REPUBLICANS PLAN PUSH FOR ELIMINATION OF IRS

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.

"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."

Despite the questionability of this story, we could still try to get the WH to notice the issue and hopefully actually push for a sales tax to replace the income tax:

Andy Card's office phone at the WH: 202 456-1111 (found several...this may be incorrect...if so, just call the main WH number and ask for his office)
E-mail: acard@who.eop.gov

General e-mail: feedback@who.eop.gov

Bush campaign chair and former deputy assistant to the President (don't know if his WH addy will still work, but might as well give it a shot): Ken_Mehlman@who.eop.gov

The guy replacing Ken as deputy assistant (he meets with the President OFTEN): Matt_Schlapp@who.eop.gov

Note: some of the who.eop.gov addresses have changed from thte Firstname_Lastname form to firstinitiallastname@who.eop.gov (such as Andy Card's).....so may have to try that if the underline form does not work.

Karl Rove (have not found an e-mail, though you can try the forms above):

phone: 202-456-2369
fax: 202-456-0191

I did find an e-mail for this person in Rove's office though, Dave Thomas:

davidthomas@who.eop.gov

Of course, there is the old standbys:

President@whitehouse.gov
vice.president@whitehouse.gov

Phone: (202) 456 1414
General WH fax: (202) 456-2461
Alternate fax: (202) 456-6538

"You don't have to stash savings under a mattress to take a hit. Small Business Owners either don't have quite as easy access to a 401(k), for cost reasons, or have savings substantially higher than that permitted by a 401(k). Roth IRAs, which many people have because they are better under an income tax system, suffer the same problem, because people pay tax up front to avoid future taxes - if there are no future taxes, then people paid unnecessary taxes upfront."

-- OK, let's take the Small Business Owner. 401(k) contributions are capped at $12,000, so he can save quite a bit in there. On top of that, many small business owners reinvest savings back into their business. Under the FairTax, they can sell their business and pay ZERO capital gains tax, or give it to a family member BEFORE they die if they like, or pass it on as an inheritance. Remember, a business is a capital investment, so profit off the sell of that is also tax-free.
-- The Roth IRA example doesn't hold water. The Roth IRA has only existed since 1998, so the maximum ANYBODY has invested in their Roth IRA is $17,000 ($2,000/yr. for 98-01, $3,000/yr. for 02-04). So nobody has substantial retirement savings in a Roth IRA. Furthermore, the "rich" can't invest in Roth IRAs ($150k+). So Roth IRAs aren't really a factor.

"I brought up municipal bonds before and I will refer to them again. No wise investor will invest in municipal bonds in a tax-exempt pension. We know that the municipal bond market is about 2 trillion dollars, so right away we know that there is at a minimum 2 trillion dollars in savings by people who have as you put it, "unfortunately stashed their savings under the mattress." 2 trillion dollars is not insignificant."

-- You're damn right no wise investor will invest in municipal bonds in a tax-exempt pension. That's why the trillions of dollars tied up in pensions AREN'T invested in MUNIs. Under the FairTax, investors can choose to invest in MUNIs if they want to. Of course, MUNIs will probably have to start issuing bigger coupons to be able to compete with corporate bonds. And all that would do is make it harder for governments to borrow money. Federal bonds aren't going to be affected the same way as sub-federal MUNIs will because so much foreign money flows into them. I understand $2T is not insignificant. But so what? If people start selling off MUNIs, municipalities have to start issuing higher rates if they're not attracting investors anymore. I read a study a while back that stated that the tax-free status of MUNI's subsidized sub-federal borrowing by $12 - $25 Billion dollars A YEAR. What that tells me is that there's a huge bubble in the MUNI market. Any correction resulting from implementation of the FairTax would simply correct the bubble. Sad but true. Should we have subsidized all the dot-com stocks? After all, people lost trillions of dollars when that bubble popped, and that was much larger than the MUNI market.

"We know that many seniors have a lot of money held in CDs, all this money falls in the same category. What about capital tied up in investment assets, such as real estate, etc. At some point, that money will be spent and taxed and once that happens it has been double taxed, because without switching to the NRST, no federal sales tax would have been paid and no additional income tax is required."

-- Capital gains taxes must be paid on CDs as well, so seniors won't have to pay that under the FairTax. Regrading Real Estate, Capital Gains or estate taxes would have to be paid on those too, especially if it wasn't a primary residency (the first $250k of the sale of a home you lived in for 5 years is untaxed). If it was an investment property, they would pay through the nose to sell it under the current system. So this point isn't valid either.

"I never understood this one point. At least to me, it is obvious that a lot of wealth will be double taxed. Many people who fall into this category will absolutely be opposed to switching to the NRST. Why will freepers not at least recognize the obvious? My goal is not to bash the NRST, I have stated many times that I strongly prefer the NRST. I just do not believe that with the problems I have discussed it will ever have the support required for passage and am trying to bring about a discussion that could lead to at least a partial solution to the problem."

-- Wanna talk about double taxation? How about dividends for starters. A company makes a profit, pays corporate taxes on it, then gives a dividend to the shareholder who again pays taxes on it! How about all the seniors who receive dividends? Did you know that Treasury statistics show they are the recipients of about 50 percent of the nation's dividend income? In fact, half of the 18 million seniors who file taxes receive dividends. The president addressed this issue last year, but didn't reach his goal of completely eliminating them.
-- How about seniors who make too much money to receive a full SS check. Did you know that some seniors pay a 85% tax rate on their SS check because they make too much money? Well, they'll get that now.

-- I completely understand your argument, but the fact is that most savers have their assets in things that they'll have to pay taxes on some day. And that's the truth.

"If a national sales tax was used how do you acount for the heinz's,kennedy's, and gates of the world who already have their considerable nest eggs? How do you account for interest on their billions? I would be real scared about the possiblity of them turning into a new breed of emperor and would insist on the elimination of all these trust funds and would also insist on a severe death tax for these billionaires and some sort of limitation on before death transfers. A sales tax structure could be the underpinnings of a new rulling class, far worse than anything we have now if such money is allowed to accumulate. Just some things which would have to be taken into account in my view. I'm imagining Little George Soros the VIII in 2050 and its causing me chills."

-- The super rich don't have to pay taxes as it is! If you had $1 Billion, you could earn $40 Million a year off municipal bonds and not pay a dime in taxes. Not even Payroll taxes! Under the FairTax, when they spend their fortunes on frivolous crap they've gotta pay for it. Not a good argument because you've got it backwards.

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