but I'm doing a lot
of other people are doing a lot.

And this website once I've got one up and

I've got a plan but but
giving it to the state legislators so

they can just run it and say OK if I
do this I get this much I do this but

I'm going to get the whole idea of trade
off which is what they don't get now.

That's what's stopping them.

Now they go your taxes will go up.

My gosh we shouldn't do that.

So yeah but right.

So that's right that's really what I want
to say what I learned about this whole

process is that we have an opportunity as
scientists and it's basically teaching or

marketing or
whatever you want to say thank you for

me so

I'm going to start with you and
I would I just it's.

It's been a tremendous experience
it's really hard work.

I don't know that I would have
could have done anything different.

I think this is you know.

Well I would do you know what do you.

I have at my back.

You have no idea how many people I can
call it midnight and say I've a meeting at

nine o'clock I need this and they get
it to me many many groups have been

totally wonderful about doing that but
they have the data they have the studies.

I mean so and I always say to them a lot
of think tanks and others I say you know

you think you're giving money just giving
money but in fact what you're doing is

on the off chance that somebody who
actually really cares about real science

gets in a situation like that you're
paying money to provide people like me

with ammunition I need nice meetings
because there's nothing that works like

getting out that you know the study for
instance corporations raise taxes and we

are here in economics about whether that
means they're going to increase prices or

not you know if they do hire the reserves
at recent Federal Reserve study

corporations raise taxes you raise taxes
on corporations they cut higher and

you get this and we know in economics
we teach well they could do this or

they could do this or they could
do this and it's Imperial what is

they actually do it's empirical what
they actually do is cut higher.

So yeah there's been a lot of you know
it's important wasn't really important for

me to have a really strong
research community that I

really trusted that I knew
had really good data.

Behind me but there was no substitute for
the Georgia data.

Would I have asked in the beginning
to have the data myself and

begin working out.

You know just when I didn't really
know I guess I sort of trusted that

Georgia state would have
done an honorable and

reasonable job of dealing with it and
it wasn't till later that I found I mean

I kept discovering these things I said now
that number doesn't sound right to me and

then you know it's off
by two billion dollars.

So it was that sort of thing where
can you run it again for me.

Well it'll be a week.

You know and then I'd beg and plead and
we were all doing this but but to be fair

to them they're running this big what
I think is outdated methodology and

outdated approach to what's
basically data problem.

And so they were kind of caught
in the old way that they did it.

So no I guess I just would
have been I don't know and

I don't think I would I think differently.

Actually I did I did for

the first presentation Governor Perdue sat
next to me because he was on the committee

and I started off with a quotation
from Thomas which was something like.

The first rule of economics of scarcity
the first rule of politics is to ignore

ignore economists and
probably should have started with that.

You know but but

it's true you know we were saying it's got
this is how much money you have we can it.

What we can do is tell you how to just
structure to bring it on efficiently but

you know.

Anyway whether

you

will

but

it doesn't

help them very much but
one thing it really does

help them because it to the extent that it
goes through and reduces unemployment but

maybe the difference likely to be
a difference between a job and

not a job because those are the people
that are getting hit with unemployment.

But you can't say that to them.

I mean it's.

You know what we need
to understand that but

the Low Income Tax Credit that I had in
there which this thing would shut up.

OK.
No I don't want the low income

tax credit there we've gone and
looked at how families at various levels.

How much they spend on food and
try to put in a tax credit to correct for

that we also went in
the dependent deduction.

And we changed the dependent induction.

Now I will go back to my spreadsheet but

you can see I have married
head of household.

Well let me do go back
that to that what I'm

going to tell you is one of my most
favorite all time students who is doing

what I want and
I close it down here we go.

He's doing a masters degree in statistics
and he just approached me for a project.

So what I just asked him to go ahead and

do is since I have this now when
I let me just show you how it's.

Headed figure out initially
how to get it sorted.

So I have how many returns in
each category for that category.

What's their federal
adjusted gross income.

George adjusted dependent
exemptions personal

exemptions their itemized deductions.

How much they paid in Georgia taxes tax
credits and sat and so on and then.

It's going to do so there's one
example I guess maybe this does

this read from somewhere else doesn't have
anyway yeah that reads from another table.

OK But you see it was so
what I can do and what he's going to do

is going to go through and
sort by certain income classes.

So what our plan is here.

Is to be able to go ten to
twenty thousand a year twenty

to thirty thousand a year thirty
to forty thousand a year so

we will look at what will be the change
in taxes in each group and then

because I have this model you can see how
I could I also know how many dependents.

So I can find single single had
a household or had a household with three

dependence and that if I'm going
to change the dependent doctrine.

Then I can change how
they're hit with taxes.

So we really work trying to do that.

But also the other thing
I it's been a issue with.

Legislature I guess is they just they just
don't want anybody having taxes increased

and and I said well there's one way to
accomplish that anything at all but

the fact is you're not going to get
a trade off unless unless you do.

Everybody's tax individually for them so

they don't just pick what
you paid last year right.

You can't somebody is going to
have to pay somewhat more now.

I always look at that
if the benefits are so

great to the community a large number
of people should pay a little bit more.

So it doesn't hurt anybody.

But yes that's the next stage and speaking
to the legislators once we are going to be

able to give them this by income bracket
they will be able to argue those issues

and talk intelligently about what it's
going to do to various groups over

the week or

more that

is the little bit

you know we're going to hear

it actually I know you

are

every week.

You're asking them to
invest in the community.

Even though you're asking them to
pay fifty dollars more a month and

the community is going to have more jobs
and there's not a direct You know so

now other quote that I use is
tax reform means don't tax

me don't tax you don't tax me
tax the guy behind the tree.

So it's always put the tax on
somebody else but it sounds.

In a word.

What has to happen is that the community
is they've got to understand somehow that

what you just said the trade off that
they're going to have to give up a little

bit and
that there are games out in the future.

So I'm sorry go ahead.

Nothing really like

either that or Caterpillar will come in
and say do it but we have really we have

been making you know I think I hope I feel
like the groups that I grew up talk to

they come around after they decide not to
hate me and say OK I understand I get it.

I understand this is good but I think that
putting in their hands a tool where they

can see what it's going to do and how it's
going to affect them and they give them

more of a sense that they are not relying
on some academic to do an analysis and

shove it down their throat.

They have actually engaged in and
participated in it themselves.

So that's the next stage
which we're close to

the will

be using and
if you met earlier that's exactly right.

That's what they say but

that's exactly right thing that

we were so

tell me how we can reframe but
that is exactly the problem.

I mean we have put in you
know you cannot do this

we tie it to the budget
can't be increased.

So you know the Ga Ga has
a balanced budget amendment.

Governor puts in the budget that's it
that's how much money we raise and so

you can put in a contingency here that
the government could not spend more money.

Therefore your taxes won't go up.

Therefore we've we've stopped
them from doing that but

that still doesn't get through
people still don't trust it.

They'll find some way.

To take the games just

in the way that you say

you know you know I

am hearing more and more legislators come
to me and say they are so disappointed

it didn't get out of committee because
they were so ready to vote for it.

And you know there is a lot of support and
all that.

So I get a lot of that what kind of help.

But what's going to happen which
is really interesting is that.

If we have a new administration
in a new house and

senate they are going to they have
a tax reform proposal already put in.

And it's along the lines of this but
probably what will happen is that state

taxes won't be deductible anymore which is
me in the arse are six percent difference

between Florida and us now is really like
for something because we can tax deducted.

But it's going to go up to six.

If it's not tax deductible and

you know what's happened in
one thousand nine hundred six.

None of the states got ready for
it and so the federal government

passed a big tax reform and states all got
hit because the states were ready for it.

So that's what you know that's what will
happen but probably you know there's

a really decent shot here that because of
what happened last Friday and Caterpillar

is going to say you promised us that you
would do this when we got a proposal.

I did the numbers yesterday.

I will say I was working with some people
in D.C. working in modeling groups in D.C.

and some of them had been with
the Congressional Budget Office and

House Ways and Means for years and
years and years and Molly and

one guy was taking you through all the
history of tax reform in the country and

telling stories about how it happened who
said this and the end of it I said well

I'm getting a lesson that first of all tax
reform is difficult but it only happens.

If you put men in competition
over something and

give one of one of them a chance to
really beat the crap out of another one.

Then tax reform will get through but

it wasn't really that one of the ones
you said just this guy said Can we beat

him if we do this and then our analysts
we've done all these numbers and it.

Our analyst said yeah you can beat him
if you do this when it went through so

politics not my thing but thank you.