• House Bill H.R.25
• Senate Bill S.1493

WASHINGTON - The IRS and all payroll taxes should be scrapped and replaced with a national sales tax that would require the poor to pay nothing, some tax reform advocates are proposing as an ideal plan to rejigger the U.S. tax code.

The proposal has been gathering strength among leading lawmakers, and the issue has made its way into the presidential campaign and at least one key Senate race.

And this, also from Fox News, with Chris Wallace interviewing Speaker of the House J. Dennis Hastert:

WALLACE: One of the other things that the president is calling for is broad tax reform. And I want to look at what you have said about this in your book called "Speaker."

Here it is: "For us to return capital and jobs to the United States, we're going to have to change our present system and adopt a flat tax, a national sales tax, an ad valorem tax or a VAT tax. In my view, that would bring capital and jobs back. And it's one of the most important things we can do over the next few years." Mr. Speaker, are you serious about doing away with the federal income tax?

HASTERT: Well, look, we need - I think people have said it on this show just a few minutes before - that the income tax we have today, it costs American taxpayers $250 billion every year just to prepare their taxes, just to get their taxes ready to pay. That's a huge amount.

That our tax system gives us a great disadvantage when we want to sell our products overseas, the European Union and Japan and other places. Because of their tax system, we have imputed costs in their taxes, into our products. They drop their taxes off at the border.

We need to look at this. There needs to be a national debate. I mentioned four or five different types of taxes that we might want to look at. But it has to be a national debate.

WALLACE: But you're not talking about tax simplification. You're talking about doing away with the income tax.

HASTERT: I'm saying there has to be a reform, a change to make this tax system simpler, better. And we need to look at all alternatives.

You know, when we get done looking at it, maybe we can say we can't do it. Maybe the entrenched groups that have their pieces in the tax bill won't let that happen.

But I think we need to have a long, serious look at it. And it needs to be a national debate. You can't push anything like this down somebody's throat, the American public's throat. You have to make sure that they understand it and they agree to it.

WALLACE: Do you think that it's possible to have broad reform in the second term of the president?

HASTERT: I think this is the only time in generations that you might have a chance to be able to do it.