Democrats are seizing on a Republican proposal to impose a national sales tax and abolish the Internal Revenue Service as a cudgel against the GOP, even though the bill has few fans even among Republican lawmakers.
The Fair Tax Act, sponsored by Rep. Earl L. “Buddy” Carter (R-Ga.) and introduced this month, would do away with income, payroll, estate and gift taxes, and instead impose a 23 percent national sales tax. It would also eliminate funding for the IRS after fiscal 2027.
Carter told Fox Business on Tuesday that people would “much rather have a consumption tax” when given a choice.
“You would actually get to see … what you’re actually earning every week in your paycheck,” Rep. Andrew S. Clyde (R-Ga.), another supporter of the bill, said this month.
On Tuesday, House Speaker Kevin McCarthy (R-Calif.) appeared to respond to a question about whether he supported the Fair Tax Act by telling reporters, simply, “No.” Representatives for Carter and McCarthy did not respond to requests for comment Wednesday.
In an op-ed for the Atlantic this week, anti-tax conservative Grover Norquist criticized the reintroduction of the Fair Tax Act as “a free gift to Democrats” and warned the GOP against allowing a small minority of House Republicans to force a vote on it.
Norquist also expressed concern that such a national sales tax, and its accompanying monthly sales tax rebates for U.S. citizens, would essentially create a universal basic income.
“The ads you can run are that so-and-so wants to add a 30 percent sales tax on top of [prices], which will be devastating to middle-income people. That’s a pretty rough ad,” Norquist told the Hill.
Those ads have effectively started, in the form of lines of attack from Democrats and the White House. In a joint news conference Wednesday, Senate Majority Leader Charles E. Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.) blasted the Fair Tax Act, saying it would result in dramatic tax hikes for almost every American, create a particular burden for seniors and “detonate” Social Security.
“The so-called ‘Fair Tax Act’ is unfair, unconscionable and un-American. It will impose a tax hike that is dramatic on 90 percent of the American people, working families, middle-class folks, seniors, and those who aspire to be part of the middle class, the poor, the sick and the afflicted,” Schumer said.
Jeffries pointed out that older Americans who had already paid into the system throughout their lives with income taxes would be “double- and triple-taxed” by a national sales tax.
“This legislation is extreme, and it is functionally the GOP tax scam, part two,” Jeffries said. “We will expose it and … do everything we can to stop it.”
Schumer said such a “doozy” of a plan would never pass the Senate as long as he was majority leader in the chamber. He also defended Democrats’ ardent and early warnings — even though the bill is almost certain to die — saying it remained a possibility that the plan could gain traction within the GOP with the support of hard-right Republicans.
“Everyone thought that Leader McCarthy would never go along with the MAGA Republicans as he ran for speaker,” Schumer said, referring to concessions McCarthy made to hard-right holdouts in his bid for the speakership. “I don’t underestimate the power over McCarthy of these extreme MAGA Republicans. We have to fight this plan now before it gains any more steam. Too many Republicans support it.”
President Biden is expected to make the proposal a major issue in a speech on the economy Thursday in Virginia. The White House has already regularly assailed Republicans for suggesting changes to Medicare and Social Security, trying to paint the GOP as out of touch with average Americans.
“These guys, they’re fiscally demented,” Biden said of Republicans in remarks at a Martin Luther King Jr. Day event last week.
The scattered support for the Fair Tax Act among Republicans is reminiscent of tensions within the Senate GOP last year, after Sen. Rick Scott (R-Fla.) released an “11-point plan to rescue America” that included a proposal for all Americans to pay some form of income tax, and after Sen. Ron Johnson (R-Wis.) suggested that Social Security and Medicare be eliminated as federal entitlement programs and instead be transformed into programs approved by Congress on an annual basis as discretionary spending.
Both proposals drew criticism from several prominent Republicans, including Senate Minority Leader Mitch McConnell (R-Ky.), who told reporters flatly that the GOP “will not have as part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years.”