The End of the IRS?

Economist Milton Friedman said government never learns, only people do. Dallas insurance salesman Dave Schum believes that maxim, and now wants to teach the government a lesson. Schum heads the Dallas chapter of CATS (Citizens for an Alternative Tax System), which aims to abolish the national income tax for people and corporations and replace it with a national sales tax. Schum believes the change would rid us of our whopping debt, our trade deficit and, best of all, the IRS.

CATS, based in Glendale, Calif., boasts more than 400 chapters nationwide and was started by scientologist Vic Krohn in California. But Schum, who has seen the local branch grow to about 100 members, stresses that CATS is not funded by the radical Church of Scientology, which has long feuded with the IRS over the church’s tax-exempt status. (At one point the group had 71 suits filed against the agency.) Well aware of Scientology’s negative image, Schum adds that he wouldn’t be involved with CATS if the organization had ties to the controversial sect. He says the CATS message is economic, not religious.

The CATS tax platform-championed by former presidential candidate Patrick Buchanan, among others-holds that eliminating income taxes would give people more money to save and spend, produce more sales tax and help create jobs. Freed of corporate income taxes, business would have less need for tax specialists, And, Schum says, business could use the extra money to invest while lowering prices 15 to 30 percent because of reduced overhead. Schum claims that the reforms would eliminate the need for the IRS and those loophole-seeking special-interest lobbyists who haunt Congress.

But Alan Schenk, professor of law at Wayne State University and an expert on the value-added tax, says that a national sales tax alone would not be a panacea- and would in no way eliminate the IRS. “Saying, ’things will get better if you just change it,’ will always get an audience,” Schenk says. Dave Schum certainly hopes so.