Abolish the tax authorities and income tax? Some Republicans have reservations

A group of archconservatives in the House is pushing for a vote on a bill that would abolish the federal income tax and the IRS, but some influential Republicans are opposing what appears to be a political loser for the GOP.

The bill, known as the Fair Tax Act, would eliminate all individual and corporate taxes while also imposing a 30% state sales tax on goods and services to be collected at the state level, making the IRS obsolete.

In a deal to support Speaker Kevin McCarthy (R-CA) in his run for House leadership, conservatives reportedly won a pledge to put the tax bill to a vote. However, the bill has virtually no chance of becoming law and has meanwhile given President Joe Biden and Democrats new ammunition in their attempt to portray Republicans as extremists.

“This ‘Fair Tax Act’ is really dirty stuff,” Charles Schumer, Senate Majority Leader (D-NY), said Thursday. “The Republican tax plan would increase the cost of buying a house by $125,000. It would increase the purchase price of a car by $10,000. It would increase your average grocery bill by $3,500 a year at a time when people are already concerned about the high price of groceries. How can they do this?”

Schumer did not note that the bill would also remove income and other taxes, but his comments highlight the difficulty Republicans could face if they go ahead with the bill. Analyzes of similar tax plans show that a national sales tax would be regressive, raising taxes on the poor and lowering taxes on the rich, while not raising enough revenue to fund the full range of government activities.

Several Republican leaders have spoken out against the bill. McCarthy said earlier this week that he opposed it, while allowing it to be considered if it gets 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 bill permanent.

Rep. Don Bacon, a relatively moderate Republican from Nebraska, told The Hill he opposes the bill. “I don’t think it’s wise,” he said, adding that he “doesn’t think it’s smart politics or policy.”

Representative 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 has stopped supporting it. “We’re going to have a public, transparent hearing on that issue and we’ll see how it goes,” he said.

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