Re "Ever Felt Like Killing the IRS?" Commentary, Aug. 17: Judy Dugan failed to mention that the national sales tax would apply only to new products, thus preserving the buying power of lower-income people, who generally buy used cars, used houses, etc. And Dugan failed to mention that the most important contribution of the sales tax to the economy is the removal of the embedded cost to corporations and individuals of complying with the IRS code, estimated currently at approximately 20% of the sales price of any given product in the marketplace. Why is this important? Because you are increasing the buying and savings power and thus increasing the size of the economy by one-fifth overnight.
Finally, Dugan's suggestion of converting the payroll tax portion of government revenues alone to a national sales tax would most adversely impact senior citizens who have worked long and hard for a worry-free retirement.
The flat-Earth wing of the Republican Party once again has it right. But, in the end, Dugan is right: None of this growth-inducing tonic will ever see the light of day. That the sales tax would increase the productivity and size of the economy overnight is simply not good enough for those who want a smaller economy and bigger government in order to redistribute more equitably a shrinking pie.
Suppose we do create a national sales tax and then we kill the IRS. Who then will investigate those who steal trucks to sell goods to others who want to avoid paying the national sales tax? Who then will investigate those who buy from those stolen trucks to buy goods without paying the national sales tax? Who then will investigate those merchants who collect the tax from their customers but then fail to pay the tax over to the federal government?
The IRS is not the bad guys. The IRS enforces the laws made by Congress, which it will have to do even if the laws change. Changing the laws does not mean that those who willingly break the law will become law-abiding citizens.
The Democrats will argue a national sales tax would be regressive, and the well-to-do Republicans figure they might ease their tax burden. Let President Bush and his political hack allies float the idea of a flat tax or a national sales tax if they want to. What it boils down to is that everyone loves to hate the IRS when April 15 rolls around.
I applaud Dugan's considering the idea of a federal sales tax to replace the income tax. She neglects, though, the federal Office of Management and Budget study of over a decade ago, which said a sales tax would save our economy about $350 billion in accounting and legal costs. The OMB also said a tax of about 20 cents on the dollar would let us drop the income tax, not Dugan's guess of 30 cents. And the IRS budget is as large as NASA's.
Further, it would get government out of our lives, and forgo the temptation to use the code to carry out social engineering. Recall too that President Nixon used income tax reports against his political enemies, and the Clinton White House requested and got tax returns on its opponents.