REPUBLICANS PLAN PUSH FOR ELIMINATION OF IRS

The Drudge Report ^ | 8/1/04 | Drudge

[NeoCaveman]

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."

[Your Nightmare]

The fraction of folks who would receive more in rebates than they actually spent will be small, and is an acceptable tradeoff compared to the needless complication of having to track exactly how much each individual had paid.

First, stop calling it a rebate. It's not a rebate, it's a demogrant (the bill calls it an allowance - don't you just love the symbolism of the government given all citizens an allowance). Second, the poverty rate in 2002 was 12.1%. Do you consider that small?

[EternalVigilance]

The IRS has well over 100,000 employees that produce nothing of value.

Do you consider that small?

[Your Nightmare]

Compliance costs plus taxes on business definitely exceed personal income taxes.

So me any reputable study that shows business compliance costs plus business income taxes are greater than personal income taxes.

BTW, last year, individual income taxes were $765 billion and corporate income taxes were $168 billion. The reputable studies I've seen show a max business compliance costs below $200 billion.

[John123]

The only problem with a flat tax is the IRS is still around to abuse people!!

What part of eliminating the IRS do you not understand? :)

NST shifts tax collection from the Government to the retail centers. Most states already have sales tax collection activity. IRS is not needed anymore.

[ElkGroveDan]

We all need to call talk radio and say how we are Democrats and had been undecided, but this settles it, we're voting for Bush now.

[Your Nightmare]

The IRS has well over 100,000 employees that produce nothing of value.

And how many employees will it take to distribute the family consumption allowance once a month to every citizen in the country? How many employees will it take to collect the NRST? The state of Texas estimates that, due to the broader base of the NRST, it will have to collect from 3 times as many businesses as it does now. Does that mean 3 times as many state sales tax collectors? And that certainly means a lot more businesses in Texas will have to start collecting sales taxes when they don't have to now and they will have sales tax compliance costs that they don't currently have.

[EternalVigilance]

Haven't looked at the studies in awhile. I remember one from Cato quite some time ago that had compliance costs in excess of $600 billion.

[Your Nightmare]

I remember one from Cato quite some time ago that had compliance costs in excess of $600 billion.

Show me. (and don't forget we are talking about business compliance.)

[EternalVigilance]

The majority of sales taxes now are collected by the big retailers like Walmart, Target, etc..

Almost all the states already have the simple collection apparatus in place.

Sure some changes will have to be made everywhere. But those changes are minor in the great scheme of things.

[EternalVigilance]

Show me.

I'm not your researcher.

Look it up yourself.

[John123]

The 16th Amendment MUST be repealed for this to work.

Don't understand. 16th give the US Congress the power to tax income from any source. NST is a source. Please elaborate your position.

[Remember_Salamis]

"Why do you keep saying this when you been shown it's not true. For every dollar the government pays in taxes they get that same dollar back in revenues. You are just changing the expediture/revenue scale. Where's the disincentive to keep spending?"

-- That is only technically possible at the Federal Level; all other levels of spending would be restricted. Furthermore, the Federal government would also have to pay any state and local sales taxes in the municipality their located in. In states where the state sales tax conforms to the tax base of te federal one, this is huge.

"For every dollar the government pays in taxes they get that same dollar back in revenues."

-- That is patently false. Have you ever heard of transaction/collection costs? It only may be a few pennies on the dollar under the FairTax, but that still means that (with a 5% transaction/collection cost) $1 spent = $.95 in revenues.

-- There are other reasons that federal spending will be restrained as well.

[ancient_geezer]

There are plenty of poor families and middle class families who don't pay any federal tax right now, who would now start paying federal tax. Regardless of what economic sense that might make, when this is explained to the public, they will vote against it.

 

Under HR25, All legal residents will receive a Family Consumption Allowence (FCA) demogrant, equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

To illustrate examine the tax burden that a family of four will have at various annual expenditure levels.

H.R.25 "The FairTax Act

[John123]

who is a tax accountant has been preaching National Sales Tax as the only solution for years.

First of all, accounting is still needed. Corporations need to have their balance sheet, income statement and cash flows. States may still require income taxes.

Those who cannot find employment in a NON-Productive activity will soon find jobs in a Productive activity that will add to our GDP. What I mean by non-productive is that tax preparation and tax avoidance strategies add nothing to our economy.

Elimination of income taxes frees capital and risk taking. Businesses will boom. New entrepreneural activity will happen. Shifting people from one activity that has been holding back our economy to one that will create an economic revival never seen before is going to be huge!

[TomServo]

Thanks AG!!

[AxelPaulsenJr]

Eliminate the IRS?

That will sure put a lot of soul less people out of work.

[John123]

You are so correct -- it also eliminates the hidding of income - the need for accounting records and accountants!!

No. Corporations and small businesses still need to keep track of profit/losses. States still may have state income taxes.

[scott7278]

"Don't understand. 16th give the US Congress the power to tax income from any source. NST is a source. Please elaborate your position."

You've made my point. The NRST must not be merely a source, but the source of government income.

If the 16th Amendment is not repealed we could -- and probably would -- wind up with a NRST on top of the income tax.

Congress must not have the power granted by the people to tax income from any source, only from the NRST.

[Your Nightmare]

Furthermore, the Federal government would also have to pay any state and local sales taxes in the municipality their located in.

What makes you think that?

---

That is patently false. Have you ever heard of transaction/collection costs? It only may be a few pennies on the dollar under the FairTax, but that still means that (with a 5% transaction/collection cost) $1 spent = $.95 in revenues.

This is patently false. The collection costs are .25% for the business and .25% for the state. 99.5% goes back to the federal government. $1 spent = $.995 in revenues.

[EternalVigilance]

Still awaiting your positive alternative to the NRST.

*crickets*