Republicans in the House of Representatives appear divided over a proposed national sales tax that would replace income taxes, with Democrats using the issue to attack the GOP.
The Fair Tax Act introduced by Representative Earl "Buddy" Carter would abolish income, payroll, estate and gift taxes and propose a 23 percent national sales tax, but the effective rate would be 30 percent, according to the non-partisan Institute of Taxation and Economic Policy (ITEP) think tank.
"Under the bill, if you buy something that costs $100 before tax, you pay $30 of national sales tax. Most of us would call that a 30 percent sales tax," ITEP said on its website.
"Proponents, however, call it a 23 percent tax, because that $30 is 23 percent of your 'gross payment' of $130, your payment including the sales tax. Proponents claim this method of calculation is more comparable to how we think about the income tax but its main result is widespread confusion," ITEP's article said.
That 30 percent figure has now become the main focus of criticism and Democrats have taken aim at the proposal, with Democratic Senator Jon Tester pledging on Wednesday to defeat the "awful" plan.
Conservative anti-tax campaigner Grover Norquist described the idea as "a political gift to Biden and the Democrats."
The bill would also abolish the Internal Revenue Service (IRS) after the fiscal year 2027 and Speaker of the House Kevin McCarthy has previously promised to allow the bill to come to the floor for a vote, according to a report from the National Review on January 10.
However, Axiosreported on Wednesday that top Republicans said McCarthy only guaranteed to go to committee, and not necessarily a vote on the floor.
"Any legislative proposal by any member would have to go through committee in regular order, have hearings, be marked up and be subject to amendment," Representative French Hill, one of McCarthy's negotiators, told Axios.
While the Fair Tax Act has given Democrats ammunition, there are also notable divisions within the Republican conference about the proposal, which has little chance of passing the Senate even if the House approves it.
While 30 other GOP members support Carter's proposal, Speaker McCarthy appeared to reject the plan when he was asked about a 30 percent sales tax on Tuesday by CNN's Manu Raju.
"Speaker Kevin McCarthy told me he opposes a bill called the Fair Tax Act, a controversial GOP proposal to repeal federal taxes and set a national sales tax at 30 percent," Raju said.
"'No,'" he said," Raju added, sharing video of the moment he asked McCarthy about the matter.
McCarthy is not alone in his apparent opposition to the proposal. Three Republicans— Representatives Marc Molinaro, Nick LaLota and Mike Lawler—have said they'll vote against the bill.
With four Republicans opposed, this effectively dooms the legislation.
Nonetheless, McCarthy has pledged to allow a vote on the bill and with a slim majority in the House and ongoing tensions from the protracted speakership election, the divisions in the GOP conference could be brought into sharp focus.
Newsweek has asked Speaker McCarthy's office for comment.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Darragh Roche is a U.S. News Reporter based in Limerick, Ireland. His focus is reporting on U.S. politics. He has ... Read more
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