REPUBLICANS PLAN PUSH FOR ELIMINATION OF IRS

http://www.drudgereport.com/ ^ | XXXXX SUN AUG 01, 2004 21:01:25 ET XXXXX | Matt Drudge

[downtoliberalism]

**Exclusive**

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.

[carenot]

There will be forms to fill out for every family so they can recieve their monthly rebate check, and of course there will be weekly forms to fill out by businesses reporting all their retail sales.

If I read it right, families fill it out once a year.
Businesses just collect and turn in the sales tax.
Their records are not checked.

[carenot]

This will not happen automatically without the threat of punishment for non-compliance.

I agree.

[meadsjn]

A can of soup that costs $1 at the store will now cost $1.30. I'm still paying taxes just in smaller increments many more times. Other than not paying $125 to get my taxes done at the end of the year, what has the average consumer saved?

If you are currently paying $1.00 for the can of soup, the hidden taxes in the $1.00 are probably about $.37. Every minute of labor involved in the creation of the soup and its contents, the manufacture of the can, all the way back to the mining of the metal, transportation of all parts and the final product, stocking the shelves, and ringing up the sale -- every dollar of labor involved is taxed, and the cost of those taxes are cumulative in the final cost of the product.

Currently, the price of foreign-produced goods only includes the income taxes on the last stages of transportation and sales labor. This puts American-produced products at a great disadvantage against foreign products.

The NRST would for the first time partially spread the burden of taxation to foreign merchants who wish to exploit our consumer market and to illegal immigrants who totally evade the income tax today.

The current Income Tax is a tariff against American labor and American-produced goods and services.

[scubadan]

No, if you bought groceries for them, that is retail. If you buy a new house or car for them, that is retail. Retail is taxed.

Do you think its as simple as the clerk asking whether this is a retail (non-business) or business purchase and charging or not charging the tax? Do you think the business buying his employee's groceries will honestly answer the question if their intent is to avoid the tax for their employees? If I go to buy a car, how does the dealer know if it is for personal or business purposes? It must be based on what I tell them. And if the buyer of the car is dishonest, who will come back and determine the buyer should have paid the tax.

The distinction between business and personal expenses can be very gray under our current system. Simply changing the manner of taxation will not change the "grayness" of this issue. Here's another example. If I run a daycare out of my home, some of the food and toilet paper and paper plates and the utilities to run my house and the cost of the house itself are business and some are personal. Who will determine that the day care operator is honestly reporting the correct portion of the personal expenses and the correct portion of the business expenses.

Let's say I build a rental home. If that's a business transaction, I'm assuming the cost to build the home would be exempt from tax. But then after the home is built and either rented for a short period of time (or at least attempted to be rented to make it look good) I move into the home. Who's going to catch the fact that I should have paid tax on these purchases. Without a compliance agency people would have a field day with this.

[Always Right]

Businesses just collect and turn in the sales tax. Their records are not checked.

LOL, so we just trust all businesses to pay the correct tax! LOL, that will happen. What fantasy land do you live in....

[carenot]

If I go to buy a car, how does the dealer know if it is for personal or business purposes? It must be based on what I tell them. And if the buyer of the car is dishonest, who will come back and determine the buyer should have paid the tax.

Doesn't matter, it is retail.

You would be the end consumer. :)

[carenot]

Who's going to catch the fact that I should have paid tax on these purchases. Without a compliance agency people would have a field day with this.

I don't know.

I just know that the NRST is much better than the Income Tax.

[carenot]

What fantasy land do you live in....

I live in Texas. :)

[Always Right]

Doesn't matter, it is retail. You would be the end consumer. :)

Yes it matters. If a business uses the product to produce, render, or sell the item or in the normal course of business it is not supposed to be taxed. This is a loophole that will be used and abused.

[undeniable logic]

I want taxes to be visible as well. My preference would be a NRST, where by law the purchase and the tax paid would be a separate transaction. For example, you go to the supermarket and buy $100 worth of stuff: The cashier says that will be $100. You pay the $100 and then the cashier says, ok, now that will be $30 for tax, and you pay the $30.

This type of system, which will never happen of course, would be a constant reminder of how much we really pay in taxes.

[agincourt1415]

The National Retail Sales tax does not need to be 30%, try 5%.

We're trying to compare the percentages to the Income Tax Rate and that is like comparing Apples to Oranges.

More Spendable income, Economic Growth will drastically alter the needed percentages to support the Budget.

[scubadan]

There's no way I can prove or disprove that 37% of the cost of an item is related to "hidden taxes". I do know that payroll taxes in my labor intensive service business only represents about 1.25% of the customer cost of our product. Last year, federal and state corporate income taxes added about another 1% to the cost of our services. That only totals about 2.25% of taxes that we passed along to our customers.

I have no way of knowing the percentage of "hidden taxes" in the supplies that we use. I would think the percentage of payroll taxes in the cost of a manufactured good would be less than in a labor intensive business since the manufacturer must also purchase the product which they assemble for me. Just for the heck of it, I looked at the level of income taxation paid by some large corporations. Procter & Gamble's % of sales paid to income taxes was 5.4%. For Ford, the latest provision for income taxes was less than 0.1%, for GE it was 3.2%.

I can not find a "payroll tax expense" on any of these companies annual reports. Back in my McDonald's manager days, our goal was to keep food costs at around 33% and total labor costs ar around 20%. Assuming that labor makes up 20% of the cost of a product, only about 2% of that would represent the actual payroll taxes. And some of these payroll taxes would include things like unemployment taxes that won't go away. Using these crude assumptions, we're only at about 5-6% of the cost of an item representing income or payroll taxes that might go away. There must be a lot more in hidden taxes that I'm not seeing to get from these numbers to 37%.

[scubadan]

You win!! I give up trying to express any logic or sense in this conversation. Either businesses are exempt from the tax or all purchases are retail. It can't be both. If all purchases are retail, it's a misstatement that businesses are exempt from the tax. If businesses are exempt than complaince will be an issue.

One of those facts must be true no matter how hard you try to ignore them.

[undeniable logic]

Everything I read shows the 23% / 30% figure, depending on how its calculated. You will never convince me that 5% will cover it. Our federal gov't is far larger than 5% of GDP. I wish 5% would cover it but it won't, without drastic cuts in gov't size and a huge economic boom. Of course, I wouldn't mind if both of those happened.

Actually, I thought that we spent about 5% of GDP on military alone.

[agincourt1415]

Actually nobody knows what percentage will work.

But income tax percentages and sales tax percentages don't relate to one another.

In anycase try the lower end first, and we can see after the 1st year, it can work.

[rwfromkansas]

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

[johnb838]

corporations don't pay taxes anyway- people do.

That's true in the sense that people are double taxed on the proceeds from investing in corporations. First as corporate profits, then as income, and I suppose there could be a third tier if there is capital gains tax. Then there's state income tax, which we don't have in Texas but the libsocs are always trying to sneak one in under the radar. Too bad for them, it is the third rail of Texas politics, so those who try often don't last long.

[undeniable logic]

I do agree that these guesses of equivalent tax rates are at best guesses. There is no way to estimate the dynamics of how markets will change and the type of revenue that would be expected at different tax rates. If the plan were to be implemented, we would probably have to update the tax rates fairly frequently over the course of the first year or two to get to the "correct" level. My guess is that at the beginning, sales will drop and thus tax receipts would be less than the long run average.

The reason is this, if you knew that in two or three months we would be switching to the NRST, wouldn't you buy like crazy right now to stock up on things before the new sales tax was added? I know I would. We would probably see a huge boom of sales before the switch, a large drop after the switch, and a relatively quick growth back to the optimal levels.

[johnb838]

Last time I was in England, I was surprised to find I liked not having to calculate a surcharge on everything I purchased, and I didn't find the prices of things to be significantly over priced. That may be different now with the weak dollar, but I had the feeling that with the VAT, the market sets the price, and if the producers get screwed, then the economy goes to hell and the govt has to do something. Just an empirical observation.

[OPS4]

This would be a much more prosperous country, without the I.R.S.

OPs4 God BLess America!