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How would you like a new tax system that exempts most of your wages and all of your interest, dividends and capital gains, taxes what's left at only 17 percent - and still balances the federal budget?

Sound too good to be true? Well, of course, it is.Rep. Richard Armey, R-Texas, wants to eliminate the progressive personal and corporate income taxes and replace them with what amounts to an oddball, flat-rate 17 percent national consumption tax.

Always opposed to whatever President Clinton is for, Armey would reverse last year's major progress toward fairer taxes and lower budget deficits. Instead, he would slash taxes on the rich and add hundreds of billions of dollars a year to the government's red ink.

Armey's proposal is actually nothing new. He has repackaged a similar, much-criticized plan put forward in the early 1980s by Robert Hall and Alvin Ra-bush-kas of Stanford's Hoover Institution. In most respects, the Armey-Hall-Rabushka tax is much like a national sales tax or value-added tax.

Under a value-added tax, businesses collect tax on their gross receipts, minus a deduction for business purchases. When all the taxes are added up, the total tax base is final sales, and the tax is just like a regressive retail sales tax.

With one major exception, this is exactly what Armey proposes to tax. Indeed, his new sales tax would apply to everything that people buy, from food, shelter and clothing, to education, to health care (including employer-paid health insurance). Even state and local governments would be taxed on their purchases.

At a 17 percent rate, a national sales tax with a base as broad as Armey suggests might conceivably come close to replacing most of the $750 billion now paid in personal and corporate income taxes.

But unlike a standard value-added tax, Armey's plan would give businesses a deduction for wages paid - and assess taxes on wages at the individual level.

In effect, this feature offers families a rebate against their sales tax paid equal to 17 percent of their wages up to the listed dollar limits. That's still not enough to protect low-and moderate-income working families, who would face large tax hikes due to Armey's implicit repeal of the just-expanded earned-income tax credit.

But in total, Armey's wage tax rebates would end up exempting more than half of total wages from his new tax, at a revenue cost of about $320 billion a year.

That leaves Armey's tax plan seriously in the hole.

If you loved the way Ronald Reagan dealt with the deficit, Armey essentially says, you'll love the Armey plan. Otherwise, watch out for this charlatan. He's selling nothing but warmed-over supply-side snake oil.