October 10, 1997 in Nation/World

A Taxing Situation The Political Mood Says The Time Is Ripe For Sweeping Reform.

Bob Dart Cox News Service
 

With the Beatles song “Taxman” blasting through Capitol corridors, Republicans launched an IRS-bashing, voter-wooing road show Thursday that they hope will help doom the federal tax code and keep them in control of Congress.

The “Scrap the Code Tour” opens in Columbus, Ohio, today and stops in Atlanta next week in what House Speaker Newt Gingrich, R-Ga., predicted will be a historic early step toward replacing the nation’s “impossibly complicated” income tax system.

The traveling debate features Rep. Richard Armey, R-Texas, championing a flat tax, and Rep. Billy Tauzin, R-La., advocating a national sales tax. Both want to replace the current progressive income tax system.

However, the tour’s subtext is to stir taxpayer anger at the Internal Revenue Service, helping Republicans win support for their efforts to drastically reshape the tax code.

A raft of bills already have been introduced in Congress. Soon after appearing with Armey and Tauzin, Gingrich joined a news conference that touted him as the 218th House member - the number needed for a majority in the chamber - sponsoring a bill to eliminate the “marriage penalty.”

Sen. Kay Bailey Hutchison, R-Texas, who also took part, introduced similar Senate legislation Thursday that would let married couples file separate tax returns if that would lower the family’s tax bill.

Last month, a Senate committee’s hearings on IRS abuses revealed a depth of national resentment toward the IRS that surprised even longtime critics. After a string of witnesses testified about abuses and unfair assessments by agents, acting IRS commissioner Michael Dolan apologized to the nation’s taxpayers and promised changes.

A poll conducted since the hearings by Rasmussen Research found that nearly two out of three Americans have an unfavorable view of the IRS and 40 percent of the respondents thought it would be a good idea to abolish the income tax.

“The hearings in the Senate jump-started this,” said Tauzin, who wants to replace the income tax with a 15 percent “consumption” tax on retail sales.

“Dick Armey’s and my mission is to first convince Americans that this is real.” he said. “That this is not a pipe dream. That we can really get rid of the IRS as we know it and dramatically change the tax system … and then to energize them.”

Armey, meanwhile, favors a “simple, fair” flat tax to replace the “mean, miserable, difficult, complex” current system of multiple tax rates and complicated deductions and exemptions. “The American people want to get rid of it, and we intend to make that happen,” Armey said.

Although both plans contain provisions the authors say will protect low-income Americans, critics charge that the changes would result in the poor paying more taxes and the rich paying less. While the current system may be flawed, the critics say, it is designed so that people who earn more pay a higher tax rate.

For most ordinary, taxpaying wage-earners, choosing between a national sales tax and a flat tax is “the fiscal equivalent of getting to choose between electrocution and hanging,” wrote Robert Kuttner, editor of the American Prospect.

Despite objections to the tax overhaul plans, Republicans wonder if Democrats are politically prepared to position themselves as defenders of the IRS. The Clinton administration has already reversed its early opposition to setting up review boards to handle taxpayer complaints against tax collectors.

If Democrats try to “demagogue it,” said Tauzin, he is ready to show how the current system costs American jobs and that “every family in America is better off” with a national sales tax.

“The big advantages to the consumption tax plan are, one, no IRS. No income tax. They’re gone and can’t come back to bite us. Number two, no double taxation. You pay once at the retail level. You don’t pay once on your income and again when you buy anything made in America. Three, you pay the tax on imported products just like you do on domestic products. Imported products no longer have an advantage over our products.”

Armey proposes a flat tax rate of 20 percent on wages and pensions, to be reduced to 17 percent within a couple of years. “Everyone is treated exactly the same,” he said, and loopholes are eliminated, so all taxpayers no longer will suspect their brothers-in-law are tax cheats.

MEMO: This sidebar appeared with the story: TAX PLANS Here are some of the main proposals in Congress to overhaul the federal tax system. Freedom and Fairness Restoration Act would abolish the system of progressive income tax rates and replace it with a flat tax. Sponsors: Rep. Dick Armey, R-Tex., and Sen. Richard Shelby, R-Ala. National Retail Sales Tax Act would abolish the IRS and replace the federal income tax with a 15 percent national sales tax. Sponsor: Rep. Dan Schaefer, R-Colo. Tax Code Termination Act would scrap the entire federal tax code by 2002. A new code whose details have not been specified would replace the current one. Sponsors: Rep. Steve Largent, R-Okla., and Sen. Tim Hutchinson, R-Ark. IRS Restructuring and Reform Act would establish an outside governing board to oversee the IRS, limit additions to the tax code and streamline the tax filing system. Sponsors: Sen. Bob Kerrey, D-Neb., and Rep. Rob Portman, D-Ohio. IRS Improvement Act is almost identical to the Kerrey-Portman bill, except that the new IRS oversight panel would consist almost entirely of government officials. Sponsors: Drafted by the Clinton administration and sponsored by Sen. Daniel Patrick Moynihan, D-N.Y., and Rep. Charles Rangel, D-N.Y.

This sidebar appeared with the story: TAX PLANS Here are some of the main proposals in Congress to overhaul the federal tax system. Freedom and Fairness Restoration Act would abolish the system of progressive income tax rates and replace it with a flat tax. Sponsors: Rep. Dick Armey, R-Tex., and Sen. Richard Shelby, R-Ala. National Retail Sales Tax Act would abolish the IRS and replace the federal income tax with a 15 percent national sales tax. Sponsor: Rep. Dan Schaefer, R-Colo. Tax Code Termination Act would scrap the entire federal tax code by 2002. A new code whose details have not been specified would replace the current one. Sponsors: Rep. Steve Largent, R-Okla., and Sen. Tim Hutchinson, R-Ark. IRS Restructuring and Reform Act would establish an outside governing board to oversee the IRS, limit additions to the tax code and streamline the tax filing system. Sponsors: Sen. Bob Kerrey, D-Neb., and Rep. Rob Portman, D-Ohio. IRS Improvement Act is almost identical to the Kerrey-Portman bill, except that the new IRS oversight panel would consist almost entirely of government officials. Sponsors: Drafted by the Clinton administration and sponsored by Sen. Daniel Patrick Moynihan, D-N.Y., and Rep. Charles Rangel, D-N.Y.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email