A group of arch-conservatives in the House is pushing for a vote on a bill that would eliminate federal income taxes and the IRS, but some influential Republicans are pushing back against what appears to be a political loser for the GOP.
The bill, known as the Fair Tax Act, would scrap all individual and corporate income taxes while imposing a 30% national sales tax on goods and services to be collected at the state level, thereby eliminating the need for the IRS.
In a deal to back Speaker Kevin McCarthy (R-CA) in his run for House leadership, conservatives reportedly won a commitment to bring the tax bill to the floor for a vote. However, the bill has virtually no chance of becoming law and meanwhile has provided President Joe Biden and Democrats with new ammunition in their effort to paint Republicans as extremists.
“This ‘Fair Tax Act’ is truly foul stuff,” Senate Majority Leader Charles Schumer (D-NY) said Thursday. “The Republican tax plan would raise the cost of buying a house by $125,000. It would raise the cost of buying a car by $10,000. It would raise your average grocery bill by $3,500 a year at a time when people are already worried about the high price of groceries. How can they do this?”
Schumer failed to note that the bill would also eliminate income and other taxes, but his remarks highlight the difficulty Republicans might face if they push ahead with the bill. Analyses of similar tax plans show that a national sales tax would be regressive, raising taxes on the poor and reducing taxes on the rich, while failing to provide enough revenues to fund the full range of government activities.
Several Republican leaders have come out against the bill. McCarthy said earlier this week that he opposes it, while allowing that it could come up for consideration if it makes it through the committee process. House Majority Leader Steve Scalise (R-LA) has also said he does not support the bill, preferring instead to make the tax cuts included in the 2017 tax law permanent.
Rep. Don Bacon, a relatively moderate Republican from Nebraska, told The Hill he is opposed to the bill. “I don’t think it’s a wise thing,” he said, adding that he doesn’t think “it’s smart politics or policy.”
Rep. Jason Smith (R-MO), the new chairman of the Ways and Means Committee who calls himself a “firebrand,” said he plans to look into the Fair Tax plan but stopped short of backing it. “We’re going to have a public, transparent hearing on that issue and we’ll see where it goes from there,” he said.