Dear Friend,

I'm writing to you today to ask you to help me bring a liberating change to America -- I PROPOSE TO ABOLISH THE FEDERAL INCOME TAX.

This proposal will put more money into your paycheck, spur savings and investment, encourage economic growth and strengthen America's position in the expanding world economy.

As the ONLY Presidential candidate who is promoting this idea whose time has come, I need your help to bring it into the forefront of public debate. Please complete the enclosed survey and send me your thoughts -- and a financial contribution for as much as you can afford -- immediately.

Our tax system is broken beyond repair. The government takes its cut out of every paycheck you receive and as a result, cripples our savings, investment and economic growth as a nation.

For ordinary Americans who work hard and are trying to save for their future, the federal income tax is their biggest obstacle.

The Senate is now considering the 32nd major tax reform plan in 41 years. I've been a U.S. Senator for 18 years, and over time I've come to the conclusion that the income tax system does not deserve a 32nd chance.

As long as the federal income tax exists, our tax system will be hampering our economy, impairing our liberty, and expanding our bureaucracy.

We must scrap our federal income tax altogether and replace it with something better -- a system that will give you control over your own money and unleash America's tremendous economic potential.

I hope you'll take a few minutes right now to read more about my plan and then send me back your thoughts by return mail. I've included a postage paid envelope for your convenience.

When you send me back your thoughts I need to ask that you PLEASE make a contribution to my campaign for at least $25 -- $50, $100 $250 or even the maximum $1 000 if you can.

Whether or not you support my candidacy, this tax issue needs to be at the forefront of public debate. Because, quite frankly, our tax system is dragging us down as a nation -- and if we don't fix it now, we'll pay the price later.

Just imagine what your life would be like without the income tax . . .

• No more income taxes taken out of your paycheck -- you keep what you earn.

• No more tax forms.

• No more audits (the only time in America when it seems we are guilty until proven innocent).

• No more need to beg for extensions to pay money you "owe" to the federal government.

• No more worry about exemptions, deductions, marriage penalties, capital gains taxes, or tax estimates.

• NO MORE IRS LOOKING OVER YOUR SHOULDER ON APRIL 15th.

But of course, the federal government still needs to generate revenue. So in place of the income tax. I am proposing a single tax on consumption. You'd pay your taxes at the cash register when you choose to buy something rather than allow the government to extract taxes from your check automatically every week. A consumption sales tax would generate the same revenue as the income tax, and it would not affect social security. The idea is simple and straightforward -- one rate would be paid by all. No loopholes, no special exemptions. Foreign visitors would share our tax burden, as would drug dealers and other criminals who now escape paying taxes. And unlike the income tax, most of which is collected through withholding, a consumption sales tax would not hide the federal tax bite. And the best way to hold taxes down and force the federal government to justify every penny it spends, is to allow you to see exactly how much money the government is taking from you. Not only does our current income tax system gouge individual hardworking citizens, it places a huge burden on those who are trying to create jobs.

I know that firsthand. After my service in the United States Navy, my brother and I bought a substantial interest in our family manufacturing business. When we took over, the business was experiencing tough times. But we fought hard to make money and build capital after we paid our taxes to bring it back to prosperity.

The business is still there today, and employs about 100 people. Even for this small business, each year a team of costly accountants spends countless hours picking its way through the maze of federal taxation. Quite frankly, we could spend that money much more productively on new employees and new machinery.

If we freed our corporations from taxes, we would dominate the globe generating quality goods and services at a low cost -- and tremendous employment opportunities for ALL Americans.

Every American who has ever filled out a tax form knows our tax system is inefficient, complex, and burdensome. But most importantly, it stifles economic growth and acts as a huge drain on our prosperity.

Consider the twin iron laws of economics.

SAVINGS = INVESTMENT

and

INVESTMENT = JOBS, GROWTH AND OPPORTUNITY.

We are taxing the wrong things, and as a result, stifling savings and investment -- which has economically disastrous effects. Logically, what rational system would tax savings, investment, and the earnings from hard work -the very elements that create economic growth?

BUT OUR FEDERAL INCOME TAX SYSTEM DOES JUST THAT!

The government takes its cut of our money before we have a chance to even see it -- let alone save it.

Americans save less as a nation than the citizens of any of our major international competitors. According to one study in 1991, the United States had a net savings rate of 2.3% of Gross Domestic Product -- compared with 9.9% for Germany, and 20.4% for Japan.

But even with our self-imposed handicap, the United States is the economic giant of the world.

Can you imagine the renaissance that the United States would enjoy if you and every other American got to take home all the money you've earned . . .

. . . if you didn't have to pay tax on any of the money you save?

. . . if there were no capital gains tax?

. . . if you didn't have to spend any more time or money filling out tax forms?

. . . if you didn't have to pay the extra $2,000 a year the government now takes from your household to pay for lost revenue due to income tax cheats?

Investment, productivity, real wages and economic growth would explode!

With a consumption sales tax, you'd only be taxed on what you purchase. So any and all money you save or invest would remain entirely free of taxation. Under such a system, investment and savings would skyrocket.

And that would give America a huge economic shot in the arm -- which is something we desperately need as a nation to compete in today's world marketplace and a central tenant of my campaign for the Presidency.

The Republican economic agenda has the nation moving in the right direction, and at the heart of that agenda, there are four vital objectives.

1. We must balance the federal budget.

2. We must cut government spending.

3. We must keep taxes down.

4. We must achieve sustained growth through deregulation, savings, and investment.

Replacing the income tax can be a key to achieving these objectives. No amount of tinkering with current tax or regulatory policy will achieve the desired effects.

Now is the time to act.

Because economic growth has not been sufficient in recent years to create opportunities for Americans to achieve their goals. If we remain satisfied with long-term economic growth at 2 percent or less, our economic position in the world will slip relative to other nations.

Additionally, our budget deficit will be extraordinarily difficult to overcome and parents will spend even more time away from their children, being forced to work outside the home to make ends meet.

I've studied this issue carefully and I've come to the conclusion that only getting rid of the federal income tax will generate the investment needed to revolutionize our economy.

This investment will deliver the strong, sustained economic growth necessary to lift the nation out of the mire of heavy taxes and heavy debt, so that we can realize the amazing potential of our country.

And make no mistake -- the fact that replacing the federal income tax is liberating will be the first criticism used against my proposal.

Some people will object, asserting that we must stick to more conventional alternatives.

But ask yourself:

If we did not already have a revenue collection system based on the income tax, would we freely choose to adopt one? If the government didn't automatically take money right out of our paychecks, would we choose to allow them to do so?

Absolutely not!

Americans cherish liberty -- we don't fear it.

Replacing the federal income tax system is the right thing to do and this is the right time to do it. That's why I fully intend to make this proposal part of the national policy debate.

And I believe I have credibility to make this a serious issue.

Some status-quo Americans doubted I was serious when I went on the David Brinkley Show one Sunday in 1986 from downtown Manila and called for an end to Ferdinand Marcos' corrupt dictatorship.

But soon after, Marcos fell, and a new democratic era was born in the Philippines.

President Carter doubted I was serious when, together with my Senate colleague Paul Tsongas, I opposed his expensive federal bailout of the Chrysler Corporation.

We offered our own plan, which called for concessions from all parties -- including Chrysler management and workers. We blocked the federal give-away plan, and passed our own.

As a result, we didn't lose a dime of taxpayer money, and thousands of jobs were saved.

Three successive Secretaries of Agriculture doubted I was serious when I said that we should sharply downsize the USDA field office structure, which had grown bloated and inefficient.

But after three years of work, Congress passed my proposal to achieve these savings. As a result, more than a thousand offices closed, and we now save hundreds of millions of tax dollars every year.

In each of these cases, I relied on supporters like you to rally and give me a chance to be heard and achieve results.

National political columnist David Broder has dubbed me "The Serious Candidate" for the Republican nomination. I didn't seek that title, but if the shoe fits, I will wear it.

The Presidency is not entertainment. It's serious business. And after two years of Bill Clinton's government by MTV and public opinion polls, I think the American people are ready for a serious President with serious ideas.

The political climate is right for liberating America from income tax. But advancing this plan won't be easy.

The tax lobbyists who profit from our current system will fight this idea tooth and nail. They will do everything in their power to stifle this idea and make sure it doesn't even get a full hearing.

For that reason, I need you to help me take this idea to the American people. As you know, running a Presidential campaign is extremely expensive. And quite frankly, without the help of Americans like you, I won't be able to bring this issue into the public eye in a sufficient way.

I need your financial assistance to help me Get this message out -- so we can save money and expand economic growth in the long run.

When you send me back your thoughts on this initiative. will you please consider enclosing a check for $1,000. $500 $250. $100, $50. $25. or as much as you can afford to Lugar for President?

If you believe the country should debate replacing the income tax with a consumption sales tax, here is your chance to help me take this debate to the American people.

Even if you can't afford as substantial a contribution as what I've listed above, but you think this is a liberating idea that needs to be given its due, please send ANY CONTRIBUTION AT ALL -- EVEN IF IT'S ONLY -- TO HELP ME SEND THIS LETTER TO A FEW MORE PEOPLE.

Literally, every dollar helps -- and sends a message!

You can help me restore the American dream by sending me your opinions and comments -- I know citizens like you have many helpful thoughts to offer, and I like to read them carefully.

I hope you'll send in a contribution to Lugar for President for as much as you can afford today so I can engage this nation in this important debate. I believe that generations to come will thank us.

Sincerely,

Richard G. Lugar
United States Senator

P.S. Please take a moment right now to make a contribution of $1,000, $500, $250, $100, $50, or $25 to Lugar for President and join me in this revolutionary effort to eliminate the federal income tax.