The IRS: Not Going Anywhere
December 3rd, 2007 by Peter SudermanGrover Norquist doesn’t seem to mind the FairTax, but I think his description of the way it transforms, rather than obliterates, bureaucracy is sharp:
The retail sales tax will do many things for you. Aboloshing the IRS is not one of them. It will go to a flat rate tax. It will exempt savings. Those are both very good, very powerful pro-economic growth things but if you’re taking 20 percent of GDP, 20 percent of the economy away from people and giving it to the government there is no polite, cheerful non-intrusive privacy respecting way to do that. Instead of having the IRS looking at your pay stubs, you’ll have the IRS standing around the back doors of Wal Mart making sure people don’t sell stuff out the back door. You need a similiarly sized police state to collect the sales tax as the income, Yes there won’t be an IRS. It’ll be called the Sales Tax Compliant Police.
No one seriously disagrees that the FairTax would drastically alter the way taxes are collected in the U.S., but the idea that it would do away with the IRS without the need for any federal tax collection agency to replace it is pretty absurd.
December 3rd, 2007 at 6:59 pm
That’s been one reason why I’ve been hesitant to support the FairTax. It seems to be great rhetoric to run for political office, but seriously, this is politics that we’re talking about here.
December 4th, 2007 at 6:02 pm
Every state has a sales tax. The state Revenue Departments audit stores and large companies, to make sure sales (and use) tax is being collected and remitted. The points are: 1). individual citizens don’t prepare tax returns and get audited, 2). the federal government could subcontract compliance to the state Revenue Departments that are already doing the work. States would eliminate THEIR Personal Income Tax units, and raise the state sales tax by 1-2%.
Part of the savings of FairTax is not needing H&R Block, Jackson-Hewitt, etc. and the millions in legal and accounting fees to construct “tax shelters”. It also taxes the underground economy - gamblers, pimps, drug dealers and white collar criminals. You buy something, you pay federal tax, no matter where the money came from.
People with large debts would benefit immediately from FairTax, because their take-home pay would increase, without Income Tax Withholding, leaving more money to pay off credit cards, auto and home equity loans.