III

105TH CONGRESS

1ST SESSION S. RES. 16

Expressing the sense of the Senate that the income tax should be eliminated

and replaced with a national sales tax.

IN THE SENATE OF THE UNITED STATES

JANUARY 21, 1997

Mr. LUGAR submitted the following resolution; which was referred to the

Committee on Finance

RESOLUTION

Expressing the sense of the Senate that the income tax

should be eliminated and replaced with a national sales tax.

Whereas the savings level in the United States has steadily

declined over the past 25 years, and lagged behind our

industrialized trading partners;

Whereas our economy cannot achieve strong, sustained

growth without adequate levels of savings to fuel productive activity;

Whereas the income tax, the accompanying capital gains tax,

and the estate and gift tax discourage savings and investment;
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SRES 16 IS

Whereas the methods necessary to enforce the income tax infringe on the privacy of our citizens and divert an estimated $157 billion of taxpayer resources to comply with

its rules and regulations;

Whereas the Internal Revenue Service estimates that each

year it fails to collect 17 per centum, or $127 billion, of

the income tax owed to the Federal Government;

Whereas the income tax system employs a withholding mechanism that limits the transparency of Federal taxes;

Whereas the most effective tax system is one that promotes

savings, fairness, simplicity, privacy, border adjustability,

and transparency;

Whereas it is estimated that the replacement of the income

tax system with a national sales tax would cause our savings rate to substantially increase;

Whereas the national sales tax would achieve fairness by employing a single tax rate, taxing the underground economy, and closing loopholes and deductions;

Whereas the national sales tax would achieve simplicity by

eliminating recordkeeping for most taxpayers and greatly

reducing the number of collection points;

Whereas the national sales tax would be the least intrusive

tax system because most taxpayers would not be required

to file returns or face audits from the Internal Revenue

Service;

Whereas the national sales tax is border adjustable and would

place United States exporting on a level playing field with

our foreign competitors;
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SRES 16 IS

Whereas a national sales tax is a transparent tax system that

would raise Americans’ awareness of the cost of the Federal Government; and

Whereas a national sales tax would best achieve the goals of

an effective tax system: Now, therefore, be it

1 Resolved, That it is the sense of the Senate that:

2 (1) the income tax system, both personal and

3 corporate, the estate and gift tax, and the accom4 panying capital gains tax be replaced with a broad5 based, single-rate national sales tax on goods and

6 services;

7 (2) the national sales tax rate be set at a level

8 that raises an equivalent level of revenue as the in9 come taxes replaced;

10 (3) the Federal Government work with the

11 States to develop a State-based system to administer

12 the national sales tax and that States be adequately

13 compensated for their efforts; and

14 (4) the Congress and States work together in

15 an effort to repeal the sixteenth amendment.

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