Editore"s Note
Tilting at Windmills

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August 12, 2004
By: Kevin Drum

BUSH SPEAKS....HIS ADVISORS SQUIRM....President Bush on Tuesday, talking off the cuff about the idea of a national sales tax: "It's an interesting idea. You know, 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."

President Bush on Wednesday: "Two administration officials, who spoke on condition of anonymity, said Bush was not considering a national sales tax."

That was quick! But why did our doughty "administration officials" insist on being anonymous? What are they ashamed of?


Most likely, I guess, is that they're embarrassed that the President of the United States doesn't have a clue what he's talking about. Before long he'll be touting a return to the gold standard. Here are a few wee problems:

  • Bill Gale estimates that to replace the income tax (just the income tax, not all our other taxes) would require a sales tax of 26% on all goods and services including purchases of food and new housing. That would go over well, wouldn't it?

  • But that's low. Gale kindly estimates the "combined rate of avoidance, evasion, and legislative adjustment" at 20%, which he admits is conservative "relative to everything that is known about how actual tax systems operate." In other words, better make that sales tax 30% or even higher. Ka ching!

  • Seniors would sure be pissed off about this. And who can blame them? All their lives their income was reduced by the amount of income tax they paid, and now that they're retired this reduced amount of money is suddenly subject to a brand new sales tax. Talk about your double taxation!

    (Don't get it? Think of it this way. Suppose you make $100 today and it gets taxed at 20%. You have $80 left over and you put it in the bank. Tomorrow the income tax is abolished and a 30% sales tax is implemented, so you can only buy $60 worth of stuff with your $80. Your original $100 has essentially been taxed down to $60. For senior citizens, this applies to everything they've socked away over their entire lives.)

Being an advisor to George Bush must be sort of like sweeping up after the elephants at the circus. I guess I'd feel sorry for these guys if it weren't for the fact that they're enabling Bush's incompetent rule by their very presence. So I guess I don't. Feel sorry for them, that is.

Kevin Drum 5:28 PM Permalink | Trackbacks

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