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Analysis: GOP push for consumption tax
By CHRISTIAN BOURGE, UPI Congressional and Policy Correspondent
WASHINGTON, Aug. 2 (UPI) -- A report Monday that in his upcoming book House Speaker Dennis Hastert, R-Ill., endorses the elimination of the Internal Revenue Service and replacement of the current tax code with a national consumption tax or flat tax as a top GOP priority in a second Bush administration should come as no surprise, considering that conservative Republicans have been pushing such ideas for years.
The Drudge Report's brief on Republican plans for eliminating the federal revenue-collection agency and the laws it enforces in favor of a national sale tax, value-added tax or even a flat tax rate on income quotes Hastert in his new tome being released Wednesday -- "Speaker: Lessons from Forty Years in Coaching and Politics" -- as praising such schemes not only as a means to increase domestic productivity and grow the U.S. economy, but also as a way to make the IRS an irrelevant part of the federal government.
Although Hastert's office did not return calls for comment on the report, House Majority Leader Tom DeLay, R-Texas, offered a preview of the House GOP leadership's post-election tax agenda in a March speech in which he said the Republicans are determined to repeal the federal income tax.
Long an advocate of a national sales tax, a confident DeLay told a conference of tax lobbyists that House Republicans will have hearings and push the issue in 2005 and 2006.
He said that replacing the income tax, payroll and other related federal taxes would provide more money for people to use, and he endorsed a proposal from Rep. John Linder, R-Ga., for a national sale tax.
However, he added that even a flat tax would be better than the current federal tax model.
Whether or not eliminating the IRS and replacing it with some form of easier-to-collect consumption tax or a uniform tax rate will be "a domestic centerpiece" of the second Bush term remains to be seen, but such alternative tax schemes are nothing new and have long been a controversial wish of numerous prominent, conservative Republicans.
In 1996 Republican presidential candidate Steve Forbes championed a 17-percent flat-tax scheme, garnering a great deal of attention and arguably making it the most prominent of the various alternative tax-system ideas floated by conservative Republicans over the last several decades.
Under Forbes' plan, taxes on interest from investment income such as dividends and capital gains, along with other forms of unearned income such as inheritances, would be eliminated, something that would certainly benefit wealthy individuals like the former candidate, who inherited his wealth.
Not that the idea is only favored by conservatives; nor was Forbes the first politician to back the idea.
Former California Gov. Jerry Brown, a liberal Democrat, was a proponent of the flat tax during his failed 1992 bid for the Democratic presidential nomination.
Conservative economists such as Arthur Laffer have also pushed the idea for decades.
More recently, U.S. Sen. Arlen Specter, R-Pa., has backed a uniform 20-percent tax on earned income, with similar exemptions on unearned income.
Former House Majority Leader Dick Armey, R-Texas, continues to promote such ideas as a conservative activist since leaving the lower House of Congress.
The idea of a national sales tax or value-added tax has gained greater favor with some conservatives in recent years, but those ideas, along with other tax-simplification schemes like the flat tax, have remained mostly wishful thinking on the part of conservatives.
Even as Republican leaders in the GOP-led House, Senate and Bush White House have praised the concept of tax simplification over the last 3 1/2 years, the U.S tax code has been expanded by over 10,000 pages as the Bush tax cuts and other changes -- part of a total of 227 changes to the code -- were implemented.
In addition, the House and Senate Republican leadership have been strong backers of the corporate-tax overhaul bill currently pending in Congress.
The measure, which started out as a simple bill to repeal a tax break for exporting companies deemed illegal by the World Trade Organization, has turned into a special-interest tax bonanza in order to make the bill acceptable to more members.
The conventional wisdom on Capitol Hill is that any corporate lobbyist worth his salt got his client a break in the bill.
"These guys have added 10,000 pages to the tax code over the last three years," said one Democratic Leadership aide. "Do you really think they can get it together and repeal the whole code?"
For their part, some Democrats are not taking the pending Republican tax push lying down.
House Minority Whip Steny Hoyer, D-Md., gave a speech last month pressing the case for simplification of the tax code and promising to make the issue a Democratic caucus priority, offering a plan that differed little from the most recent simplification plans from the GOP not involving wholesale repeal of the tax code.
It is important to note that House Democratic Congressional Conference Chairman Robert Matsui of California and others, including Republican members, acknowledge that changing the code is an extremely difficult challenge.
The last major set of wholesale changes made to U.S. tax law intended to simplify the code was enacted in 1986.
Although Monday's report on Hastert's book was met with little attention on Capitol Hill, the Democratic National Committee released a statement deriding the flat tax as an attempt to shift the federal tax burden to the middle class.
They argue that lowering taxes on the wealthy citizens who pay higher rates under the current progressive tax systems means many poorer citizens will pay higher portions of their income to the federal government.
In addition, they decried the losses of tax breaks for home mortgages and healthcare expenses provided under current law -- losses that have led some conservatives to label the home-mortgage deduction the "third rail" of tax reform.
Some conservatives were emboldened by news last fall that former Iraqi Provisional Authority administrator Paul Bremer was expanding neoconservative nation-building doctrine to include conservative tax orthodoxy by establishing a 15-percent flat-rate tax in Iraq.
However, Bremer's tax efforts did not actually preclude progressive rates but only capped them at 15 percent and surely are open to interpretation by Iraq's burgeoning self-government apparatus.
Several former Soviet-bloc nations, long a favorite of conservative anti-communist crusaders within the GOP, have become a haven of sorts for the flat tax.
Ukraine, Latvia, Estonia, and Slovakia, along with Russia itself, have all embraced flat-tax plans as their means to collect taxes from personal earnings.
The Russians, for one, have reported increases in revenue intake vs. their old, complex, higher-rate system.
While the idea of a flat tax or consumption-based tax system still seems like a pie-in-the-sky dream on the domestic front, some economists say we may be closer than it seems at first glance.
Many liberal-minded economists argue that the Bush tax cuts and other GOP efforts to lower taxes on capital gains and investment income have resulted in a tax system that is more regressive than has traditionally been the case.
Since the ultra-rich have higher levels of investment income than those with lower incomes, they end up paying a lower share of taxes, percentage-wise.
But many conservatives dispute the validity of such arguments, and even if it is the case, this by no means is the sort of lower-tax haven that they wish for.
It also remains to be seen if Republicans will be in the position to give it to them anytime in the near future.
--
(Please send comments to nationaldesk@upi.com.)
Copyright 2004 by United Press International.
All rights reserved.
By CHRISTIAN BOURGE, UPI Congressional and Policy Correspondent
WASHINGTON, Aug. 2 (UPI) -- A report Monday that in his upcoming book House Speaker Dennis Hastert, R-Ill., endorses the elimination of the Internal Revenue Service and replacement of the current tax code with a national consumption tax or flat tax as a top GOP priority in a second Bush administration should come as no surprise, considering that conservative Republicans have been pushing such ideas for years.
The Drudge Report's brief on Republican plans for eliminating the federal revenue-collection agency and the laws it enforces in favor of a national sale tax, value-added tax or even a flat tax rate on income quotes Hastert in his new tome being released Wednesday -- "Speaker: Lessons from Forty Years in Coaching and Politics" -- as praising such schemes not only as a means to increase domestic productivity and grow the U.S. economy, but also as a way to make the IRS an irrelevant part of the federal government.
Although Hastert's office did not return calls for comment on the report, House Majority Leader Tom DeLay, R-Texas, offered a preview of the House GOP leadership's post-election tax agenda in a March speech in which he said the Republicans are determined to repeal the federal income tax.
Long an advocate of a national sales tax, a confident DeLay told a conference of tax lobbyists that House Republicans will have hearings and push the issue in 2005 and 2006.
He said that replacing the income tax, payroll and other related federal taxes would provide more money for people to use, and he endorsed a proposal from Rep. John Linder, R-Ga., for a national sale tax.
However, he added that even a flat tax would be better than the current federal tax model.
Whether or not eliminating the IRS and replacing it with some form of easier-to-collect consumption tax or a uniform tax rate will be "a domestic centerpiece" of the second Bush term remains to be seen, but such alternative tax schemes are nothing new and have long been a controversial wish of numerous prominent, conservative Republicans.
In 1996 Republican presidential candidate Steve Forbes championed a 17-percent flat-tax scheme, garnering a great deal of attention and arguably making it the most prominent of the various alternative tax-system ideas floated by conservative Republicans over the last several decades.
Under Forbes' plan, taxes on interest from investment income such as dividends and capital gains, along with other forms of unearned income such as inheritances, would be eliminated, something that would certainly benefit wealthy individuals like the former candidate, who inherited his wealth.
Not that the idea is only favored by conservatives; nor was Forbes the first politician to back the idea.
Former California Gov. Jerry Brown, a liberal Democrat, was a proponent of the flat tax during his failed 1992 bid for the Democratic presidential nomination.
Conservative economists such as Arthur Laffer have also pushed the idea for decades.
More recently, U.S. Sen. Arlen Specter, R-Pa., has backed a uniform 20-percent tax on earned income, with similar exemptions on unearned income.
Former House Majority Leader Dick Armey, R-Texas, continues to promote such ideas as a conservative activist since leaving the lower House of Congress.
The idea of a national sales tax or value-added tax has gained greater favor with some conservatives in recent years, but those ideas, along with other tax-simplification schemes like the flat tax, have remained mostly wishful thinking on the part of conservatives.
Even as Republican leaders in the GOP-led House, Senate and Bush White House have praised the concept of tax simplification over the last 3 1/2 years, the U.S tax code has been expanded by over 10,000 pages as the Bush tax cuts and other changes -- part of a total of 227 changes to the code -- were implemented.
In addition, the House and Senate Republican leadership have been strong backers of the corporate-tax overhaul bill currently pending in Congress.
The measure, which started out as a simple bill to repeal a tax break for exporting companies deemed illegal by the World Trade Organization, has turned into a special-interest tax bonanza in order to make the bill acceptable to more members.
The conventional wisdom on Capitol Hill is that any corporate lobbyist worth his salt got his client a break in the bill.
"These guys have added 10,000 pages to the tax code over the last three years," said one Democratic Leadership aide. "Do you really think they can get it together and repeal the whole code?"
For their part, some Democrats are not taking the pending Republican tax push lying down.
House Minority Whip Steny Hoyer, D-Md., gave a speech last month pressing the case for simplification of the tax code and promising to make the issue a Democratic caucus priority, offering a plan that differed little from the most recent simplification plans from the GOP not involving wholesale repeal of the tax code.
It is important to note that House Democratic Congressional Conference Chairman Robert Matsui of California and others, including Republican members, acknowledge that changing the code is an extremely difficult challenge.
The last major set of wholesale changes made to U.S. tax law intended to simplify the code was enacted in 1986.
Although Monday's report on Hastert's book was met with little attention on Capitol Hill, the Democratic National Committee released a statement deriding the flat tax as an attempt to shift the federal tax burden to the middle class.
They argue that lowering taxes on the wealthy citizens who pay higher rates under the current progressive tax systems means many poorer citizens will pay higher portions of their income to the federal government.
In addition, they decried the losses of tax breaks for home mortgages and healthcare expenses provided under current law -- losses that have led some conservatives to label the home-mortgage deduction the "third rail" of tax reform.
Some conservatives were emboldened by news last fall that former Iraqi Provisional Authority administrator Paul Bremer was expanding neoconservative nation-building doctrine to include conservative tax orthodoxy by establishing a 15-percent flat-rate tax in Iraq.
However, Bremer's tax efforts did not actually preclude progressive rates but only capped them at 15 percent and surely are open to interpretation by Iraq's burgeoning self-government apparatus.
Several former Soviet-bloc nations, long a favorite of conservative anti-communist crusaders within the GOP, have become a haven of sorts for the flat tax.
Ukraine, Latvia, Estonia, and Slovakia, along with Russia itself, have all embraced flat-tax plans as their means to collect taxes from personal earnings.
The Russians, for one, have reported increases in revenue intake vs. their old, complex, higher-rate system.
While the idea of a flat tax or consumption-based tax system still seems like a pie-in-the-sky dream on the domestic front, some economists say we may be closer than it seems at first glance.
Many liberal-minded economists argue that the Bush tax cuts and other GOP efforts to lower taxes on capital gains and investment income have resulted in a tax system that is more regressive than has traditionally been the case.
Since the ultra-rich have higher levels of investment income than those with lower incomes, they end up paying a lower share of taxes, percentage-wise.
But many conservatives dispute the validity of such arguments, and even if it is the case, this by no means is the sort of lower-tax haven that they wish for.
It also remains to be seen if Republicans will be in the position to give it to them anytime in the near future.
--
(Please send comments to nationaldesk@upi.com.)
Copyright 2004 by United Press International.
All rights reserved.
*Thus on the flip side of the coin I guess we all get what we put into it. 
