REPUBLICAN PARTY Nation sales-tax proposal generates public debate
Speaker Dennis Hastert is among high-ranking Republicans favoring the tax.
WASHINGTON -- A once-quiet campaign by several top Republicans to abolish the IRS and replace the federal income tax with a European-style national sales tax has burst into the open, leading President Bush to withhold his blessing of the controversial proposal.
Yet the plan has strong backing within the GOP hierarchy, including House Speaker Dennis Hastert of Illinois, who has become its most visible advocate and said he has plans to push the idea strongly in the next Congress.
The speaker said in an interview that if Bush is re-elected and the GOP keeps control of the House and Senate, there is a "potential" Congress could adopt the plan during the next four years. "I think we ought to have a national debate on this," Hastert said.
"We have the opportunity if Bush wins and we hold the House of Representatives to really make a change to do this," he said. "I think we may have one chance in a generation."
The speaker said he had talked to Bush about his proposal some time ago, "but I don't think he wanted to get this tied into the campaign." Indeed, a plan to abolish the IRS in favor of a national sales tax would have to overcome enormous opposition to become law, and most analysts believe it is unlikely at the moment.
Yet with congressional forces leading the charge, a strange debate has emerged about an idea that had, until earlier last week, lurked in Republican shadows for months. Hastert and House Majority Leader Tom DeLay, R-Texas, had both spoken in favor of the proposal, while the White House kept its counsel. Others in the GOP on Capitol Hill favor a so-called flat tax, or a single rate for all taxpayers.
When asked about the national sales tax on the campaign trail last week, the president said the idea is worth exploring, although he stopped short of supporting it. Not long after, the Democratic presidential nominee, Sen. John Kerry, attacked Bush for a tax proposal he said would raise taxes on middle-income Americans.
"I call it one of the largest tax increases on the middle class in American history," Kerry said in a speech in Carson, Calif., on Thursday after Bush had expressed interest in the idea. The White House then backed away, and Bush said on CNN's "Larry King Live" that he is interested chiefly in tax simplification.
Wide GOP support
Still, the proposal is widely admired within GOP ranks. Several conservative supporters of tax reform said a national sales tax, or a valued-added tax, as it is formally known, would be the ultimate goal of overhauling the tax system so it taxes consumption of goods and services more than savings.
The flat tax, replacing the progressive system that assesses higher tax rates on those with higher incomes, is also under quiet GOP discussion. Sen. Sam Brownback, R-Kan., said Americans will hear Bush "talk about a flat tax, really getting the tax code out of so much impact over people's lives."
So far, Bush has not talked publicly about the flat tax, either, but the Republican National Convention in New York will give him an opportunity to lay out a second-term agenda. A Treasury Department official said that the agency has no studies under way on replacing the income tax system with a national sales tax or a flat tax.
Hastert ridiculed Kerry's remarks about the valued-added tax, or VAT, and said the plan would actually benefit the middle class. Now, he said, middle-income people pay an "imputed" tax on every product they buy because corporate income taxes have been simply passed through to them.