Former Cheney Advisor Blasts National Sales Tax

[wyethwire]

Remember when Bush was floating the idea of a national sales tax to replace the income tax?

Republicans like Jim DeMint are pushing an even more radical tax reform that would slap a 23 percent federal sales tax on nearly everything you buy.

There's just one problem - Republicans think its a terrible idea

[cheshire]

1. Good the more they say that the bigger chance it will be heard by the

sheep. God I love desent in the ranks. Good will rise above evil. And smash it's ugly smirky face. Oh sorry I'm back. Whew almost of the deep end.

[wyethwire]

3. even Grover Norquist opposed a national sales tax

but that doesn't stop him from being a Republican shill

[snippy]

2. I usually am able to persuade republicans that this is a bad idea.

My argument doesn't even attempt to address the inequitable aspects of a national sales tax. I just point out that if you tax something you will get less of it and that a huge black market would be created for all taxable goods and services. To eliminate that black market the IRS will have to increase in size several times over.

Not only will the IRS have to verify that an individual paid the sales tax on purchases made in stores and that the retailer remitted the tax to the government, the IRS also will have to verify that people paid the tax to the plumber who repairs their leaky pipes and that the plumber remitted the tax. The IRS also will have to do this for the vital eBay segment of the economy and of course for sales made at gun shows. Nearly every republican I have discussed this with ends up deciding that a national sales tax is a bad idea.

However, Bush is not ever going to propose such a tax. If he wins in November he will propose and pass revisions to the income tax code that will have the effect of turning the income tax into a sales tax. This will be done by creating an unlimited deduction for income which is invested rather than spent. The deduction will apply to earned income and unearned income such as interest and capital gain income. The result of this will be that taxable income will include only income which is spent.

[wyethwire]

4. DeMints sales tax would create three new agencies

and individuals would have to file a tax return every month.