Replacing IRS With a National Sales Tax

Re “Abolish the IRS; a National Sales Tax Is Fairer,” Column Right, Sept. 30: Douglas Kmiec’s estimate that a national sales tax would have to be 15% to 17% to provide revenue equivalent to the income tax raised under the present system may be much too high, as the sales tax would come much closer to reaching everyone than does the present system. Millions of people in California completely avoid income taxes by operating their family-owned businesses with fictitious accounting systems; others have no accounting systems at all but simply operate on a strictly cash basis.

The only people who pay taxes are those who have income of record, such as salaries and income resulting from security transactions; I believe that fully 50% of real income escapes taxation. We certainly need a system that would correct these outrageous abuses.

JO BERRYMAN

Buena Park

Kmiec’s is but one of many fine pieces advocating the replacement of the income tax with a national sales tax. But nobody seems to mention whether this system would replace the business income tax, nor how the millions of owners of small businesses whose profits (and losses) are taxed to them personally would be affected.

OLIVER BERLINER

Beverly Hills

Kmiec makes an interesting case for a national sales tax and the abolition of the IRS. My question is, would this tax apply to the sale of stock?

JOHN BALTIC

Topanga

Kmiec errs in calling for a national sales tax. A sales tax is a regressive source of revenue--it would increase the tax burden on those less able to pay. The proposal would be a big boon for the rich who can afford to save more, thereby shielding that money from taxation. Higher sales tax would also discourage consumption and create a drag on the economy.

Kmiec’s estimate of 15% to 17% tax also needs to be revised. He suggests exempting necessities such as food and medicine from taxation, which would require a higher rate for other goods and services. If he considers housing a necessity, as most of us do, he would also have to exclude rents and mortgages from taxation, further increasing the tax rate required for revenue neutrality. He also presumably neglected to consider that a decrease in consumption would decrease the tax base, requiring a still higher rate.

I agree with Kmiec’s statement that tax codes are far too complex. What I would propose is a stripped-down income tax with only a standard deduction, a progressive tax rate and treatment of capital gains identical to other forms of income. Such a tax structure would be fairer than both the current system and the one proposed by Kmiec.

DAVID HOLLAND

Northridge