Hatch Urges End to IRS, Replacing Income-Based System With Sales Tax

The American tax system needs major changes now and a complete overhaul in the long term, Sen. Orrin G. Hatch told an audience on the presidential campaign trail Friday in New Hampshire.

Hatch (R-Utah) said that if he is elected president, he will appoint a commission on his second day in office that will propose the long-term changes, including eliminating the Internal Revenue Service and replacing the progressive income tax with a national sales tax.

That same day, he also would send Congress interim legislation to:

* Double the personal exemption.

* Allow a deduction for Social Security taxes paid.

* Eliminate capital-gains taxes and exempt the first $5,000 in dividend income, or $10,000 in income for couples filing jointly.

* Eliminate the “marriage penalty” and estate and gift taxes.

“If we merely tinker with the tax code, the changes can be easily reversed by a subsequent administration,” Hatch told about 25 people attending a breakfast meeting of the Nashua, N.H., Chamber of Commerce.

The senator did not identify the tax rate for his proposed national sales tax. He estimated that the deduction for Social Security taxes would save the average two-income American family $1,770 a year in income taxes. He said increasing the personal exemption could save the average family of four as much as $3,000 a year.