A lot of discussion going on today in the sphere over a Drudge newsflash. Predictably, most conservatives/libertarians jumped for joy while most liberals cried foul. First of all, this is a Drudge post everyone. Secondly, shouldn't we wait a little until more details or hard information comes out of the White House before burning it down?
For those of you who don't like to click on links, here's the gist of the Drudge exclusive.
A domestic centerpiece of the Bush/GOP agenda for a second Bush term is getting rid of the Internal Revenue Service, the DRUDGE REPORT has learned.
The Speaker of the House will push for replacing the nation's current tax system with a national sales tax or a value added tax, Hill sources tell DRUDGE.
"People ask me if I’m really calling for the elimination of the IRS, and I say I think that’s a great thing to do for future generations of Americans," Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.
...
"By adopting a VAT, sales tax, or some other alternative, we could begin to change productivity. If you can do that, you can change gross national product and start growing the economy. You could double the economy over the next fifteen years. All of a sudden, the problem of what future generations owe in Social Security and Medicare won’t be so daunting anymore. The answer is to grow the economy, and the key to doing that is making sure we have a tax system that attracts capital and builds incentives to keep it here instead of forcing it out to other nations."
The IRS has been the conservative boogeyman for decades now. Hey, I'm no fan of it either. Jon Henke ponders on this idea while offering a roundup of opinions. If you have a few minutes, read Dale Franks' post over at QandO that details the National Sales Tax or Value Added Tax ideas. This comes down to two points that are inter-related. No more IRS and elimination of the income tax.
Matthew Yglesias makes what I think is the biggest point of this discussion here.
I'm actually a fan of consumption taxation, but it's simply not the case that you could abolish the IRS by moving to a national sales tax or a national VAT. Any tax system is bound to have rules (or if it's not going to have rules it would be a very strange system indeed) and that means people will need to enforce those rules. That's what the IRS does.
Yes, I am also a fan of consumption taxation. Matthew is very correct in thinking that a different kind of tax system would not be without enforceable rules. No matter what way you look at it, there will have to be some sort of governmental agency set up to make sure they can collect their money. So we can forget about jumping up and down about the possible demise of the IRS.
My reasoning behind support for a consumption tax is simple. There are millions of untaxed dollars being shifted around the underground economy everyday. For a good look into just how much money we're talking about, pick up a copy of Eric Schlosser's Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market. Basically, it would make it difficult for people to operate in secrecy anymore. The drug dealer doesn't pay income tax, but he does when purchasing that soon-to-be-confiscated Porsche.
While you won't see the end of the tax enforcement agency, talking about revamping the tax system is a worthy debate to have. My libertarian friends over at QandO would vote for Bush purely on this issue. Unfortunately for them and and conflicted conservative voters, I think a proposal like the elimination of the IRS ranks right up there with the road trip to Mars. Meaning, a lot of grandstanding and empty promises. It's a shame, really. Because a real overhaul to the tax system would be beneficial for everyone.
UPDATE: For more info on the Fair Tax idea, here is a link.