On the day many Americans scramble to pay their taxes, U.S. House Majority Leader Tom DeLay and more than 100 other people rallied outside a post office today to abolish federal income taxes.
"The tax system in this country is an unmitigated mess," said DeLay, R-Sugar Land. "The code is getting longer, more complicated. Things don't have to be this way. Instead we can throw the internal revenue code in the garbage, where it belongs."
DeLay and members of Americans for Fair Taxation were joined by other GOP congressman calling for a voluntary, single-rate sales tax on goods and services, eliminating all federal income taxes.
DeLay said the fair tax proposal is the answer to reducing the deficit and the catalyst for creating more and better jobs.
U.S. Rep. John Linder, a Georgia Republican who has sponsored the Fairfax Act in Congress, told people at the rally that DeLay's support of the legislation will help legitimize it.
"No one should know as much about us as the IRS," he said.
Linder's proposal would replace all income taxes with a 23 percent across-the-board sales tax.
Most Democrats and many Republicans say the plan is far from fair. They complain it regressively hurts poorer people who spend a higher percentage of their income while more affluent people are able to save and invest.
Linder has said he would accommodate for that by sending all taxpayers a check each month reimbursing them for the taxes on essentials such as food, shelter and clothing.
"You should only pay a tax when you make the decision to buy something," said U.S. Rep. John Culberson, R-Houston.
Ira B. Shepard, a law professor at the University of Houston, said replacing the federal income tax with only a sales tax will not generate enough funds for the government.
"People do not avoid the sales tax on items even though in Texas it is 8.25 percent because it is not worth doing," said Shepard, who specializes in tax law. "But you triple that Texas sales tax and you will have people planning to avoid that tax. There's a certain rate at which people will begin to generally try to avoid a sales tax."
Shepard said he could envision some people smuggling some items to avoid paying the across-the-board sales tax on them.
But Shepard was sympathetic to the efforts by Linder and Americans for Fair Taxation to reform the federal tax system.
"I think something has to be done before we all drown in the molasses of the complexity" of the tax system, he said. "At a certain point, you can't fix up your old house, you have to tear it down and put a new one there."
Interesting that the first thing the bill's detractors do is claim that it's regressive. Then when that is shot out of the water, they immediatly start talking about evasion and "cheating" -- as if this never, ever happens under the income tax.
Aa opposed to what the income tax was when it was first passed in 1913.
Updated: 4/15/2004 8:19:27 PM
By: Melissa Blasius
Inside the downtown post office, procrastinators were still getting forms trying to beat the midnight federal income tax deadline.
Outside, dozens of people protested the IRS and the U.S. tax structure.
“Nobody understands how the tax code works anymore, and its problems are getting worse. The tax code is getting longer, more complicated and more time consuming to obey,” House Majority Leader Tom DeLay (R) says.
They want to eliminate all payroll taxes, meaning income tax, social security and Medicare taxes and replace those with a national sales tax tacked on to everything you buy new.
As a result consumers would have to pay about 23 cents in tax per dollar spent.
But opponents of this national sales tax say it’s not fair at all especially to people in lower income brackets.
That's because people who are low and middle income tend to spend more of their paycheck immediately vs. wealthier people who save and invest more.
National sales tax supporters say they have a solution for that.
“We have a rebate that ensures that no one living at or below the poverty level pays any tax whatsoever,” Tom Wright from Americans for Fair Taxation says.
That sounds good to people we caught up with rushing to pay Uncle Sam.
“Because I feel like I pay more than my fair share,” one taxpayer says.
“I think it would be wonderful because I don't spend that much, so I think I would get a break,” another taxpayer says.
But in order to change the tax system, these Republican leaders have to convince colleagues on Capital Hill.
Democratic Congressman Chris Bell says he doesn't know if this sales tax is feasible.
“A lot of people have misgivings about the IRS, especially this time of the year. But if you are going to talk about replacing it, you have to replace it with something responsible. And something that won't have a great loss of revenue,” Bell says.
The national retail sales tax, also known as a consumption tax, would apply to all new purchases but not to used goods.
A Georgia congressman is sponsoring a bill on the tax but it's unclear when or not it will ever make it to the House floor for debate.
Copyright © 2004 TWEAN d.b.a. News 24 Houston
It seems to me that housing would have to be exempted...how would anyone ever get financing when they would immediately lose equity on buying a new house? (If a $100,000 home now costs $123,000.) Anyone more familiar with the proposal that can help me understand this?
Here's a better method, one that has its origins in the Constitutional framework. The US taxes should be aportioned among the states. For example, California should be assessed 53/435 of the total amount needed, Georgia should pay 13/425, New York would pay 29/435, Wyoming would pay 1/435 and so on.
The states could raise the money in any manner they so chose to. They could raise tobacco taxes, gas taxes, real estate taxes or whatever. The point is, the local politicians (where the people have the most clout) could be held accountable for their profligate ways of the free-wheeling DC reps. Our local representatives would become our advocates instead of our rulers.
Companies could uproot to more favorable states where lower corporate taxes, or prescribed benefits, or regulations prevailed. Businesses could not be setup as tax fountains. People would be able to flee free-spending states, which would then lose their political power. The pressure would come from local pols to hold down Federal spending because there would be more visibility of the free loot being sent to influential mobs or constituents.
Its because of morons like this that the current tax code is so complicated.
I know people who use their sales tax exemption certificates to get around Texas' 6% sales tax. If the Feds created a 30% sales tax, I'd consider getting a sales tax exemption cert, too. This idea is completely unworkable.
Seriously, the only part of my taxes that I don't mind paying go to the military. I figure I'm getting good value for my money there.
Such a good, good feeling to know that we're going to make headway on this issue over the next 2-4 years.