War of Words Heats Up Over GOP Plan to Abolish Income Tax

January 25, 2023 by Dan McCue
War of Words Heats Up Over GOP Plan to Abolish Income Tax
Senate Majority Leader Chuck Schumer, D-N.Y., addresses reporters at the Capitol on Jan. 25.

WASHINGTON — Democratic leaders from the House and Senate on Wednesday blasted away at a GOP proposal to do away with all income and payroll taxes and replace the lost federal revenue with a massive hike in the sales tax.

“This plan is dangerous and it is a disaster,” Senate Majority Leader Chuck Schumer, D-N.Y., declared during an early afternoon press conference, where he was joined by House Democratic Leader Hakeem Jeffries, D-N.Y.

“This proposal is a real doozy. It would impact just about every single American family for the worse,” Schumer said, balling his hands into fists before sending his arms flailing to his side.

“It’s hard to believe they came up with it,” he added.

“The fact is the so-called Fair Tax Act is just another example of the extremist agenda that Republicans are trying to jam down the throats of the American people,” Jeffries said.

Speaking for the Republicans, House Majority Leader Steve Scalise, R-La., said at a wide-ranging press briefing Wednesday morning that Democrats’ outrage over the proposal is a symptom of “the bigger Washington spending problem.”

The broadsides came as Democrats and Republicans on both ends of Pennsylvania Avenue are grappling with how to reach an agreement to avoid defaulting on the United States’ $31.4 trillion debt.

So far there isn’t even agreement on who should take the first step in negotiations over how to raise the so-called debt ceiling and by how much.

Right out of the shoot, hard-line conservative Republicans in the House are pushing to force deep spending cuts on Biden and the Democratic-led Senate in exchange for a deal.

In that regard, the Fair Tax Act introduced by Rep. Buddy Carter, R-Ga., on Jan. 10, and reportedly supported by at least 30 other members of the GOP House caucus, can be considered an opening salvo.

The idea itself is not new. It was first introduced in Congress in 1999. Carter’s version would impose a 30% sales tax on all purchases, allowing for the elimination of income, Social Security and Medicare taxes.

Carter and other proponents of the act say not only would it eliminate all personal and corporate income taxes, the death tax, gift taxes and the payroll tax, it would also eliminate the need for the Internal Revenue Service. 

“The Fair Tax Act would repeal the current tax code and replace it with a single national consumption tax that is pro-growth and allows Americans to keep every cent of their hard-earned money,” a press release on Carter’s website states.

“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 himself said in the release. “Armed, unelected bureaucrats should not have more power over your paycheck than you do.”

Majority Leader Steve Scalise, R-La., addresses the press. (Photo by Dan McCue)

But several moderate Republicans fear the messaging has played into President Biden’s hands.

That’s because of the widespread belief that reliance on a sales tax alone would place a higher tax burden on people making less money. The conventional wisdom is people with lower incomes tend to spend more of what they make, while wealthier individuals tend to save more of their earnings, investing it in retirement accounts and the like.

On Tuesday Biden quipped to reporters that Republicans had proposed a massive tax hike on the middle class, and he vowed to veto it.

“I have no intention of letting the Republicans wreck our economy, nor does anybody around this table in my view,” he said.

On Wednesday, Scalise sought to minimize the internal party debate over the message being conveyed to voters.

“The bigger question is, can we get spending under control in Washington?” he said. “For every dollar that we take in, we’re spending $1.29. That’s just not sustainable.

“I think in most families, if they max out their credit cards, they’re going to sit down and have a conversation about how to responsibly deal with the problem,” he said. 

“That’s what [House] Speaker [Kevin] McCarthy, [R-Cailf.,] has been asking for. … What he’s said is, ‘Let’s just sit down and have an honest conversation about how to solve this problem of Washington spending too much money. And for President Biden to say we can’t even have that conversation, that’s irresponsible.’”

But for Schumer and Jeffries, the issue right now is the proposal on the table — the Fair Tax Act.

“I mean, here we are with Americans telling us they are worried about inflation, and now you’re saying, ‘Let’s just impose a 30% tax on everything,’” Schumer said. “It would be the largest tax increase for working Americans ever.

“So what we have is a MAGA Republican Party that has no concern for working people. Every single day, they’re simply trying to have a new plan to cut more taxes on the wealthy and impose them on average working Americans.”

Schumer went on to quote former Republican presidential candidate Steve Forbes who had run largely on the proposal of tossing the existing tax code and replacing it with a single tax rate that offered a few generous exemptions for certain adults and children.

According to Schumer, Forbes has predicted the Fair Tax Act would raise the cost of buying a new home by about $125,000 and a new car by $10,000.

And at a time when people are already complaining about the high price of eggs and other groceries, Forbes has predicted the act would raise the annual cost of groceries by $3,500.

“Almost every American family would be devastated,” Schumer said, adding that as long as he’s Senate majority leader, “this devastating, unfair, nasty and almost crazy plan” is not going to pass the Senate.”

Later, Schumer referred to the Fair Tax Act as “the biggest Lollapalooza I have ever seen around here.”

Given that the proposal has no chance to pass the senate, and may even be on shaky ground in the House, Schumer and Jeffries were asked why they were spending so much time on it Wednesday afternoon.

“You know, everyone thought there was no way that Leader McCarthy would ever go along with the MAGA Republicans when he ran for speaker. And we all saw what happened and see that he’s committed to them still,” Jeffries said. “That’s why we have to fight this plan now, before it gains any more of a head of steam and too many Republicans support it.”

“What we’re trying to do is make it clear to the American people just how high the stakes are,” Schumer said. “I mean, when you see how extreme these proposals are, you have to wonder who’s sitting in some dungeon … some laboratory down in some basement … cooking up these ideas.

“But that’s what’s happening. And it’s why we’re speaking out against it, working to defeat it, expose it, and make it clear that it’s part of an overall extreme agenda,” the Senate majority leader said.

Pressed again on why they were pushing back so hard on legislation that will likely never get by the Senate and certainly wouldn’t be signed by the president, Schumer said, “First, to make sure this plan dies. MAGA Republicans have a lot of power, certainly in the House.

“But second, we have to show the American people who is on their side and who isn’t. You get a lot of rhetoric about protecting working people from the other side. But they’re not protecting working people, and what they are putting out there as proposals would harm working people in ways we’ve never seen before.”

“Public sentiment is everything,” Jeffries said. “With it, nothing can fail. Without it, nothing can succeed. That’s Abraham Lincoln. And with this discussion and debate, we’re making sure the American people clearly understand why this so-called tax fairness plan would be a disaster for them.”

Dan can be reached at [email protected] and @DanMcCue

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  • Chuck Schumer
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