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There's no bigger piece of news than XXXXX Drudge's XXXXX report that the House Republicans are set to try to eliminate the IRS and switch the nation over to some kind of national sales tax. This is, essentially, a declaration of war on both the poor and the American way of government that's been practiced since FDR. A sales tax is an incredibly regressive way to collect revenue.
The details are very fuzzy. Drudge's source is a passage from an advance copy of House Speaker Dennis Hastert's new book. Drudge says that the plan will be part of the new "Bush/GOP agenda," but he offers nothing to indicate that President would support the plan. The measure would have to gain support from the Senate, an institution that prides itself on deliberation (in theory) and independence. And, the plan certainly wouldn't survive a Senate filibuster, so at worst we're looking at a "national debate" about taxes.
The report also neglects to state whether "Screw California Out Of Money" will still a central plank of the GOP agenda.
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Yes, a national sales tax by itself would be regressive. However, every serious national sales tax proposal that I have heard of pairs the sales tax with a rebate (similar to the current earned income credit) so that the end result would be a progessive tax system. For an example, go to http://www.fairtax.org/ or more specifically http://www.fairtaxvolunteer.org/smart/faq-main.html#48
The current American tax system does an excellent job of encouraging consumption and discouraging savings and investment. One result is the lowest savings rate in the developed world. Another is the complete waste of resources that people use hiring accountants, lawyers and assorted bureaucrats to figure out what people owe under the current morass of a system.
There are 2 large problems that I see with national sales tax proposals. 1) Done correctly, taxes could be simplified. Done less than correctly, it would just replace one form of taxes with another, leaving the tax industry and bureaucracy just as intact as it is now. 2) Instead of being reminded of taxes at every paycheck over around April 15, people would be reminded about taxes everytime they buy something: The temptation for buyers and sellers to evade the sales tax would be overwhelming. Then again, it might be an improvement over the tax evasion that occurs now.
To sum up: A national sales tax proposal is not necessarily "a declaration of war on the poor" and has the potential (the devil being in the details) of being a simpler, progressive tax system that would decrease consumption and/or increase savings and investment.
>the American way of government
>that's been practiced since FDR
A little historical whoopsie there.
The present income tax system dates back to the Woodrow Wilson administration, not FDR's. The IRS came into being after passage of the Sixteenth Amendment in 1913.
America's history with income tax, however, dates back much further than that. There was a national income tax during the Civil War, for instance. Income tax efforts came and went repeatedly during the second half of the nineteenth century.
A national income tax law was passed in 1894, during the second administration of Grover Cleveland. That was ruled unconstitutional by the US Supreme Court in the Pollock v. Farmers' Loan & Trust Co. decision in 1895. The Sixteenth Amendment was thus in response to the Pollock decision.
David - technically, yes. But the income tax "as we know it" began with FDR and World War II, even if the IRS started with Wilson.
Mike - I'm making an assumption that a GOP-backed tax overhaul will be for a system that's less progressive or even regressive. I believe that, in terms of political strategy, they are attempting to 'think big' and introduce an idea that will consolidate the changes they've made to our economic policies.