Republicans' 30% Sales Tax Would Harm Working Americans

For years I have argued that the Republican Party's agenda boils down to a reverse Robin Hood plan that aids the very wealthy and large corporations while screwing working Americans and shredding the social safety net.  The misnamed  Fair Tax Act that is currently being pushed by GOP MAGA extremists has been introduced by a small handful of Republicans in every Congress since 1999plan would abolish the Internal Revenue Service and eliminate the federal income tax and replace the income tax with a 30 percent national sales tax on all goods and services.  If folks thought inflation last summer was bad, the Act's impact would be three times worse and have working families paying far more in taxes than under the current income tax system.   The big winners would be the very wealthy and large corporations who would no longer pay any income tax and would likely devise ways around the new sales tax.  It is rare that I agree with  Grover Norquist, the president of Americans for Tax Reform, on almost anything, but I agree with some of his positions set out in a piece in The Atlantic that this proposal needs to be dead on arrival.  Meanwhile, hopefully, Democrats should see the Act as a big gift from Republicans who seem hell bent on alienating more American voters.  Here are column highlights:

A small minority of House Republicans may force a vote on the creation of a national sales tax. This will needlessly give Democrats a political cudgel in exchange for a flawed bill with no hope of passing. 

The Fair Tax Act has been introduced by a small handful of Republicans in every Congress since 1999. The bill proposes to abolish the Internal Revenue Service and eliminate the federal income tax. So far, so good. Unfortunately, the bill would replace the income tax with a 30 percent national sales tax on all goods and services . . . . . 

Replacing our current tax code with a national sales tax would create a system of double taxation on retirees. Take, for example, a 65-year-old who has spent a lifetime saving after-tax income and has retired, expecting to draw down that income without paying further taxes. Instead, they would now face a 30 percent sales tax on everything they buy. Representatives seeking reelection may want to remember that people over the age of 65 tend to vote. 

The Fair Tax Act would also strip any work requirements from the tax code—an approach that is completely antithetical to conservative principles. Under the bill’s plan, all households would receive a monthly check from the federal government regardless of earned income. 

Fair Tax proponents typically frame the prebate as a replacement for the current standard deduction allowed under the federal income-tax code, as well as an advance refund on sales taxes that will be paid. But this argument carries little weight given that these payments would be untethered from taxpayers’ actual consumer spending. 

Despite all of these shortcomings, the Fair Tax Act’s lead sponsor, Representative Buddy Carter of Georgia, recently told reporters that as part of a deal to drop their opposition to Kevin McCarthy’s effort to secure the speakership, holdout members in the House had been privately promised an up-or-down vote on the bill. But, luckily, the Fair Tax Act has no hope of passing in the House. 

In the 24 years of the Fair Tax proposal’s existence, House Republicans have declined to hold a single hearing or mark-up session in committee, let alone a floor vote. The number of lawmakers sponsoring the bill has actually declined with each Congress, falling from a peak of 76 House Republicans in 2015 to 24 today. The Fair Tax effort is not gaining momentum but losing it. 

The bill probably won’t even get a vote in committee: Republican opposition is reportedly so strong that Carter is likely to soft-pedal the bill to avoid the embarrassing spectacle of Republican committee members unanimously rejecting it. But should the bill somehow reach the floor of the House, it is safe to assume that roughly 90 percent of Republicans will vote against it. In addition, the bill would stand no chance in the Senate, and the president has said he would veto it. 

None of this has stopped Democrats from seizing the opportunity to claim that Republicans now want to raise taxes on the poor and middle class. President Biden bludgeoned Republicans from the presidential podium a week after it was reported that the bill would receive a vote. . . . .he said sarcastically. “It would raise taxes on the middle class by taxing thousands of everyday items, from groceries to gas, while cutting taxes for the wealthiest Americans.” 

Later, Biden’s chief of staff openly mocked Carter on Twitter for his statement that if consumers don’t want to pay a 30 percent sales tax on some item, then “don’t buy it. It’s as simple as that.” Democrats are right to be confident they have the winning message there. 

This past election cycle showed how Democrats are still succeeding in tagging mainstream GOP candidates with unrepresentative minority positions on tax policy. Before the midterms, Senator Rick Scott of Florida put out a list of policy ideas that included a remark that all Americans “should have skin in the game” when it comes to federal income taxes. 

Even though Scott ultimately dropped the point, his status as chairman of the Senate Republican Campaign Committee gave Democrats what one Democratic operative called a fundraising “godsend,” enabling attack ads that painted all Republicans as plotting to raise taxes on retirees and low- and middle-income Americans. 

Imagine what Democrats will be able to do if they get the opportunity of an actual House vote on a federal sales tax. The Democratic Congressional Campaign Committee has already taken aim at House Republicans in competitive seats in recent elections with negative ads focused on the Fair Tax. 

To mitigate the political damage already done, Republicans need to kill the bill. Denounce it. In public. Loudly. This may seem harsh, but it’s no less than the Fair Tax deserves.