FLAT TAX MAY BE A "GO"

Last week, Juliet Eilperin reported in the Washington Post(1) that "House Speaker J. Dennis Hastert (R-Ill.) would like to abolish the Internal Revenue Service and replace the current tax system with either a flat tax, a national sales tax or a value-added tax." As reported, Hastert suggests that a new tax system would increase productivity and "double the economy" over the next 15 years. "All of a sudden, the problem of what future generations owe in Social Security and Medicare won't seem so daunting anymore," The Post reports Hastert wrote.

"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," Hastert said.

Hastert is, of course, quite correct. We should abolish that overbearing IRS and all of the unruly tax code. Federal tax law is so complicated, no person in the IRS (or Congress) understands all of it. Yet, every citizen is expected to obey 100%. Truly, it is a corrupt system.

But, before we begin looking for any new "flat tax" proposal, perhaps we should take a quick look at a little history -- see what has already been on the table.

Back in June of 1998, the House actually passed a bill to abolish the income tax code by the year 2003. Albeit, there was one damning caveat: that Congress approves a simplified replacement tax system before then.(2)

That, of course, did not happen. Because, then Treasury Secretary Bobby Rubin -- who is a millionaire hundreds of times over -- immediately jumped on the bill, saying the bill should never became law. "If enacted, it would create enormous uncertainty which could well have a severe adverse impact on our economy, our workers, our businesses, our people. Families, for example, would not know what to pay for a house because they wouldn't know if their mortgage interest would be deductible."

Pete Stark (D-CA) did a good job of representing the whining of the tax and spend Social-Democrats: "With the Republicans in leadership having no understanding of the basic tenets of economics and leading this house in the most amateurish, asinine way, we will destroy this economy, destroy the values upon which the families are based."

Then House Minority Leader Dick Gephardt, (D-MO), said the bill "is yet another irresponsible Republican idea masquerading as a solution. They refuse to have a real debate on tax reform because they know what we know: That the average taxpayer would be worse off under the Republican plans."

That just goes to prove how far out of touch the Democrats really are with the American people. Also, they fear losing the control they wield over the American people via the tax code.

In March of 1999, then House Majority Leader Dick Armey (R-TX) announced that he was reintroducing H.R. 1040, a bill to scrap the current tax system and replace it with a flat 17 percent tax on all income.(3)

"Filling out an IRS tax form can be a frightening experience," Armey said. "The forms and instructions we must deal with are complicated and confusing. Millions would rather pay someone else to deal with their returns than face this frustration. But there's no reason that our system needs to be so complex. My flat tax proposal offers a simple, fair alternative. It allows everyone to file their returns on a simple, postcard-sized form." . . .

"The flat tax offers relief to an America that is overtaxed, and burdened by the current tax system," said Armey. "Millions would find their tax burden reduced -- or eliminated entirely -- under the flat tax. But the flat tax offers no breaks for special interests. No loopholes for powerful lobbies. Just a simple tax system that treats everyone the same."

Armey also reported that the U.S. income tax code is a monument to unnecessary waste. The income tax system is so complex, the IRS publishes 480 tax forms and another 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year which, if laid end to end, would circle the earth 28 times. Nearly 300,000 trees are cut down each year to produce the paper on which IRS forms and instructions are printed. The tax code does more than complicate people's lives during tax season and reduce living standards. It pollutes Washington's political culture.

As special-interest provisions have been added to the tax code, Washington's lobbying industry has flourished. Washington's lobbying industry, which is the largest private employer in the nation's capital, generates $8.4 billion in revenue each year. If the lobbying industry were its own economy, it would be larger than the economies of 57 countries. While the thousands of lobbyists in Washington have prospered in an environment of tax favoritism, the typical taxpayer has not.

And remember a bean counter named Steve Forbes with a very interesting flat tax plan? His table is still available.(4) Forbes said: "Start by scrapping the tax code. Don't fiddle with it. Junk it. Throw it out. Bury it. Replace it with a pro-growth, pro-family tax cut that lowers tax rates to 17% across the board and expands exemptions for individuals and children so that a family of four would pay no taxes on the first $36,000 of income.

Not one cent to the IRS on the first $36,000. Anything over that would be taxed at a flat, fair 17%. The flat tax would be simple. You could fill it out on a postcard. It would be honest. It would eliminate the principal source of political corruption in Washington. It would be fair. Millions of people would be off the federal income tax rolls. There would be no tax on Social Security. No tax on pensions. No tax on personal savings. It would zero out capital gains taxes. It would set off a boom by letting people keep more of what they earn and by lowering barriers to risk taking. "(5)

Let's not discount any of the above mentioned people. Dick Armey is now at FreedomWorks(6) and still fighting for lower taxes, less government, and more freedom at the grassroots level. Steve Forbes is also still available to lend a hand. Many other "flat taxers" are, too. They may all be quiet at the moment, but that could be for a very good reason.

It appears that House Speaker Dennis Hastert sent up a trial balloon in an election year for a reason. George W. Bush has also mentioned abolishing the IRS as we know it and replacing those many thousands of pages of federal tax law, rules and regulations with a flat tax. This may be the time for President Bush to formally announce that publicly.

As this article was being written, President Bush was addressing an "Ask President Bush" campaign forum in Florida. The flat tax was mentioned and President Bush called it "an interesting idea." Then, Bush came back with: "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

Was that also a trial balloon? Sure; of sorts. Unfortunately, the media didn't pick up on it and so few Americans know of the statement. In truth, President Bush knows exactly how high any of the flat taxes would need to be. People in the White House and on Capitol Hill have been quietly running the numbers for a couple years. Now is the time for our input -- before the Social-Democrats start whining about the program.

Let's face it, President (candidate) Bush likes to play his cards close to the vest. His campaign committee knows very well that, if President Bush were to formally make such a flat tax proposal within the next few weeks, there just ain't enough Prozac available in the nation to calm down the Social-Democrats and their liberal media cheerleaders enough to be understood properly by the electorate before November.

Use, consumption, sale etc. of personal property is seen as taxable in regard to exercise of a particular single power over property incidental to ownership, which distinguishes the carriage in the case of Hylton.

So would this apply to real property as well? Could, for example, the sale of one's home (prior to the 16th, that is) be taxed under the rules of an indirect tax?

Could, for example, the sale of one's home (prior to the 16th, that is) be taxed under the rules of an indirect tax?

I have found nothing to indicate otherwise, all that is required as far as I can determine is wherther or not it is politically feasible for the federal government to get away with it.

If you can have an excise tax on gross sales value as in an estate tax, the sale of land or a house is just another exchange or event transfering property open to taxation as an excise.

As held discussing the nature of estate taxes as an indirect tax in:

KNOWLTON v. MOORE, 178 U.S. 41 (1900)

'indirect taxes are levied upon the happening of an event or an exchange.'

A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
EXCISES. This word is used to signify an inland imposition, paid sometimes upon the consumption of the commodity, and frequently upon the retail sale.

There already is a mechanism for helping lower to middle income families. Simply make the first 10,000 per adult deductable, first 5,000 per child deductable. Family of 4 would then only be taxed on money made over $30,000.

True, but with the current in place, individuals and corps with lobbyists will still be able to affect the rest of the tax laws get loopholes for their clients. By switching to a consumption tax, they lose this power entirely (at least on a national level.)

Other benefits of a NST are that those who don't pay any national taxes currently (illegal aliens and other criminals) would finally be supporting the rest of us. And, as illegal criminals they wouldn't even be getting the refund checks that honest Americans would be getting! Just this point alone would get it through CA and TX I think!

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