Bruce Bartlett is back with another much-needed evisceration
of the national sales tax. (Great title too!)
Bruce unpacks what I take as a given: that a national retail sales tax would morph into a value-added tax almost immediately. And if you want America to morph into Europe, with even more Ikea stores so that last bit of assembly-value escapes tax and other related horrors, a VAT is a great start.
Normally I wouldn’t worry about such fundamental change to the tax code, not with all the inertia of the current code. But my old boss Bob Novak reports that George W. Bush may well uncork some sort of tax reform plan in New York City. (NEW YORK CITY!)
I had thought Karl Rove had removed fundamental tax reform from the Bush issue-plate as too big a chunk to bite off. Indeed, I thought John Kerry had a better shot to propose tax reform but, of course, no.
Now I guess that lines about “abolishing the IRS” are testing too well for Rove in key states. This is a dangerous game to play, as Bush, the ex-governor, must know.
The IRS will never go away, not as long as the federal government collects tax. Texas is one of seven states which levies no income tax of any kind, while two more — New Hampshire and Tennessee — tax only non-wage income. Does it follow that none of these has a revenue agency? Of course not.
Whether the feds tax “income,” “transactions,” or “value,” they are not just going to take everyone’s word for their tax liability. There will be some enforcement mechanism. There will be some attempt to define that which is subject to tax and that which is tax exempt. There will be IRS agents, there will be IRS regulations.
There will be taxes. And there will be an IRS.
PS — What ever happened to Grover Norquist’s Anti-VAT Caucus?