Time: Tue Feb 25 08:32:28 1997
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Tue, 25 Feb 1997 07:58:31 -0700 (MST)
Date: Tue, 25 Feb 1997 08:18:05 -0800
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From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: "Rewriting the Code" (part 2)
<snip>
>could only be followed by something better. But the French and Russian
>revolutions remind us that it is indeed possible to move from bad to worse.
>
>Should friends of liberty in America rush to embrace radical reform of the
>federal corporate and individual income tax? And if so, which plan is
>better, Archer's or Armey's? Armey would tax "consumed income," exempting
>savings and investment, capital gains, and interest and dividend income.
>Unlike the present tax structure, all income would be taxed once and only
>once. Inheritance taxes would be abolished: You already paid taxes on that
>money, so it's yours. Armey contends a flat tax of 17 percent that exempts
>savings would do less damage to the economy, spur job creation, and be seen
>as fairer and less intrusive.
>
>Archer, however, argues for a national sales tax and gives four imperatives
>that guide his thinking: First, the new system must not tax savings and
>investment. Second, the IRS must be abolished. Third, the new tax system
>must capture the underground economy. And fourth, the tax must be border
>adjustable (i.e., the tax must be removed from American exports and added
>onto imported goods and services to American citizens). This, as Pete DuPont
>has observed, describes not a national sales tax, but a European-style
>value-added tax. Any sales tax large enough to replace the income, Social
>Security, inheritance, and gift taxes (all enforced through the condemned
>IRS) would immediately become a value-added tax since avoidance at the
>retail level would force tax collectors to move to the wholesale level and
>backwards through manufacturing, as has happened in every European nation.
>
>In comparing Dick Armey's flat consumed-income tax and Bill Archer's
>national sales tax/VAT, it is important to begin by outlining just what
>criteria determine the "best" or least destructive tax.
>
>The most important aspect of any tax is that it be difficult to increase.
>This means a tax should be visible, painful, and applied equally to all
>taxpayers. Politicians love invisible taxes. How many times have we heard
>Ted Kennedy and Dick Gephardt urge that corporations pay more in taxes? Of
>course, the only way that General Motors gets any money to pay its corporate
>income taxes--or property taxes and wage taxes, for that matter--is to
>include the taxes in the price of cars it sells to the public.
>
>Bill Clinton's 1993 tax hike "on the richest 1 percent" actually raised
>two-thirds of its revenue from small businesses filing as subchapter S
>corporations. Thus all Americans pay this "millionaires' tax" when they shop
>at the grocery store or go to the dry cleaners. Yet Clinton says--and may
>actually believe--that people don't pay his tax, businesses do.
>
>By contrast, property taxes have the virtue of being paid in lump sum
>installments--not dribbled out as in a sales tax or withheld like the income
>tax. It's no accident that the first success of the contemporary tax
>revolt--California's passage of the Jarvis-Gann Proposition 13 in 1978--was
>a measure to roll back property taxes. Subsequent efforts to cut income
>taxes and sales taxes have been less successful, in part because those taxes
>are less obvious to taxpayers.
>
>Dick Armey's flat tax would abolish withholding and require that all
>Americans send a check to Washington each month, just as we pay our rent,
>phone, or utility bill. Now this is creating truly revolutionary conditions.
>Monthly checks to the feds will be painful reminders of the cost of
>government. By contrast, the sales tax or VAT will hide the true cost of
>government. Sen. Dick Lugar (R-Ind.), speaking at the Cato Institute in
>favor of a national sales tax, was asked how much he paid in local sales
>taxes last year and he didn't know. Every citizen will know exactly how much
>he or she is paying with Dick Armey's flat tax. A tax bill hidden in a VAT
>will mask the deadweight cost of the state.
>
>After visibility and painfulness, taxes should apply equally to all
>taxpayers--and perhaps as important--be seen to do so. Armey's bill would
>unify taxpayers by having all taxpayers pay one rate and by eliminating
>almost all deductions. With its many complicated deductions, one of the
>problems of the present tax code is that some taxpayers think that they are
>benefiting from deductions and are "getting away with something," despite
>their heavy tax burden. A flat tax not only puts all taxpayers in the same
>miserable relationship with the state but also lets taxpayers feel confident
>they are all in the same situation.
>
>To the political class, the greatest virtue of the graduated or progressive
>income tax is that it allows politicians to divide taxpayers into discrete
>groups that tax increasers can target and mug one at a time, rather than
>having to take them all on at once. Bill Clinton worked hard at this,
>telling Americans, "Pay no attention to my little tax hike, I'm only going
>after the top 1 percent." The taxman's strategy is to divide and conquer, a
>little bit at a time.
>
>Such a ploy works extremely well. The business community remains quiet when
>the personal income tax is raised or inflation shrinks the value of personal
>and dependent exemptions. Then individual taxpayers remain inert when
>business taxes are raised. Politicians such as Clinton and Gephardt even
>play to class envy, urging one group of income earners to hold the
>politicians' coats as they expropriate another.
>
>In Massachusetts, the establishment left has tried five times through the
>constitutional initiative process to repeal the present requirement that the
>state income tax have one rate. Those who want higher taxes and more
>government know they cannot raise the income tax as high as they would like
>if they must face all taxpayers at once. Offered the chance to see "average
>taxpayers' taxes fall while the rich pay more," Bay Staters have rejected
>the siren call of envy. Dick Armey, in fact, may want to take a cue from
>Massachusetts and codify single-rate language in the Constitution.
>
>When it comes to treating everyone equally, Archer's sales tax/VAT has no
>advantage over the present income tax. Every VAT in Europe has multiple
>rates. Politicians extort campaign funds from cowed industries that fear
>having their products taxed more or that want their product exempted from
>the VAT. Products are labeled "necessities" or "luxuries," and taxed at
>politically determined rates. In America, we already have politically driven
>multiple rates on sales of goods and services such as tobacco, alcohol, and
>hotel rooms. Sen. Daniel Moynihan (D-N.Y.) has suggested a 10,000-percent
>tax on gun ammunition. A national sales tax would politicize the "virtue"
>and "sinfulness" of every product and service in America.
>
>The progressive or graduated income tax divides Americans by income class
>and treats them differently, just as racial preferences--whether old-style
>Jim Crow laws or new-style affirmative action--divide Americans by race. And
>for the same reason: so we can be divided against each other by the state.
>It is no coincidence that the graduated income tax and racial preferences
>are collapsing at the same time. Americans wish to be treated equally before
>the law. This is neither South Africa nor East Germany, despite the best
>efforts of Clinton and Gephardt to divide us against each other, first by
>race and then class.
>
>There's another reason to be wary of a sales tax or VAT: Canada, Japan, and
>every European nation have a national sales tax or VAT and a personal income
>tax and a corporate income tax and wage taxes. In fact, it has long been a
>goal of the Democrat party to add a VAT to our present tax burdens. I remind
>readers that Hillary Clinton has three times argued for a VAT to pay for her
>German-style government-run health care plan. As further proof, remember
>that Bill Clinton has three times denied such plans for a VAT.
>
>It is inauspicious that both Bill Archer and Dick Lugar have refused to
>insist that the 16th Amendment, which allows the federal income tax, be
>repealed before any national sales tax or VAT is introduced. To implement
>any consumption tax without first repealing the 16th Amendment is a
>guaranteed recipe for disaster. Honest supporters of a VAT as a replacement
>to the present tax must insist both on repeal of the 16th Amendment as the
>prerequisite for any new tax and on a constitutional prohibition to the
>return of any income tax. Given the present courts, I despair that even this
>would save us from Europe's experience, where politicians in every case have
>used tax reform impulses to saddle their citizens with both taxes.
>
>Tax reform should not blind us to the true battle: the total size, scope,
>and power of the state. The total tax burden, not simply how it is carved
>out of our lives, is the target. Perhaps the most important tax reform
>measure is the Barton Amendment urged by freshmen Reps. John Shadegg
>(R-Ariz.) and Linda Smith (R-Wash.) to require a three-fifths vote of both
>houses to raise or introduce any tax. Speaker Gingrich has promised a vote
>on this amendment on April 15, 1996, and if it doesn't pass then another
>vote will be held on April 15, 1997--conveniently after the 1996 elections.
>
>All tax reformers should support this amendment--or preferably one that
>requires a two-thirds supermajority to raise taxes, as is the case now in
>Arizona, California, and the state of Washington, and may soon be true for
>Ohio, Florida, and Nevada.
>
>Strategically, friends of liberty should support the Republican efforts to
>cut taxes and spending at the same time. Linking budget cuts with the
>$500-per-child tax credit and cuts in the capital gains tax and inheritance
>tax builds public support for both budget cuts and tax cuts. Let's ratchet
>down the state, cutting back spending and handing the savings back to
>Americans in tax savings.
>
>In this process of reducing government, every tax cut is a good tax cut. Mae
>West made a similar observation about sex. Let's work together to reduce the
>total tax burden, to protect Americans against a political class that would
>divide us to better loot us, recognizing that there is no good way to rip 20
>to 25 percent of the economy away from those who earned it to be distributed
>by the political class to those who vote for it.
>
>Asking Americans to choose the best way to be taxed--rather than focusing on
>reducing total taxes--is too reminiscent of the "choice" the state of Utah
>offered Gary Gilmore: hanging or shooting?
>
>Grover Norquist is the president of Americans for Tax Reform.
>
>Edward H. Crane Responds
>
>I t's important to keep in mind that the flat income tax being proposed by
>Dick Armey, based on the research of Hall and Rabushka, is actually a
>consumption tax. Neither Grover Norquist nor Bruce Bartlett dispute this
>fact. Thus, the economic impact of both the flat tax and the federal retail
>sales tax would be the same. That impact, of course, would be enormously
>positive when compared to our present tax system. So, as I mention in my
>essay, the issue isn't economics. It is politics and tactics.
>
>There's a little dissembling going on when Grover Norquist consistently uses
>the VAT and a federal retail sales tax interchangeably. They ain't the same
>thing, and Grover knows it.
>
>Of course, you could argue (and Norquist does) that a retail sales tax will
>inevitably become a VAT. But there's less reason to expect that to happen
>than to expect a flat tax--Bartlett points out that it's not really a flat
>tax even at the outset--to be twisted and molded into something that looks a
>lot like what we have today. In either case, it would be best to eventually
>back up a statute with a constitutional amendment.
>
>One other point. Norquist had better dust off his copy of Power & Market if
>he actually thinks business income taxes are paid by consumers. They are
>paid by the owners of the business. The notion that prices are determined by
>costs, which are easily passed on to consumers, is nonsense. Supply and
>demand determine prices. Consumers couldn't care less how much it costs for
>a business to produce a product or how much in the way of taxes it pays.
>
>Back to the issue of politics. As Dan Pilla points out, getting rid of the
>IRS is an appealing aspect of the sales tax. This is not an agency that
>spends a lot of time reminding its employees of the Bill of Rights. If we
>can fund the federal government without it, by all means, let's do it.
>Flat-tax advocates posture that the retail sales tax will necessitate hordes
>of revenuers swarming over the landscape to keep shopkeepers from breaking
>the law. That 95 percent of retailers willingly comply with state retail
>sales tax requirements already is apparently inconsequential.
>
>But even if there was some problem with collections--and with taxes as high
>as they are, we could expect some--it's unlikely that missing taxes under a
>national sales tax would exceed the $150 billion that annually escapes the
>feds now. Besides, whatever sales tax enforcement agency would be created,
>it would not be going into your home to discuss every aspect of your
>personal and business life. How much money you make and how you make it
>would then be no business of the federal government. Actually, since the
>vast majority of states that have
>an income tax depend on the IRS to enforce compliance at the state level,
>most, if not all, would switch to a sales tax or increase their current one.
>Income taxes would be abolished throughout the land.
>
>Moreover, politics in America would forever be changed. The psychological
>impact of living in a society where it was none of the government's business
>how much money you made--where your paycheck reflected exactly what you
>earned--would be huge. It would change people's attitudes on all public
>policy issues to remove the intimidating and paternalistic Internal Revenue
>Service from people's lives.
>
>Finally, public support for abolishing the income taxes is at an all-time
>high. When columnist Jack Anderson asked readers of Parade magazine to write
>in and tell him if they would like to replace income taxes with a federal
>retail sales tax, some 40,000 did. And 97 percent of them favored the retail
>sales tax.
>
>Daniel J. Pilla Responds
>
>The chief opposition to the sales tax is the claim that due to evasion, it
>will quickly degenerate into a European-style value-added tax (VAT). All
>agree VATs are inefficient, hidden, and to be avoided.
>
>The argument that a sales tax will mutate is simply not supported by the
>American experience. Forty-five states now have a sales tax. In no case has
>it transmogrified into a VAT. Moreover, the present system creates an
>incentive for a merchant to engage in sales tax evasion with a customer.
>When a product is purchased "off the books," the customer evades the sales
>tax, and the merchant evades the income tax. If there is no income tax, the
>merchant loses his primary incentive to aid in sales tax evasion. He is not
>as likely to abet evasion when the risks are his but the rewards are not.
>
>Please note: Evasion is greatly reduced when the public perceives the tax
>rate is reasonable, and the system itself is fair and simple. Hence, as the
>overall tax burden falls, evasion falls. This is precisely why it is
>critical to eliminate existing federal taxes in favor of a single national
>sales tax.
>
>The average American family today pays 15-percent income taxes. Social
>Security tax, not including the employer's matching share, is 7.65 percent.
>Thus, to purchase a $10,000 automobile, the average family must earn $12,265
>(not counting state taxes). Now, consider that business taxes and compliance
>costs amount to 15 percent of a car's purchase price. Get rid of those costs
>and the car costs $8,500. By eliminating other federal taxes and going to a
>25-percent retail sales tax, the average family would have to earn $10,625
>to purchase the same auto--a $1,640 savings.
>
>The Armey plan also seeks to eliminate wage withholding. It would require us
>to send a check to Washington each month. Grover Norquist suggests payments
>will "be painful reminders of the true cost of government." True, but they
>will also remind us of the continuing presence of the IRS. And, in fact, IRS
>records show about 3.5 million citizens annually cannot pay what they owe,
>regardless of how simple it is to file a return. To collect, IRS executes 3
>million to 4 million wage and bank levies, and files about the same number
>of tax liens.
>
>A flat tax coupled with no withholding creates a compliance problem unheard
>of in any sales tax environment. It turns loose tens of thousands of IRS
>collectors on the public. A system designed to remind us that taxation is
>painful will become a collection nightmare for millions.
>
>Norquist suggests that a flat tax puts "all taxpayers in the same miserable
>relationship with the state." I fear this is true, as the IRS is preparing
>for draconian enforcement measures even now. Overreaching IRS procedures
>will flourish under a flat tax. Our challenge, however, is not to put all
>citizens on equally miserable footing. Our challenge is to free all citizens
>from the misery inflicted in the name of taxation.
>
>The biggest single advantage of the sales tax, apart from eliminating the
>IRS, is simplicity. This is lost with the flat tax. Advocates claim both
>businesses and individuals will be able to file flat tax returns on a
>postcard. However, Bruce Bartlett's remarks betray this claim.
>
>He acknowledges that businesses retain substantial deductions, including,
>"wages, salaries, and pensions paid (but not benefits); purchases of goods,
>services, and materials used in business; and all capital equipment,
>structures, and land." It is no easy matter to account for these expenses.
>It is even more difficult to persuade error-prone IRS examiners that one's
>own calculations are accurate.
>
>Also consider that withholding of income tax ceases under the flat tax, but
>withholding of Social Security taxes does not. Consequently, every business
>with employees must continue to withhold, make regular deposits of the tax,
>and file five employment tax returns annually.
>
>According to the IRS's 1993 Annual Report, nearly 29 million such returns
>were filed, at tremendous cost. The IRS assessed nearly 11.5 million
>penalties in connection with those returns, at a direct cost of over $3.5
>billion. Nothing in the flat tax proposal eliminates this albatross.
>
>In sum, the claimed benefits of a flat tax are non-existent. Only a national
>sales tax provides the kind of relief needed. We all recognize a reduction
>in government is a key element in the tax reform debate. A sales tax
>provides a unique advantage in this regard. If funded through a sales tax,
>government has a vested interest in keeping its hands off the economy and
>out of people's pockets. As the economy grows, government's share of the pie
>grows.
>
>Conversely, the flat tax is still an income tax and carries with it the
>unarguable reality that it penalizes growth. That is precisely why our
>founders used consumption taxes as the primary means of funding government.
>Alexander Hamilton rejected taxing "the articles of our own growth and
>manufacture" as they are "more prejudicial" to the economy than consumption
>taxes.
>
>And indeed, income is the most basic element of the "articles of our own
>growth and manufacture."
>
>Bruce Bartlett Responds
>
>Dan Pilla and Ed Crane both favor a retail sales tax to replace the current
>federal tax system for one basic reason: It will cause the IRS to vanish.
>Unfortunately, it will not, for a number of reasons.
>
>First, a federal sales tax will require too high a rate. Crane says a rate
>of up to 30 percent would do the job. My own calculations put the figure at
>a minimum of 32 percent. International and state-level experience indicates
>clearly that sales tax rates much above 10 percent cannot be collected due
>to massive evasion.
>
>Second, to get the tax rate as low as 32 percent assumes that all services
>will be taxed. In other words, we are not just adding to the prices of goods
>at the checkout, but to every service we consume as well. These services
>include legal, medical, funeral, utilities, video rentals, racetrack wagers,
>airline tickets, movie tickets, plumbing, school tuition, telephones, rent,
>and many others too numerous to mention.
>
>Again, experience at the state level and in foreign countries indicates that
>such comprehensive taxation of services with a retail sales tax--as opposed
>to a value-added tax (VAT)--is impractical. This is why almost all states
>exempt most services from sales taxes. Also, political resistance to taxing
>services tends to be strong. In fact, a recent effort to comprehensively tax
>services in Florida had to be repealed shortly after it took effect.
>
>Third, there is a serious problem with intermediate goods and
>services--those resources used in production--under a sales tax. For a sales
>tax to work properly, intermediate goods and services must be exempted from
>the tax. Otherwise, you get what economists call "cascading," where taxes
>are levied on top of taxes. This is very inefficient and forces companies to
>vertically integrate in order to prevent it.
>
>Fourth, eliminating federal income taxes will not relieve taxpayers of the
>necessity of keeping records, filing returns, or being audited. This is
>because 44 states have income taxes. Thus, most of us will still have to
>suffer all the invasions of privacy and other indignities that Crane and
>Pilla wish to save us from, but from our state governments rather than the
>federal government.
>
>Fifth, simply eliminating the necessity to file income tax returns will not
>relieve all taxpayers of IRS-like audits. Every business, including all
>self-employed workers, will still be subject to audits to ensure that the
>necessary sales taxes have been paid on their production. This will affect
>upwards of 35 million Americans.
>
>Sixth, someone will still have to collect the sales tax. Proponents of the
>sales tax, such as Sen. Richard Lugar, have said that the states will
>collect it for the federal government, since most already have sales taxes.
>Leaving aside the fact that this country tried that once during the Articles
>of Confederation and it didn't work, there are continuing problems with this
>idea:
>
>[[perthousand]] It assumes that the states will do the collection willingly
>and not cheat the federal government.
>
>[[perthousand]] It ignores the fact that states will need to be compensated
>for collecting these taxes. Studies suggest that this will require at least
>a 1 percent higher rate for this purpose.
>
>[[perthousand]] It assumes that the states will keep their sales taxes. In
>fact, given the costs and burdens of facilitating a national sales tax, all
>would quickly abolish their sales taxes and increase their income taxes to
>replace the revenue, thus eliminating the sales tax collection machinery.
>States without income taxes would immediately adopt them.
>
>[[perthousand]] It ignores the fact that no two states have the same sales
>tax base, nor is it likely that any state's tax base will be the same as the
>federal government's. This means that the cost of collecting the tax will be
>far higher than 1 percent.
>
>Seventh, the problem of relieving the poor has not adequately been dealt
>with. While there may be some virtue in treating everyone the same--rich and
>poor alike--there is no possibility that the Congress would enact a sales
>tax without doing something to reduce the burden on the poor.
>
>Historically, this has been done by exempting certain items, such as food
>and clothing, from the sales tax. However, exemptions greatly increase the
>complexity of the tax and the opportunities for evasion. Thus advocates of
>the sales tax have suggested a rebate mechanism instead. (Studies of the
>earned-income tax credit--a similar program--show error and fraud rates of
>up to 40 percent.) A rebate system would quickly turn into a major
>entitlement spending program running into the hundreds of billions of
>dollars. And it will also require a significantly higher tax rate.
>
>While there are many other important problems with the sales tax, I will
>conclude by pointing out that every other major country with a national
>sales tax, with the exception of Australia, ultimately replaced it with a
>VAT. This is because a VAT is capable of dealing with the many
>administrative problems I have outlined. Therefore, I believe that the
>effort to enact a national sales tax will necessarily be corrupted into a
>VAT. And, as Ed Crane succinctly pointed out, a VAT would be a disaster.
>
>Grover Norquist Responds
>
>Reading the arguments of Ed Crane and Daniel Pilla, I am reminded why all
>taxpayers find the present income tax system a threat to American civil
>liberties and the American economy. The wonderful aspect of this debate on
>reforming the tax system is that Bill Clinton and those who practice the
>politics of hate and envy are so isolated from the view of most Americans
>and are alone in their support of the present system.
>
>So, among friends of liberty and serious critics of the present tax
>code--with its intrusiveness and economic deadweight--let us revisit the
>argument for a flat tax on consumed income versus a national sales tax or a
>VAT.
>
>First, I reiterate that any sales tax of 20 percent or 30 percent will
>become a value-added tax. Only a VAT would be enforceable. On large ticket
>items or personal service, the retail sales tax would be easily avoided.
>There is a reason that every European nation with a significant consumption
>tax has it in the form of a VAT rather than a retail sales tax. And it is
>for the convenience of the tax collectors, not the citizenry.
>
>Second, the idea that a shift to a national sales tax/VAT would free "us"
>from the burden of paperwork, intrusive government oversight, and forced
>labor to calculate the amount of tribute sent to Washington, D, assumes that
>none of "us" run businesses or are self-employed. If all service producers
>and all sellers of goods must calculate their value added or their sales
>prices and collect and remit taxes, this requirement would hit well over 20
>million American small-business owners.
>
>I have always looked forward to the day when most Americans would be
>"self-employed" and contract for their own services rather than serving as
>paid staff to a company. The self-employed would be more numerous today if
>not for archaic and doomed laws written for the benefit of labor union
>organizers. It isn't good news to a self-employed American, the owner of a
>small business, an independent contractor, or a home-worker to be told that
>"you" will do all the federal government's tax collecting from now on,
>rather than you and wage earners.
>
>Karen Kerrigan, the president of the Small Business Survival Committee,
>reminds us that "small businessmen and taxpayers are allies in fighting
>against big government and big government intrusion. Why would some work so
>hard to saddle small businessmen with all the burdens of ripping resources
>out of the real economy and sending them to Washington, D?"
>
>Third, the sales tax fails the test of making the total tax burden clear.
>Pop quiz: How much, gentle reader, did you pay in your state sales taxes
>last year? How much in federal excise taxes on your phone bill, tires,
>cigarettes, liquor, etc.? Yet I bet you could look up your federal income
>tax burden within minutes.
>
>Fourth, the sales tax fails the test of making the tax painful to pay and
>painful to raise. On small purchases, the sales tax would be hidden in the
>price of the good or service. On large purchases, the sales tax would be
>avoided--which is why the government would do what every other nation in the
>world has done: turn the sales tax into a VAT. For example, if a car is only
>taxed at the "retail" level, clever people would figure out how to buy at
>wholesale. Only by taking at all levels of production--i.e., a VAT--can the
>tax collector be sure that taxpayers don't go around retail outlets to do
>their purchasing tax free.
>
>Fifth, the advantage of the flat tax of uniting all taxpayers in opposition
>to tax hikes and in support of tax reduction would be lost by a sales
>tax/VAT. Today's national sales taxes or excise taxes on cigarettes, liquor,
>tires, gasoline, guns, aviation fuel, and phone bills already are all set at
>different rates. At the state level, some items are exempt from state sales
>taxes, others included.
>
>In Europe, the VAT discriminates among product categories. Some are exempt.
>Some are taxed as necessities. Some are taxed as luxuries and all at
>different rates. Wait until the environmentalists get to tax recyclable and
>non-recyclable materials at different rates. All "social costs" can be
>"internalized" in an industry by setting different rates. Packaged-goods
>manufacturers can pay for landfills and recycling programs. Guns and ammo
>taxes can pay for hospital costs for gang members. Snack foods can pay for
>health care. Cigarettes can pay for anti-smoking ads (as they already do
>through a special sales tax in California). Target an industry. Come up with
>a "worthy" spending program. And you're off to the races.
>
>Such differential rates are a gold mine for politicians. Every year some
>industry would be threatened with an upgrade from necessity to luxury. If
>campaign contributions are sufficiently forthcoming, no change. If not, zap.
>And some industries and products would be offered lower rates in return
>for--yes, you got it--campaign contributions. The income tax has no such
>ease of targeting whole industries or portions of production.
>
>Lastly, the greatest danger of moving to a consumption tax of any
>kind--whether a national sales tax or a VAT--is that it risks saddling the
>American taxpayers with what our European brethren have sadly suffered: both
>an income tax and a national sales tax/VAT. No imagined benefit of the sales
>tax is worth this risk.
>
>(TAXES)
>
========================================================================
Paul Andrew, Mitchell, B.A., M.S. : Counselor at Law, federal witness
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