Opinion: How a GOP tax cut plan became a gift to Democrats
Remember how cameras followed Rep. Kevin McCarthy up and down the aisles of the House as he tried to string together enough deals during 15 rounds of voting to be elected House speaker?
The California Republican gathered enough votes to win the post — and now he seems to be running almost as fast to back away from some of those deals.
One particularly problematic example is the proposed Fair Tax Act, which is not to be confused with the failed Illinois Fair Tax. The proposed Illinois state constitutional amendment on the 2020 ballot would have changed the state’s income tax system from a flat tax to a graduated income tax.
The proposed federal measure, a radical product of the GOP’s right-wing Freedom Caucus, would abolish the Internal Revenue Service, do away with income, payroll, estate and gift taxes and replace the income tax with a 30% national sales tax.
Wow. Are you as gobsmacked by that 30% figure as I am? Rep. Earl “Buddy” Carter, the Georgia Republican who introduced the bill, argues on his website that the 30% is really more like 23%, since the tax is included in the purchase price.
Right. I’m all in favor of simplifying the annual torture that filing income taxes puts me through, especially if it also lowers taxes. But, since I was not a math major in school, I identify as too math-illiterate to know whether this bill will save me money or take me to the cleaners.
But, wait, there’s more. To further sweeten the deal, the bill includes a monthly check, which Carter calls a “prebate,” that would go out to every registered household to cover the consumption tax spent on necessities up to the federal poverty level.
Thank you, sir. But already this tax simplification plan is sounding too complicated for me.
One group appears to be particularly delighted by this Republican proposal: Democrats.
Democratic leaders mocked McCarthy’s apparent cave-in to Trump-aligned MAGA Republicans with various concessions in exchange for their votes.
They’re also expected to work it into their continuing theme that Republicans are endangering Medicare and Social Security and, more generally, are out of touch with regular Americans.
The bumpy launch of the proposed Fair Tax Act reveals another troubling trend for the Republicans. The small-government “party of ideas” GOP that we saw in the 1980s and ’90s under President Ronald Reagan and House Speaker Newt Gingrich lost its intellectual steam in Trump’s MAGA era.
Instead, it has become more dominated by hard-right extremist culture warriors and Trump wannabes, rejecting old-school bipartisan gestures across the aisle as some form of ideological treason.
The result is such sights as McCarthy campaigning through 15 feverish rounds of voting and deal-making to cobble together enough votes to become speaker, during which he promised Republicans that he would hold a hearing on the national sales tax measure, among other promises. More recently, he appears to be backpedaling away from it.
When he was questioned, for example, by CNN’s Manu Raju in a hallway as to whether he supported the Fair Tax Act, he responded simply, “No” and kept on walking, swiftly away.
That may not matter much in the long run, since the Fair Tax idea has only spotty support among Republicans and virtually no chance of passing in the Senate. Even anti-tax hawks such as Grover Norquist, founder of Americans for Tax Reform, wrote recently in the Atlantic that the bill was “a free gift to the Democrats.”
I don’t have to be an economic wizard to see how tacking a 30% — or even 23% — tax or surcharge onto the price of goods or services puts a drag on consumer sales and wallets. As the late Republican congressman and policy wonk Jack Kemp used to say, “If you want less of something, tax it,” he said. “If you want more of something, subsidize it.”
The same might also be said of those who want more votes.
— Clarence Page is a columnist for Tribune Content Agency.