Scrap the tax code? Bush floats a national sales tax

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Related stories: 02/02/04 Surprise! Some taxes go up. 02/02/04 The next big tax battles: state by state

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But is the president really ready to take on the American tax system? A comment Tuesday at a town-hall meeting in Florida has reignited the long-simmering debate in conservative circles over whether Washington should rethink the way it levies taxes.

When a supporter asked President Bush about scrapping the current tax code and replacing it with a national sales tax, he replied favorably: "I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

Since then, White House spokesmen have not ruled out the idea. Nor have they ruled out that Bush may announce a big new initiative on the tax system at the Republican convention. Some of the president's economic advisers are known to support reforms to simplify tax collection and promote savings and investment.

Rep. Bill Thomas (R) of California, chairman of the House Ways and Means Committee, also favors looking at alternatives and told reporters that his committee will do so. And in a new book, House Speaker Dennis Hastert (R) of Illinois calls for replacing the current system with either a national sales tax, a value-added tax, or a flat income tax.

Democratic presidential nominee John Kerry jumped on what he called the Bush "proposal," saying it would harm the middle class. "Were the Bush proposal to be adopted, many Americans would be paying more than 20 percent in national sales taxes" on top of state taxes, he said.

Not all conservatives like the idea of instituting a national sales tax. Bruce Bartlett, a former Treasury Department official under the first President Bush, writes this week in National Review online that even a 23 percent national sales tax, as proposed by Rep. John Linder (R) of Georgia four years ago, vastly undercalculates the rate that would be needed to replace all federal revenue.

For now, the question is whether Bush really wants to inject this bold new idea into an already issue-laden campaign. "They have other things they want to talk about," Mr. Hastert told the Associated Press recently. But Bush is known for his on-message discipline - and so perhaps his quick comment wasn't a gaffe at all.