Since Donald Trump’s first presidential campaign and the GOP’s subsequent slide into utter inanity, real life has continued to so far outpace satire that The Onion is starting to seem strangely mundane.
Take, for example, the House GOP’s latest lurch into bizzaro-land: Several dozen hard-right lawmakers want to replace the country’s entire progressive tax code with a sales tax of 30 percent, and to toss the Internal Revenue Service (IRS) into the trash can of history.
For decades, a small, fringe group of Republicans have pushed these sorts of measures. And for decades, these tax “reforms” have gone absolutely nowhere. It’s the sort of ill thought out policy that once garnered support among extremist followers of Howard Phillips’s U.S. Taxpayers Party (later renamed the Constitution Party) and virtually no one else. Now, however, it’s a measure that more and more GOP congressmembers are enthusiastically embracing as the party lurches ever further rightward.
House Speaker Kevin McCarthy is, himself, opposed to the bill; but the very fact that he felt compelled to promise to facilitate a floor vote on the proposal shows both how weak he is as speaker and how extreme, and politically irrational, a large part of his caucus has become.
The Orwellian-named Fair Tax Act, authored by Georgia congressmember Earl L. “Buddy” Carter and co-sponsored by roughly two dozen other congressmembers, doesn’t have a snowball’s chance in hell of actually becoming the law of the land, but even it being voted on by Congress is entirely extraordinary.
It’s hard to imagine a more regressive policy suggestion, one that would funnel more money to the super wealthy directly off of the backs of the working poor. Currently, tens of millions of Americans don’t pay any income tax, for the simple reason that they are earning too little to trigger a federal tax bill. The wealthy do generally pay at least some proportion of their income to the feds, though far too many corporations and individuals like Donald Trump have expensive tax attorneys and accountants that help them avoid paying their fair share.
Replace the income tax with a sales tax, and suddenly the tax burden is inverted. A system that the rich already game would overnight become even more ludicrously stacked in their favor. Wealthy people would receive windfalls that in many instances would total millions of dollars per year; the working poor, by contrast, who currently don’t pay much income tax and who spend all, or almost all, of their limited income on buying necessities, would suddenly be hit with huge consumption tax bills. In 2004, when Republicans last marshaled significant numbers of congressmembers to support such a retrograde proposal, the Tax Policy Center estimated that such a vast change in the tax code would force 8 out of 10 Americans to pay more in annual taxes. Today’s proposal, while slightly different from that of 17 years ago, would almost certainly also result in most Americans being worse off.
For a party that’s staked so much of its support on its anti-tax credentials, floating a proposal that would end a practice — the raising of revenues through a federal income tax — dating back to the Civil War, and that, in so doing, would render 80 percent of the voting public worse off hardly seems politically savvy. What it lays bare is the utterly irresponsible and immoral, even fantasist, core at the heart of modern GOP thinking on the economy.
The authors of this wildly inept legislation have attempted to sugarcoat its regressive nature by including a “rebate” proposal so that all Americans would receive a check each month equal to 23 percent of the cost of living at the federal poverty line — an effort to ensure that the poorest of Americans wouldn’t be decimated by the consumption tax. But that’s simply putting lipstick on a pig; at the end of the day, it’s still a policy guaranteed to benefit the wealthy and harm pretty much everyone else.
The proposal is so manifestly unfair that even Grover Norquist — the original gangster of extreme anti-tax rhetoric in the modern-day U.S. — has denounced it as a terrible idea and a “gift” to Democrats. Norquist pointed out that, among other things, it would double-tax retirees: people who have paid taxes their whole life in part so that they could receive Social Security checks, would then have to pay a huge tax on everything they buy with those Social Security checks.
These are words I never thought I would say, but Norquist is right. This isn’t just a minor present to Democrats, a storm in a teacup that will be over in a few days; it’s a gift that has the potential to keep on giving throughout this Congress and into the 2024 elections.
The authors of the bill argue that they can replace the entire bureaucracy of the IRS and that they can leave it up to the states to collect the sales tax, with the states allowed to keep a 0.25 percent finder’s fee for all the dollars they bring in. That’s sort of how the ill-starred Farmers’ General worked in pre-revolutionary France, in the 18th century: a deeply inequitable, corrupt system of tax collection that fed into the rivers of discontent that, ultimately, flooded their banks and swept away the Bourbon monarchy.
Kevin McCarthy must be tearing out his hair. He must on some level realize that the constituent parts of this entirely regressive tax plan are deeply unpopular; yet, in ceding so much power to his individual caucus members, he has shown himself to be entirely at the mercy of his most extreme representatives. And those extremists have wasted no time in attempting to secure a floor vote for this pet project of theirs, despite the fact that it is, for the GOP, a politically poisonous undertaking.