'Really?' Both sides pan Georgia Republican's 'dumb' national sales tax proposal

23 January 2023

Rep. Buddy Carter, in a bill dubbed the Fair Tax Act of 2023, has proposed a 23 percent national sales tax. But according to critics of the Georgia Republican, such a tax would really amount to 30 percent, not 23 percent. And Carter’s proposal is being attacked from both the left and the right.

Conservative Grover Norquist has argued that a national sales tax would be terrible for retirees living on fixed incomes, and the Wall Street Journal’s right-wing editorial board believes that Carter is giving Democrats a major weapon to use against Republicans.

In an editorial published on January 20, the Journal argues, “Rule No. 1 in the legislative handbook is to make your opponent take the tough votes, but House Republicans may be reading it backwards. They’re set to vote on a national sales tax that won’t become law but will give Democrats a potent campaign issue. The plan is called the Fair Tax, and its premise is simple: Replace every existing federal tax with a new national tax on sales.”

The Journal added, “The most recent version, introduced by Georgia Rep. Buddy Carter, would slap a 23 percent tax on ‘gross payments.’ That rate includes the sticker price for any purchase plus the tax paid, which means the true rate would be about 30 percent. The Fair Tax rate would be on top of state sales taxes.”

Carter is proposing that the Internal Revenue Service (IRS) and the federal income tax be eliminated, but the Journal warns that one should “hold the applause” because Carter would like to “replace” the IRS with a “new Sales Tax Bureau and Excise Tax Bureau.”

“The new bureaucracies would have to keep track of the inevitable exceptions to the tax introduced by politicians that would erode the tax base,” the Journal writes. “A 30 percent tax on food and healthcare — really? The bill would offset the tax’s regressive nature in part by a hefty new rebate, charmingly titled a ‘family consumption allowance.’”

Meanwhile, in an article published by the left-leaning The New Republic on January 20, journalist Timothy Noah stresses that Democrats shouldn’t hesitate to use Carter’s “dumb” proposal to their political advantage. President Joe Biden, in fact, is already attacking House Republicans for trying to impose a “sales tax on virtually everything in the country” and wanting “working-class folks to be paying another 10, 20 percent on their taxes.”

“Consumption taxes can be worthwhile if they’re targeted narrowly to specific things that we legitimately want people to buy less of,” Noah notes. “That’s the logic of the gasoline tax, which is 18.4 cents per gallon and ought to be at least twice that to curb carbon emissions, and of the cigarette tax, which is about $1 per pack. But you have to be careful with consumption taxes, because unless they target luxuries available only to the affluent, they’re going to be regressive.”

Noah continues, “You also have to be careful because such taxes are wildly unpopular. Broad-based consumption taxes like what Carter has proposed are always a dumb idea…. It will be interesting to see how many House Republicans are suicidal enough to vote for the ‘fair tax.’”

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