Proposed Tax Changes

Rep. Dick Armey (R-Texas) and Rep. Billy Tauzin's (R-La.) commentary, "Should We Scrap the System . . ." (Oct. 5), fails to emphasize a most fundamental issue in the debate between the present progressive income tax and the alternatives of flat tax and sales tax. The current tax and the flat tax will always favor the rich because they only tax "taxable income." It is true that the rich pay taxes at a higher rate than others, but they only do so on their taxable income, which is usually an extremely small portion of their total income.

Armey's flat tax does not change that. It will still permit wealthy individuals like him to exclude a fortune in annual income from being considered a part of their "taxable income."

The sales tax, more correctly called the "value-added tax," is the only concept that addresses this issue. For the first time the rich would pay their fair share of taxes because every exchange of value, including barter, would include a tax. The enormous increase in revenue would permit taxation to drop dramatically for everyone else and would permit a rebate to the poor to offset their tax liability.


Culver City

* The Republicans, with all the grace and finesse of a bull in a china shop, will now foist upon us the "Scrap the Code Tour" to abolish the entire tax code and come up with a new, simpler and fairer system. It seems to me that the people of the U.S. in 1994 clearly stated that they do not want a revolution, but an evolution of our form of government. Totally scrapping the tax code is an extreme solution and the result, because of those darn lobbyists they refer to, is likely to be not much different in terms of dollars than what I'm paying right now.

I absolutely agree that the tax code can be made easier and more fair. I believe that the disincentive for savings could be fixed and that income should only be taxed once. But I believe that those of us who are blessed with more should contribute more and vice versa. Scrapping the tax code completely is another extreme idea from politicians desperate for an audience.



* I thought capitalists were supposed to be greedy. But here's one of their regular critics, Robert Kuttner (" . . . or Maintain the Status Quo?" Oct. 5), saying that history has shown just the opposite, that the more taxation and less profit, the more investment there is.

Which is it: Are they greedy robber barons investing only for profit, or really good liberals investing only for the joy of supporting the welfare state?



* Kuttner, like all liberals, is beating around the bush with the "fairness" problem. Communism is fair--let's admit it and go for it. Then everyone would understand where the country is heading.



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