Bush floats idea of national tax to replace current tax code

By The Christian Science Monitor and The Associated Press

President Bush might try to revamp tax system.

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But is the president really ready to take on the tax system? A comment this week at a town-hall meeting in Niceville, Fla., has reignited the long-simmering debate in conservative circles over whether Washington should rethink the way it levies taxes.

Asked about scrapping the current tax code and replacing it with a national sales tax, Bush replied favorably: "I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

White House officials since have downplayed the idea, but Bush and his senior aides have suggested that overhauling the tax code would be a second-term priority if the president is re-elected. Some of his economic advisers are known to support reforms to simplify tax collection and promote savings and investment.

"We're working to simplify the tax code," Bush said at the Florida meeting.

Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee, also favors looking at alternatives and said his committee will do so. And House Speaker Dennis Hastert, R-Ill., uses a new book to call for replacing the current system with either a national sales tax, a value-added tax, or a flat income tax.

In Carson, Calif., yesterday, Democratic presidential candidate John Kerry said a national sales tax would amount to "one of the largest tax increases on the middle class in American history."

Kerry, during a speech at California State University, Dominguez Hills, tried to reverse partisan stereotypes by portraying Bush as a tax raiser and himself as a tax cutter.

If Bush wants to create a national sales tax without increasing the deficit, Kerry said, people will pay at least 26 percent more for purchases on top of state and local sales taxes.

"We know exactly who that's going to hurt," Kerry said. "That's going to hurt small business. It's going to hurt jobs. It's going to hit the pocketbooks of those who need and deserve tax relief most in America."

In April 1993, President Clinton suggested he was weighing — but had not decided upon — proposing a national sales tax to help finance his health-care program, noting that many business leaders supported such a tax.
 
Gene Sperling, one of Clinton's top economic advisers and now an adviser to Kerry, said he did not remember discussions over such a tax.

But, Sperling said, "Any way you cut it, a proposal like this will amount to a historic tax increase on middle-income families."

Not all conservatives like the idea of instituting a national sales tax.

Bruce Bartlett, a former Treasury Department official under the first President Bush, wrote this week in National Review online that even a 23 percent national sales tax, as proposed by Rep. John Linder, R-Ore., four years ago, vastly undercalculates the rate that would be needed to replace all federal revenue.

For now, the question is whether Bush really wants to inject this bold new idea into an already issue-laden campaign.

"They have other things they want to talk about," Hastert told The Associated Press recently. But Bush is known for his on-message discipline — and so perhaps his quick comment wasn't a gaffe at all.