Craziest Goddamn Idea Ever
I’m sure you’ve heard of this by now, but just in case, let me point you toward this post by Atrios about the craziest idea to come out of the Republican party in…well, ever.
In his upcoming book, the speaker of the House Dennis Hastert suggests the “one size fits all” solution to our economic woes is to abolish the Internal Revenue Service. The murmurs in the blogosphere are that this is a trial balloon for an idea that Bush wants to propose as well. I wouldn’t speculate on that part of it, but if this lunacy is really what the GOP thinks the American people want, then I say go for it.
This reminds me of the 1996 election when Steve Forbes made a big splash out of his “flat tax” proposal. His refrain that it was more fair for everyone to pay the same rate was so popular at first glance, it wasn’t long before every Republican had their own take on tax “simplification”. Once the GOP primaries were over, it was pointed out that in order to bring in the same amount of money, the government would need to raise the taxes on the poor and middle classes in order to make up for the lower taxes for the rich. Following that, the American people elected Bob Dole in a landslide.
And the same would be true here. This idea is from the party that has spent the last 50 years lowering taxes for the rich. Do you really trust them to suddenly abolish the IRS and come up with a plan whose side effect isn’t to balance the budget on the backs of the poor? Every time anyone from either party suggests cutting taxes, voters need to ask themselves two simple questions :
1) Are they planning on cutting spending? If so, which programs are going to be cut?2) If they aren’t going to cut spending, where do they plan to make up the money? If all things are equal, cutting taxes somewhere means raising revenue somewhere else.
If you apply these questions to Bush’s tax cuts, the answers are that they haven’t cut spending at all. They’ve increased spending and they’re making up the huge difference in funds by running record deficits which will be paid off in the future by all of us.
Now if we go back to the idea of abolishing the IRS, we’ve got an even worse situation. If we abolish income taxes completely (which are progressive by nature in that the rate for the highest incomes is larger for the rate of the lowest incomes), then we’re in a situation in which we’ve got to make up for more than a trillion (with a T) dollars. And they wanna do this with an increase in sales taxes. Seriously.
Considering how crazy our country goes every time the price of gasoline jumps up 20-30 cents per gallon, imagine how popular this proposal will be when they idly suggest raising the price of everything by 20-30 cents per dollar. Even with the math trickery to fool people into thinking replacing income tax with sales tax would be a progressive change, I can’t help but think this would hit the economy like an inflationary atom bomb.
Let’s say you wake up tomorrow and the IRS is gone. You pick up your paycheck and notice it’s much bigger than it was before. Swinging by your favorite fast food restaurant, you see that everything on the Super-Value Cheap-Ass menu is now $1.30 instead of $1. You go to the grocery store and what used to cost $50 is now almost $70. You get your car serviced and a $400 repair has more than $100 in taxes added to it. Sure, your take home pay went up, but the price of everything you buy has gone up as well.
And if you think this is effecting the rich and poor equally, think about it this way : Sure rich people pay more for most stuff than the poor, but they don’t pay more as a percentage of their income. Just because someone makes ten times more than you do doesn’t mean they consume ten times as much food, clothing, etc. For a person who’s living paycheck to paycheck, every penny is spent on bills, but for the middle classes and up, there’s usually enough left over to save and/or invest. Under a sales tax only model, that money avoids any sort of taxation which means the less you make, the higher and higher you’re paying as a percentage of your income.
Foreseeing these arguments, these sorts of proposals are full of “fuzzy math” designed to mislead voters. As Atrios put it :
They always set the tax rate too low, often obscuring it by calculating percentages rather weirdly (say, if the total price including tax is $1.30, and the price without tax is $1.00, they call the associated tax rate as ((1.30-1)/1.30)= .23 instead of the .3 that we normally think of it). They claim you can include progressivity by exempting the first $X worth of purchases, ignoring how this would require a massive increase in the underlying tax rate.
Like every other tax proposal the Republicans endorse, this one will primarily benefit the wealthy, while more modest reforms, such as Kerry’s proposal to cut taxes on the lower and middle classes by rolling back the Bush tax cuts for the top 2%, benefit the rest of us. In a world where every voter is informed and votes in their economic self-interest, this would translate into Bush losing this November in a landslide, but one of the nice things about being rich is that you can afford a lot of propaganda.
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Can’t you see what the Emperor and his minions are trying to do? First, we conquor week nations and demand tribute (oil). His clerics conduct an inquisition, and the common folk become serfs to the Lords of the Feudal realm. The haves and the have-mores control the heirarchy and shit/scraps flow down to the rest of us. The sad thing is that the morons who blindlessly support the modern day Reptilian, I mean Republican party do not realize that just because Bush isn’t the “LIBERAL TRIAL LAWYER – Evil Boogie Man” that he stands for the original conservative ideals. They are the ones who would like up in droves to see this happen – God help us if this isn’t stomped out soon.
Comment by mbf1978 — August 2, 2004 @ 2:45 pm
that was a crazy idea when jerry brown offered it up as a central plank in the 92 democratic presidential primaries, too. but, i understand that pointing that out might somehow intimate similarites between the two major parties, and we cant afford that in an election year. forget i mentioned it…
Comment by josh — August 2, 2004 @ 2:59 pm
I say we eliminate the IRS and everyone earning over $300,000 a year pays 35%, straight out of their pocket. No income tax for most people, and not enough to really bother everyone else. No deductions, no nothing else.
Comment by donna — August 2, 2004 @ 3:51 pm
You’re missing the big picture, man! You see, tax cuts are good. So, logically, more tax cuts are better. Every time there’s a tax cut, it spurs the economy. So, the bigger the tax cut, the bigger the spur! So, elinimating the IRS would be like opening the floodgates on economic growth! It’s like consumer confidence on steroids!
One of these days, I’m going to advertise a meeting for people interested in abolishing the IRS, then I’ll enroll them all in a pyramid scheme, so I can retire with all their money and sit around reading blogs all day…
Comment by thehim — August 2, 2004 @ 5:35 pm
Why not speculate a little? They see how Denny’s book does and if it starts people drooling, they jump on. They only have to make the idea last for two months. They never have to deliver on it. Your arguments against the VAT are all good, but you’re a bright and informed person. Are the rest of us? BushCo will talk about the thousands regular America will save and how they can spend that money how they want to without the gummint pokin’ in. Use it to save for retirement, for medical purposes – it’s your money! I can hear him – but I’m off my meds.
Comment by eRobin — August 3, 2004 @ 5:33 am
It’s really a tax on families with children. We buy so much crap, you wouldn’t believe it. And half of it I’m actually convinced I need. Go to Fair Tax for a sales pitch. They also link to a rebuttal. I got the link at Nosey Online
Comment by eRobin — August 3, 2004 @ 5:38 am
Abolish the IRS? FUCK yeah, whar do I vote?
Whut the hail? Gas costs $3 a gallon? Loaf a bread, $5? 12 pack of Pabst Blue Ribbon, $32?!?
Comment by Joe Six-Pack — August 3, 2004 @ 7:46 am
My guess is that payroll taxes would still be effective, so no, most of us wouldn’t see much more in our paychecks but we would be paying more money everywhere else and we wouldn’t have a refund check in the mail.
Comment by Amanda — August 3, 2004 @ 8:05 am
i like the idea of no tax on labor and a progressive tax on consumption, but what does a crazy lefty like me know?
Comment by josh — August 3, 2004 @ 2:17 pm
More “Abolish the IRS!” Rumblings
GrassrootsPA.com, is reporting that Rep. Murphy (R-PA) is considering supporting a Fair Tax proposal to abolish the IRS or – and here’s the rub – at the very least recognize the problems with the current tax system. Here’s a press
Trackback by Fact-esque — August 3, 2004 @ 2:50 pm
Issue #42: BLOGWORTHY
Greg at The Talent Show takes on Bush’s insane ideas about tax cuts.
Trackback by Current Events Monitor — August 3, 2004 @ 9:16 pm
It’ll never happen. Republicans love to complain about how complex the tax code is, but every deduction, exemption, and write-off was put there by Congress in response to intense lobbbying by special interest groups. Do you think legislators will eliminate all those favors to lobbyists when they couldn’t stand up to them in the first place?
Comment by Xboy — August 4, 2004 @ 9:37 am
I think Kerry could win on the tax issue if he promised to reduce the size of the Tax code by half every year he’s in office. The conventional wisdom is that everyone hates paying taxes, but even more important is the sense of futility and “I’m getting screwed” that comes with a labyrinthine tax code tilted towards corporations and the rich. What people hate is the nonsensicalness of such a complicated pile of spaghetti code crap.
“I will cut the tax code in half every year I am in office to restore sanity, fairness, and common sense to our tax policy. I promise that I will present recomendations to congress that will make the tax code simpler and fairer. I will do this every year, and I will work with Congress to make sure the tax code is not a tool of accountants and lawyers , but instaed a tool for making sure everyone pays their fair share.”
Or something. I’m serious about this. Where’s the downside?
Comment by Joe — August 4, 2004 @ 12:05 pm