From the day he started running for president, Sen. Ted Cruz has been promising to “abolish the IRS.” On its face, this is a fairly silly idea, since even in a Republican utopia of low, low, low taxes, someone has to collect that money. Cruz has since clarified that what he really wants to do is move collections to a “much smaller division” of the Treasury Department, which would supposedly be feasible once he passes a simple flat tax that families can fill out on a postcard. This is still a fairly silly idea, because Cruz is simultaneously proposing a “business flat tax,” otherwise known as a value-added tax, otherwise known as a national sales tax. Pretty much everyone realizes it would take an enormous amount of manpower to collect such a levy.
So it was satisfying to see Sen. Marco Rubio hold out a thin reed of sanity to the American people during Thursday’s Republican debate and point out that Cruz’s plan is absurd:
You may rename the IRS, but you’re not going to abolish the IRS, because there has to be some agency that’s going to collect your VAT tax. Someone’s going to be collecting this tax. In fact, when Ronald Reagan’s treasury looked at the VAT tax, you know what they found? That they were going to have to hire 20,000 new IRS agents to collect it.
Point, Rubio. You cannot abolish the IRS.
On a slightly more wonkish note, Rubio also argued that a VAT would disproportionately hurt seniors on fixed incomes, because they would effectively be getting whacked with a sales tax without getting much of an income-tax break to balance it out. You can argue the fine points of this—Cruz’s variation on a VAT isn’t imposed directly on sales but on total corporate revenue (minus cost of goods), and he’s simultaneously eliminating the current corporate income tax, so it’s not totally clear how much of his tax would be passed on to consumers in the form of higher prices, blah blah blah. But in a world in which Cruz is king, prices on consumer goods probably would go up for most. And telling retirees that Cruz wants to raise the cost of their groceries strikes me as a pretty effective tactic in a Republican primary.
