[Congressional Record Volume 141, Number 99 (Friday, June 16, 1995)]
[Extensions of Remarks]
[Pages E1280-E1281]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       THE FLAT TAX AND CRIMINALS

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Friday, June 16, 1995

  Mr. STARK. Mr. Speaker, advocates of sales taxes and value added 
taxes say that their proposals will eliminate the underground economy 
and tax avoidance by the criminal element and pretty much make the IRS 
unnecessary.
  Personally, I've been very skeptical of this argument, but the 
following letter, received by members of the Ways and Means Committee, 
indicates that the Republican tax revolution may indeed bring a 
revolution to criminal thinking.


                                  Robin, Gypum, & Steel, P.C.,

                                    Springfield, VA, June 7, 1995.
     Chairman Bill Archer,
     Committee on Ways and Means, 1102 Longworth HOB, Washington, 
         DC.
       Dear Mr. Chairman: We serve as legal representatives of the 
     United Drug Dealers of America and the Organized Families 
     Mutual Benefit Association. On behalf of our clients, we were 
     pleased and excited to hear your opening statement of June 5, 
     1995, detailing how the United States of America might 
     abolish the IRS and move to a transaction or sales tax 
     system. As you indicated, this would abolish the problem of 
     the underground economy and the problem of non-compliance 
     with the nation's tax laws.
       On behalf of our clients, we heartily endorse this move. 
     Our clients are patriotic Americans who want to contribute to 
     the nation's tax base.
       We do have, however, a number of technical questions as to 
     how the sales tax system would work, and we hope you can 
     provide guidance to the entrepreneurs we represent.
       1. To reduce the paperwork associated with millions of 
     dollars worth of marijuana, heroin, cocaine, LSD, etc., 
     sales, can we pay the tax just once at the point of entry? If 
     so, can we pay to an authority other than the U.S. Customs 
     Service (whose personnel seem to have an unprofessional 
     ``attitude'' problem toward our clients)? Or could you 
     abolish the Customs Service, too?
       2. Many of our clients build a customer base near centers 
     of education by the use of free samples. Later, much later, 
     the customer pays. Can the cost of free samples be netted 
     against the profits of later sales?
       3. Sometimes a client/customer will make an offer that 
     can't be refused, and a refund for a below par product is in 
     order. If our client has already paid the sales tax, whom do 
     they apply to for a refund?
       4. In the execution of our business, a contract is 
     frequently let for disposing of a family of problems. Half 
     the payment is made at the time of the contract, half on the 
     completed contract method of accounting. If, however, the 
     contractor is himself/herself indisposed before half the job 
     is completed, can we receive a refund for a business loss?
       5. Because of the high rate of disease and disability in 
     our clients' professions, we are very interested in 
     qualifying for Social Security disability payments as soon as 
     possible. Will we be able to qualify after six quarters of 
     employment in the event of hostile fire? If there is no IRS, 
     who will keep track of our Social Security and Medicare 
     payments? Or would you recommend that we advise our clients 
     to switch to State Workmen's Compensation programs?
       6. It is reported you might exempt medical expenses from 
     the sales tax. Client customers who use drugs for stress-
     reducing 

[[Page E1281]]
     purposes--can they be exempt? We have a number of clients who provide 
     dysfunctional sexual counseling services. Will that be an 
     exempt medical expense?
       7. Lastly, for our interstate gambling clients, will there 
     be a source tax? For example, if a bettor in Virginia wins at 
     a New York track, will his bookie have to withhold for New 
     York State taxes?
       Thank you for your help and guidance on these questions. 
     Like other Americans, we will probably have more as we think 
     through your proposal.
           Sincerely,
     Dewey Cheatem, Esq.

                          ____________________