House Votes to Abolish U.S. Tax Code

Responding to taxpayers’ frustration with the complex federal tax system, the House on Wednesday approved a bill that would abolish the Internal Revenue Code in 2002--and call on Congress to replace it with a new, simpler code.

Republican sponsors do not really expect the measure to become law this year, but they brought it to a vote as part of an election-year effort to portray Democrats as friends of a despised tax system.

“We will make some people’s lives miserable for defending the current tax code,” said Mary Crawford, spokeswoman for the National Republican Congressional Committee.

The 219-209 vote on the bill, which does not specify how the code should be rewritten, broke down largely along party lines. But the 20 Republicans who defected to oppose the bill were enough to force a last-minute scramble by GOP leaders to avert an embarrassing defeat. Fifteen Democrats voted for it.

Within the California delegation, the only member to stray from the party line was Rep. Gary A. Condit (D-Ceres), who voted for the bill.

President Clinton has threatened to veto the measure, which he has described as a “reckless and irresponsible” bill that would throw business and household financial planning into chaos by abolishing the current system of tax incentives with no indication of what will replace it.

Referring to Asia’s economic crisis, Clinton told reporters Wednesday: “The last thing in the world we need to do right now is to send some signal of instability, that we’ve decided to get rid of our whole tax code without knowing what to replace it with.”

It may never come to a veto confrontation because the Senate may not pass the measure. Senate Majority Leader Trent Lott (R-Miss.) hopes to bring the bill up for a vote in July, a spokeswoman said, but supporters acknowledge that it likely would be stalled by a filibuster.

As a political matter, the populist appeal of bashing the tax system is obvious. The code is complicated, ever-changing and forces people to pay some of their hard-earned money to the government.

“The American people are fed up,” said House Majority Leader Dick Armey (R-Texas). “Between Jan. 1 and April 15, the tax code makes us crazy.”

Although Republicans are divided over whether to replace the code with a flat tax, a sales tax or some other sort of tax reform, they have tried to bridge those divisions by focusing on their shared opposition to the current system.

The legislation approved by the House would end the tax code on Dec. 31, 2002, and call on Congress to enact a replacement system no later than July 4, 2002. The bill does not say what would happen if Congress fails to act.

The principal political force behind the measure is the nation’s small businesses, a key part of the Republican political base. The National Federation of Independent Business sent a flatbed truck to the Capitol on Wednesday to deliver 750,000 petitions gathered from its members calling for the end of the tax code. But other business leaders, including the National Assn. of Manufacturers, oppose the idea.

Proponents of the bill said Congress needs to face a hard deadline to summon the political will to accomplish the monumental task of rewriting the tax code.

“Having a date certain will keep the issue at the top of the national agenda,” said Rep. Doc Hastings (R-Wash.).

But critics, including a cadre of Republican dissidents, said abolishing the code without knowing what will replace it is bad policy and would disrupt financial planning throughout the economy. For example, critics said, families would be less willing to buy a new house if they were not sure that they will have a home mortgage deduction, and school districts would have a harder time raising money if investors were unsure that their bonds are tax exempt.

“It is highly irresponsible,” said Rep. Amo Houghton (R-N.Y.), who voted against the bill. “This is a very high-stakes game.”

Other Republicans dismissed those concerns and warned that Democrats will live to regret their opposition on election day.

“This is going to be the great bright-light issue of the campaign this fall,” said Sen. Tim Hutchinson (R-Ark.), lead sponsor of the measure in the Senate.

But Democrats seemed unconcerned about the political impact of the vote, saying that voters will recognize the bill as an election-year gimmick. “People want tax reform, but they don’t want a press release about tax reform,” said House Minority Leader Richard A. Gephardt (D-Mo.).