DOMENICI STATEMENT ON NEED FOR FEDERAL TAX REFORM. DOMENICI HOSTED A TAX REFORM CONFERENCE IN ALBUQUERQUE ON MONDAY.

FOR IMMEDIATE RELEASE                    CONTACT:  CHRIS GALLEGOS
July 1, 1996                                       (202) 224-7082

DOMENICI: TAX REFORM KEY TO GREATER ECONOMIC GROWTH

Conference Focuses New Mexico on Need for Tax Reform

In his opening statement to "The Tax Reform Debate: Exchanging Ideas/Developing Solutions" conference, Domenici said such pro-savings tax code would increase the American standard of living by nurturing greater economic growth and job creation.

"The design of the new tax system is crucial to our economy's long-term growth rate because the tax code is a powerful influence on how we save and consume," Domenici said. "The current tax code encourages us to consume now. A new tax code should at least be neutral."

"We will reform the tax code. We simply have to change this anti-saving, anti-investment system. Doing this will be important not only for New Mexicans today, but for future generations. If our state is to `grow as it goes,' as our motto states, we must have a more friendly tax code," Domenici said.

The conference, sponsored by the Public Forum Institute, was designed to review a number of tax reform proposals, including a flat tax, national sales tax and the Unlimited Savings Allowance (USA) Tax plan authored by Domenici and Georgia Senator Sam Nunn.

Domenici outlined the massive scope of the problems with the current, complex tax code by drawing attention to the impact of the code on the American economy. He said the tax code is regressive in that it imposes a double tax on dividends and savings, which serves as a disincentive for saving and investing.

"A guiding principle of tax reform should be to encourage savings and investment. I believe this will, in turn, create a major behavior modification for Americans and encourage them to save," Domenici said.

"A bigger savings pool means more investment activities, which means greater economic growth, more jobs and a higher standard of living. Every percentage increase in the GDP adds $67 billion to the economy in just one year--enough to fund New Mexico state government for ten years," Domenici said.

Domenici cited Robert Barro, an economist at Harvard University, who believes aggressive tax reform would boost American GDP by three-tenths of a percent per year.

"Greater economic growth of three-tenths of one percent doesn't sound like much, but three-tenths in a $7 trillion economy is a lot of extra prosperity," Domenici said. "Over a 15-year period growth would be an estimated five percent higher than it is now. When America's economy grows, then New Mexicans can expect to see their economy grow."