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Society - National Sales Tax

Public Support Soars for a Better Tax Solution

By Victor Krohn

 T
wo hundred twenty-four years ago, colonists disguised as American Indians climbed aboard three British tea ships anchored in Boston Harbor and tossed the cargo overboard in what has ever since been remembered as the quintessential demonstration against unfair taxes.

      “That Boston Tea Party was the signal of early American citizens that never, ever would they put up with a sovereign who taxed them unfairly and unreasonably,” said Congressman Billy Tauzin (R-La.). “Today we call upon Americans for a second, national Tea Party.”

      Tauzin and a colleague, Congressman Dan Schaefer (R-Colo.), inspired a modern-day “Tea Party,” held last year at the site of the nation’s original 1773 protest.

      More than 100 tax activists were on hand in Boston Harbor to support Reps. Schaefer and Tauzin in their call to end the federal income tax system — through its replacement with a National Retail Sales Tax. These included Congressmen Mike Crapo, Charlie Norwood and Ron Packard, who flew up for the day from Washington with Tauzin and Schaefer.

      As shutters clicked and observers cheered, the U.S. income tax code was heaved overboard from the deck of the Beaver – an exact replica of the ship of the same name from which tea was tossed in 1773.

A Fresh Start

      Some of the benefits of the National Retail Sales Tax were described by Representative Bill Archer, chairman of the House Ways and Means Committee — which writes the tax laws — one of the numerous supporters of the concept: “The people should never again have to fill out a tax return. Withholding taxes from people’s paychecks should stop. The government should not have first dibs on the money people earn. If you make it, you keep it.”

      Public discontent over our current system of income taxation has reached nearly unprecedented levels of vocal and virulent opposition. If recent polls are any indication, not since the introduction of the income tax in 1913, and perhaps even the American Revolution of 1776 itself, has there been such resentment and disgust of our tax system.

      Even former IRS officials are calling for the income tax code to be torn up so we can get a fresh start on a simpler, fairer tax system.

      This broad-based disagreement with the status quo has translated into an equally unprecedented groundswell of support for a fundamental overhaul of our tax morass. It is manifest in everything from town hall meetings to radio show call-ins; from newspaper editorials to the public pronouncements of elected officials.

      And when specifics about a fundamental re-working of our tax system are discussed, increasingly we are hearing about replacing the income tax and the agency which enforces it with a National Retail Sales Tax.

      This public demand for change owes much to the advocacy and public education of a grassroots organization which was covered first in this magazine in 1990. That organization is now known as Citizens for an Alternative Tax System (CATS).

Grassroots Movement

      CATS began with concerned citizens who realized that the income tax code was fatally flawed — that no amount of tinkering with the code could ever “fix” it.

      They found that the best solution to our tax problems was well established: A sales tax, which could be collected by the states and replace the federal personal and corporate income tax, gift, estate, and capital gains taxes.

      An initial survey of taxpayers by CATS revealed that when Americans learned of this national sales tax option, they widely supported it.

      A factor found to have immediate and widespread popularity was that with a National Retail Sales Tax, production is directly rewarded. Those who work hard to get ahead or to support their families are no longer penalized by losing a portion of their income through tax. By removing this major barrier to individual and corporate productivity, the economy and society as a whole will benefit.

      “When you use income as a base, you tax work and you tax savings,” said Representative Archer. “That isn’t where we should tax. We punish people for more work effort. The harder you work, the longer you work, the more you pay! It ought to be, the more you spend, the more you pay. That’s where we ought to raise our money.”

      From 1990 through 1997, as word of the National Retail Sales Tax concept expanded, more than 300 CATS chapters formed across the country at the local level. Some of these chapters have grown to include several hundred active members.

      And as the number of sales tax supporters and CATS chapters grew, it was inevitable that political support would follow in a similar trend.

Legislation

      In March 1996, a bill was first introduced in the U.S. Congress to implement the National Retail Sales Tax as the replacement for the income tax and IRS (H.R. 3039).

      This historic legislation was known as the Schaefer-Tauzin National Retail Sales Tax Act of 1996 and named after its primary authors, Congressmen Schaefer and Tauzin.

      As Schaefer summarized it, “Imagine just for a moment that April 15th was just another spring day. What if our tax system required no Internal Revenue Service, had no loopholes for the rich, increased Americans’ paltry personal savings rate, encouraged economic investment, and weakened special interests’ hold on Congress? What if it also lowered our trade deficit, made foreign corporations pay U.S. taxes and slowed job flight overseas? This is not some kind of fantastic utopia I am describing. It could be reality if America eliminated the personal and corporate income tax system and replaced it with a national sales tax.”

      Prominent members of Congress immediately voiced their support for the Schaefer-Tauzin National Retail Sales Tax plan. Among the bill’s co-sponsors are Congressmen John Linder (R-Ga.), Ralph Hall (D-Texas) and Collin Peterson (D-Minn.).

      The 105th Congress began with amplified interest in the National Retail Sales Tax. On April 14, 1997, H.R. 2001 was introduced, covering the same ground as H.R. 3039, but in even clearer language. Senator Richard Lugar (R-Ind.) has indicated that he is interested in seeing similar legislation introduced into the U.S. Senate.

      “The first factor in choosing an effective tax system is its simplicity,” Senator Lugar stated. “Under a National Sales Tax, the burden of complying with the income tax code would be lifted. There would be no records to keep or audits to fear. The money a person makes is his or her own. You don’t have to report it. You don’t have to hide it. You may decide if you want to save it, invest it, or give it to your children. It is only when you buy something that you pay a tax.”

Strong Contender for Reform

      There is increasingly broad and visible agreement among national leaders that a detailed and meaningful debate on real tax reform is needed and the NRST has been explicitly included as a contender for consideration.

      Indeed, there is now a broader consensus than ever before that we must see a fundamental overhaul of our tax system:

  • House Majority Leader Dick Armey (R-Texas) and National Retail Sales Tax legislation co-author Billy Tauzin recently began a national tour of “Scrap the Code” debates across the country, pointing to how bad the current code is for America and arguing why their respective proposals (Representative Armey supports a flat income tax) are the best alternative for America. In city after city, thousands of citizens have shown up for these debates and enthusiastically backed the National Retail Sales Tax proposal. Expanding national media coverage has followed in the wake of these events, with plans for dozens more to occur through 1998.

  • As the leader of the Republican majority in the Senate, Senator Trent Lott gave a speech to the U.S. Chamber of Commerce about what he saw as the top priorities for the new 105th Congress. He listed the replacement of the income tax as a most important debate which will take place in coming months and the National Retail Sales Tax as one of the three top contenders in that debate.

  • House Speaker Newt Gingrich, who has considerable influence over the agenda of the House of Representatives, once again announced that the House will debate the issue of tax reform, including the National Retail Sales Tax. “I have also asked Chairman Archer to prepare a series of hearings looking at the entire issue of how we revise the entire tax code,” he said, “whether we go towards a flat tax or whether we replace the income tax with a sales tax or what we do, but to begin a process....”

          During the next several months, ongoing Capitol Hill hearings on tax overhaul will undoubtedly bring even more interest and support to the National Retail Sales Tax proposal from members of Congress and their staffs.

          Don’t be surprised, however, if other events outside Washington, D.C., such as the new Boston Tea Party, stir up even greater national interest than the formal committee hearings. Rapidly expanding grassroots support has destined the National Retail Sales Tax — a revolutionary and effective means to liberate American economic productivity — to be the wave of the future.

    . . .

          Victor Krohn is National Chairman of Citizens for an Alternative Tax System in Washington, D.C. For more information on CATS, contact the CATS National Office at (800) 767-7577.

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