From the Contributing Editor:
No more IRS?
Two recent news events have caused a firestorm of commentary in the news media: First, Speaker of the House Dennis Hastert has taken the position that eliminating the IRS and the current tax system, replacing them with a new tax system like a national sales tax, would be a very good thing for our economy. Second, President Bush answered a question about this idea by calling it an “interesting idea that we ought to explore seriously.”
Not to brag on ourselves too much here, but over the past year the Delta Business Journal has been exploring the idea of a national sales tax with articles and a publisher’s comment about it. And, yes, Virginia, we do think it merits attention, research and debate. Who better than our readers?
Now that the national media is jumping to catch up, let me point out that the U.S House of Representatives already has a bill moving forward, HR25, known informally as the “Fairtax.” The bill has over 60 co-sponsors, and the two lead sponsors are one Democrat and one Republican. The purpose of this bill is to eliminate the IRS, repeal the 16th Amendment (eliminating all federal income and payroll taxes) and establish a national retail sales tax to replace the current tax system. HR25’s summary reads: “Amends the Internal Revenue Code to repeal subtitle A (Income Taxes), B (Estate and Gift Taxes), and C (Employment Taxes) of the Internal Revenue Code.” The lead-in line reads: “To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.” It’s nothing if not bold!
Unfortunately, the political season is going to skew the debate. At the time of this writing it hasn’t really begun yet, but the detractors of the “Fairtax” will soon start with the usual slogans of “only benefiting the rich” or “burdens the poor unfairly” and so on, nevermind what the bill would actually do. President Bush’s calling it “an interesting idea” is all it’s going to take to fire up the anti-Bush crowd to rail against this idea too, without even looking at it.
If you read the actual bill as I have, you will see that this should be a bi-partisan effort, and should probably be being led by the liberals in government instead of the conservatives, since it un-taxes the poor and has a number of other features that would benefit the less fortunate among us, for example used merchandise would not be taxed. In that way it’s progressive too. A rich person buys a new car and pays the tax; a poor person could buy a used car, tax-free. By removing all hidden taxes currently built in to the cost of a product, the retail price of, say, a new car will fall. Everyone wins. Of course, the problem with this for the socialist wing of our government is that this would remove the “class warfare” rhetoric they use fairly effectively regarding taxes to gain votes.
Don’t take anyone’s word on any of this. If I may suggest, you should visit the website www.fairtax.org and read the Cato Institute study and other research papers. The sponsor of this website is a non-partisan group called Americans for Fair Taxation. They also have links to all recent news articles on it and a link to the U.S. House page that you can use to get straight to HR25.
So here’s the request – please look into it yourself and let us know what you think. Such a change would have huge ramifications for all businesses and personal finances and the economic impact for the nation and the Delta could be very positive. As with any real momentous change though, this new tax revolt is coming from the grassroots and forcing itself upon the politicians. We should all be as informed as possible and engage in the debate. DBJ
Jamie Smith
Contributing Editor
