WASHINGTON — Three Democrats in the U.S. House introduced a measure to push back against a controversial Republican tax proposal that would abolish the IRS, eliminate income taxes and impose a national sales tax.
House Republicans introduced the Fair Tax Act in January shortly after Kevin McCarthy, R-Calif, was voted in as speaker. The legislation proposes to overhaul the U.S. tax system by eliminating the income tax in favor of a 23% to 30% tax on gross payments for taxable property.
Democratic Reps. Wiley Nickel of North Carolina, Eric Sorensen of Illinois and Brittany Pettersen of Colorado called the measure “extremist.”
“I was dismayed to hear about an extremist plan by my colleagues on the other side of the aisle that calls for a 30% national sales tax for working families,” Nickel said at a press conference Wednesday. “A 30% sales tax would be a disaster for working families and individuals in North Carolina and around the country who are already dealing with high gas prices, exorbitant housing costs and the rising costs of goods and everyday services.”
The three Democrats introduced a House resolution opposing a national sales tax on working families and, instead, supporting a tax cut to benefit middle-class families. Their efforts build off the work of Sens. Jon Tester, D-Mont., and Jacky Rosen, D-Nev., Nickel said.
Tester and Rosen introduced a complimentary Senate resolution in February.
“We in the heartland, we see a couple of things as determination of how hard it is to live,” Sorenson said. “It’s the price of a gallon of milk, which has been around $5 a gallon. And also the cost of eggs. It’s the cost of gas. We need to bring these costs down for everyday Americans.”
“The last thing anyone needs now as we’re struggling to make ends meet is a tax increase,” he added.
Congressional resolutions aren’t binding laws. They are used, instead, to highlight an issue of importance in Congress and signal the direction lawmakers plan to take if they are forced to vote on it.
Negotiations between McCarthy and members of the conservative House Freedom Caucus during McCarthy’s lengthy bid for House speaker, cemented a full House vote on the Fair Tax Act, according to Fox News. But McCarthy has yet to bring the bill to the floor for debate.
“The idea that Republicans could even consider such a provision when their constituents are crying out for help is outrageous,” Pettersen said. Not only would this bill have negative impacts on people in Colorado and across the country, it would completely eliminate the IRS.”
The bill would effectively repeal the 16th Amendment of the U.S. Constitution, which gives Congress the power to establish and collect income taxes. It would also abolish the IRS and institute a tax of 30% on each $100 purchase, according to the nonpartisan Center for American Progress.
If passed, the tax policy would take effect in 2025.
GOP lawmakers argue that a national sales tax on goods and services “purchased for final consumption” will promote savings and investments, spur economic growth, raise the standard of living and respect taxpayers’ right to privacy compared to traditional federal income, payroll, estate and gift taxes, according to the bill’s language.
Rep. Buddy Carter, R-Ga., who introduced the Fair Tax Act, said it would simplify the tax code.
“Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation,” Carter said in a statement. “Armed, unelected bureaucrats should not have more power over your paycheck than you do.”
The act would decrease federal spending by over $71 billion in 2023, according to a report released Monday by the Congressional Budget Office. But it is estimated to also reduce tax revenues by more than $185 billion over the next 10 years.
The GOP’s tax proposal would add $114 billion to the deficit during that time frame, according to the CBO.
The bill will also undermine many of the tax provisions President Joe Biden introduced under the Inflation Reduction Act, including more staffing at the IRS and a 15% corporate minimum tax imposed on companies earning over $1 billion a year. In a January statement, Vice President Kamala Harris said the GOP is “rushing to undo that progress and allow too many millionaires, billionaires and corporations to cheat the system.”
Pettersen said the sales tax would hurt the most those who are unable to save, such as seniors and low-income families.
“When you’re looking at a consumer-driven tax code, then it’s the people who are unable to actually save who are paying a disproportionate level of taxes, as well as the tax level going down significantly impacting Social Security and Medicare,” she said.