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August 02, 2004

Eliminating the IRS

By Jim Dallas

Drudge:

A domestic centerpiece of the Bush/GOP agenda for a second Bush term is getting rid of the Internal Revenue Service, the DRUDGE REPORT has learned.

The Speaker of the House will push for replacing the nation's current tax system with a national sales tax or a value added tax, Hill sources tell DRUDGE.

Continuing...

"People ask me if I’m really calling for the elimination of the IRS, and I say I think that’s a great thing to do for future generations of Americans," Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.

"Pushing reform legislation will be difficult. Change of any sort seldom comes easy. But these changes are critical to our economic vitality and our economic security abroad," Hastert declares in SPEAKER: LESSONS FROM FORTY YEARS IN COACHING AND POLITICS.

"“If you own property, stock, or, say, one hundred acres of farmland and tax time is approaching, you don’t want to make a mistake, so you’re almost obliged to go to a certified public accountant, tax preparer, or tax attorney to help you file a correct return. That costs a lot of money. Now multiply the amount you have to pay by the total number of people who are in the same boat. You can’t. No one can because precise numbers don’t exist. But we can stipulate that we’re talking about a huge amount. Now consider that a flat tax, national sales tax, or VAT would not only eliminate the need to do this, it could also eliminate the Internal Revenue Service (IRS) itself and make the process of paying taxes much easier."

"By adopting a VAT, sales tax, or some other alternative, we could begin to change productivity. If you can do that, you can change gross national product and start growing the economy. You could double the economy over the next fifteen years. All of a sudden, the problem of what future generations owe in Social Security and Medicare won’t be so daunting anymore. The answer is to grow the economy, and the key to doing that is making sure we have a tax system that attracts capital and builds incentives to keep it here instead of forcing it out to other nations."

Although such a goal would be noble (and major tax reform is an issue that ought to be raised, as I have noted, Atrios pretty much sums up the reality of the situation:

The thing about those who advocate replacing all federal taxes with a VAT taxes, they almost inevitably lie about just about everything when they're advocating it. Any changing tax system needs to start with what it would take for a revenue neutral change. They always set the tax rate too low, often obscuring it by calculating percentages rather weirdly (say, if the total price including tax is $1.30, and the price without tax is $1.00, they call the associated tax rate as ((1.30-1)/1.30)= .23 instead of the .3 that we normally think of it). They claim you can include progressivity by exempting the first $X worth of purchases, ignoring how this would require a massive increase in the underlying tax rate. They pretend compliance and enforcement costs simply don't exist (abolish the IRS!). And, they exaggerate the overly impact on the economy which serious studies find to be at best a tiny bump.

The core to what Atrios is getting at is, I think, that the Republicans do not have the credibility to make these sort of changes (for about the same reason that Social Security privatization is DOA).

Should this develop as a major campaign theme, I hope that the Kerry/DNC response is more nuanced than "tax cuts for the rich!" Chicken Little-isms. Rather, I'd like to see them advance an alternative tax reform plan and then question the honesty of the GOP.

And let's face it, is it not abundantly clear that Hastert, at least, has not totally drunk the "abolish the IRS" kool-aid? And knowing Bush, is there any doubt that he would not whole-heartedly support a war on the IRS, even if all the evidence justifying said war was bogus?

Part of me also suspects that this is a trial balloon being floated. But if this does come to fruition, this is a sign of desperation on the part of the GOP (a sort of Hail Mary pass to shore up support among fiscal conservatives).

Posted by Jim Dallas at August 2, 2004 02:00 PM | TrackBack

Comments

http://www.texasgop.org/library/RPTPlatform2004.pdf

"Tax Burden Federal Tax Reform - Federal tax reform is required and any reform should support free enterprise, economic growth, be simple and fair and support job retention in the United States. The Internal Revenue Service is unacceptable to U. S. taxpayers! The Party urges that the IRS be abolished and the Sixteenth Amendment to the U.S. Constitution be repealed. We further urge that the personal income tax, inheritance (death) tax, gift tax, capital gains, corporate income tax, and payroll tax be eliminated. We recommend the implementation of a national retail sales tax, with the provision that a two-thirds majority of the U.S. House and U.S. Senate is required to raise the rate. Such reforms will encourage investment and economic growth. Such a sales tax plan must ensure that no one in America pays taxes of any kind on the necessities of life, ensuring opportunity and quality of life for low- and fixed-income Americans. We believe every tax at every level should be a separate !
and clearly visible billing to the taxpayer, regardless of type of tax, and of calculation method, so we support tax visibility in all forms."

Posted by: DeadDogDemocrat at August 2, 2004 04:48 PM

Hastert is a complete idiot. He is little more than a stand-in for Tom DeLay.
No shock that part of the TX GOP platform ended up in the Speaker's book.

Posted by: Tim Z. at August 3, 2004 02:10 AM

An interesting idea, but another thing I doubt those backing this plan have not considered is the job loss of many accountants. There is sort of a cottage industry that has developed around taxation,m with CPA's and personal accountants who are dependent on the people being confused by our tax system.

If we were to totally change the tax system in a way that got rid of the IRS (wouldn't they still be needed to monitor the new way we'd collect money? I mean, humans are still humans and people will still figure out ways to cheat, right?), you can bet that the accounting industry would be one profession the GOP would lose forever.

Posted by: suhr_guy at August 3, 2004 07:34 AM

Last we week we got mailers from our new (thanks to redistricting) congeressman, Culberson TX-7th, where he self-rightiously proclaimed that his number one goal is to eliminate the IRS. Not terrorism, or child health care, or abortion, or gay marriage. No, his foremost priority legislatively is to eliminate the IRS.

Posted by: grnwayrob at August 3, 2004 05:17 PM

As Wonkette says "stroke the base, stroke the base". Hastert et al have to understand the the chances of eliminating the IRS are zero - far too many corporations giving money to elected officials depend on the complexities of the tax code. But all this stuff sounds so good to the uneducated voters who make up the base of the Republican Party.

Posted by: Dennis at August 4, 2004 06:44 AM

In response to suhr guy's comment: The national sales tax in place of income tax is a fiscally conservative platform, which is appealing to accountants. As a CPA, I can tell you that this type of tax reform is a good idea for our country, and it is being well thought out and researched; it will not ruin accountant’s support for the GOP. There will be plenty of accounting jobs created as a result of the transition since there will be a need for compliance testing (as you mentioned – somebody needs to check on the companies collecting the sales tax), and finally accountants will be able to perform their jobs without having to find the very fine line between integrity and obeying the law and pushing the envelope on behalf of their client. Many of todays accountants are not involved in tax preparation anyway; most are in business management consulting, financial analysis and management and even personal financial management, since individuals are finding less and less time these days to manage their own finances. In fact, many so-called “tax preparers” that work for companies like H&R Block aren’t even CPAs or accountants. They go to a training class on how to input data into a computer, and then shoot out tax returns in quantities by the minute. Their pay isn’t much more than some retail store manager’s pay. Furthermore, TurboTax and other software products present just as much of a problem to the tax preparation field as tax reform. More and more people are finding out how easy it is to do it yourself. So I don’t agree that the GOP would lose the support of the accounting profession. In fact, most accountants are conservative in nature and already back the GOP’s fiscally conservative policies.

Posted by: HBB at September 5, 2004 02:37 AM

As a home business owner, I realize that there is a huge need for tax reform. Here is the problem with the current system. 1. It is way too complicated. 2. It supports Large companies and stifles independent business owners. 3. It also stifles the small investor because of double taxation on investments. (Companies don't want small investors anyway) 4. It hampers our ability to handle other financial responsibilities such as medical insurance.
Anybody who thinks the US can't do without the IRS should think again. I support the speakers plan. Some of you don't know this, but the 16th. amendment WAS NEVER PROPERLY RATIFIED in the first place. Go research this for yourself, I dare you.

Posted by: DB at October 6, 2004 01:23 PM
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