[Congressional Record Volume 142, Number 62 (Tuesday, May 7, 1996)]
[House]
[Page H4437]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TAX CONSUMPTION RATHER THAN INCOME

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from California [Mr. Campbell] is recognized 
during morning business for 3 minutes.
  Mr. CAMPBELL. Mr. Speaker, on the subject of tax freedom day, there 
is a serious proposal being advanced by the gentleman from Texas [Mr. 
Archer], the Chairman of the Committee on Ways and Means, that we do 
away with the Federal income tax on individuals entirely. I think this 
is long overdue, and let me take a moment and explain why it is so 
important.
  Mr. Speaker, suppose instead of talking about all the loopholes that 
we are going to close, and all of the small changes we are going to 
make here, and the tweaks and turns we are going to make, suppose we 
remove from the American public once and for all the burden of filling 
out that 1040 form; the burden of partnerships and subchapter S 
corporations, structuring their business in such a way as to avoid 
having to do this or that under our IRS; and get rid of the 
intrusiveness of the IRS into our personal lives.
  Where would we make up the revenue? Well, the proposal would be to 
bury the personal income tax. Do not dare keep it alive, because if we 
put something else in place, Lord knows we will have both. But if we 
bury the personal income tax and instead raise money from a national 
consumption tax, here is how it could work.

  Mr. Speaker, we could exempt food and rent and medicines. As a 
result, we really would not tax the poor at all. For all other goods 
and services in our country, we would have a tax rate of under 19 
percent.
  Now, is 19 percent high? Sure. Would I rather have it lower? Of 
course I would. But, Mr. Speaker, if we could abolish the personal 
Federal income tax, and all the time that it takes to fill out that 
form, and all of the lost energy that businesspeople spend structuring 
deals to avoid taxation instead of inventing and promoting and selling, 
would it not be worth it?
  How much is a 19-percent increase in the price of a good because of a 
sales tax? It is about a year and a half under President Carter's 
administration. It is about a year and a half of the inflation we had 
then. But once it is in, it is done. We are not talking about 
increasing it any more. And we would in one moment liberate the 
American taxpayer.
  One other advantage is the underground economy would pay tax for the 
first time. Drug dealers do not fill out their 1040 listing their 
occupation ``drug dealer, drug lord,'' but they do buy things. So we 
would tax people who consume. And we would create an incentive for 
those who save and invest.
  Mr. Speaker, I used to teach economics, and a very simple rule of 
economics is people do less of that which you tax. Right now, we tax 
production of income. If, instead, we tax consumption, people will save 
and invest and that will make our country competitive for years to 
come.

                          ____________________