As part of his deal to become House speaker, Kevin McCarthy reportedly promised his party’s conservative hardliners a vote on legislation that would scrap the entire American tax code and replace it with a jumbo-sized national sales tax.
The assurance got relatively little attention at the time, drowned out by the many other concessions McCarthy made to win his gavel. But with Democrats already attacking the proposal, some conservatives see it as a political headache in the making.
“This is a political gift to Biden and the Democrats,” Grover Norquist, the dean of D.C. anti-tax activists, said in an interview. “I think that this is the first significant problem created for the Republican Party by the 20 people who thought that there was no downside to the approach they took.”
The idea of a “fair tax” that would replace our current IRS code with a single sales tax was popularized on conservative talk radio in the late 1990s. It has kicked around Washington ever since, popping up in the occasional presidential platform, but never received a vote.
Its current champion in Congress is Georgia Rep. Earl “Buddy” Carter, whose Fair Tax Act would swap out the income, payroll, estate, and corporate levies for a 30% national sales tax. It would also send out “prebate” checks to soften the blow on lower income families, all while abolishing the Internal Revenue Service.
“Nobody likes to pay taxes, or at least, I don't know anybody who does,” Carter said in a recent office interview. “But if they are going to pay a tax, I think they would much rather pay a consumption tax as opposed to an income tax.”
Proponents argue the system is superior because it doesn’t punish people for making more money and rewards them for thrift, if they so choose.
“If you don't want to pay a tax, don’t buy it. It's as simple as that,” the Georgia Republican said.
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Carter told Semafor he didn’t want to subject his colleagues to a painful vote. My guess is he won’t have to any time soon: Expect Republicans to bottle up this bill as long as possible.
Outside the deepest trenches of conservatism, a 30 percent sales tax is mostly seen as an obvious political loser. Democrats, for their part, can hardly seem to believe their luck that their opponents might attach themselves to it.
"Great idea,” Biden deadpanned during a speech Monday. “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."
It’s still unclear how many Republicans actually support the Fair Tax Act, or even want it to get a vote. Carter said the bill’s debut on the House floor was secured as part of negotiations among 20 conservative holdouts that eventually gave Speaker McCarthy the gavel by a slim margin. But he was uncertain when it would be put to the floor, however, and said he wasn’t “privy” to those talks.
Critically, Ways and Means GOP members already appear opposed to the plan, at least in its current form. None are co-sponsoring the plan.
“I would almost expect it to be in [Carter’s] interest to pull that bill rather than have a vote on it in committee,” a tax lobbyist in touch with House Ways and Means Republicans told Semafor. “I don't think there's any favorable people on the committee with an opinion in support of the Fair Tax.”
The bill does enjoy a number of co-sponsors within the hardline House Freedom Caucus. But even some archconservatives aren’t on board.
“I've got concerns,” Rep. Chip Roy, R-Texas., told Semafor, referring to the amendment authorizing income taxes. “I will not support creating a new tax without repealing the 16th amendment.”
Room for Disagreement
Some top Republicans are saying there’s at least a possibility the bill will get a vote. “A lot of people wanted to vote on that for quite a number of years so this might be the Congress when it happens,” Rep. Patrick McHenry, R-N.C., a top McCarthy ally, told Semafor last week.
- “The Fair Tax idea has never really had any serious support because it’s not a serious proposal, but a bit of niche talk-radio kitsch from a generation ago,” The Bulwark's Jim Swift writes in his overview of the concept's long history.