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House Republicans Divided on Fair Tax Bill

Cámara Baja aprueba paquete de reglas que debilitan a McCarthy, EFE

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“Tax reform is so difficult that everyone knows it will be subject to a lot of give and take in the legislative process,” James Baker III wrote a while back, as he recalled the backroom of the Tax Reform Act of 1986. Thirty-seven years later, some House Republicans are seeking to completely transform taxes in the United States.

The Fair Tax Act entered the House floor in early January under the authorship of Congressman Earl “Buddy” Carter (R-GA). Although it is not even a month old, it is already causing divisions within the Republican Party, as opinions on the legislation are divided.

The bill would fundamentally change the tax system and would take direct aim at the Internal Revenue Service (IRS). Specifically, it would eliminate all income taxes, payroll taxes, estate taxes and gift taxes.

As a counterpart, it would create a 23% sales tax, which would be collected directly by the states and remitted to the federal Treasury. The latter would directly retire the IRS and render the agency virtually obsolete.

Sales tax is an amount of money that is added to the value of the product or service when it is purchased by the consumer. For example, if a chair has a value of $5.00, this tax would bring its final price to $6.15 for the consumer.

House Republicans divided over Fair Tax Act
The Fair Tax Act was authored by Congressman “Buddy” Carter and co-sponsored by 22 Republicans (EFE).

Republicans divided over Fair Tax Bill, Democrats want nothing to do with it

Rumor has it that the treatment of the bill was part of the negotiation between Kevin McCarthy and the group of Republicans who opposed his candidacy as Speaker of the House. However, when asked about the legislation, the Californian assured that it would first “have to go through committee,” in this case the Ways and Means Committee.

On the other hand, Steve Scalise (R-LA), second in the House leadership, was openly against the bill. As a superseding proposal, he suggested making the 2017 tax cuts enacted by former President Trump permanent.

“We made the code more simplified and got rid of a lot of loopholes, and so I want to see us continue focusing on the fairness and simplicity of a tax code,” Scalise argued. “Any member can file a bill. That doesn’t mean the bill is going to pass the committee or pass the floor,” he added in that regard.

Some 22 Republicans co-sponsored the bill and advanced their support for when it comes out of committee and lands in the House. They are Andrew Clyde, Jeff Duncan Kat Cammack, Scott Perry, Bob Good, Thomas Massie, Ralph Norman, Bill Posey, Gary Palmer, Jim Banks, Barry Loudermilk, John Carter, Gus Bilirakis, Matt Gaetz, Marjorie Taylor Green, John Rutherford, Warren Davidson, Gregory Steube, Byron Donalds, Mike Collins, Barry Moore, Eric Burlison and Tim Walberg.

Democrats have already anticipated their unwavering opposition to the bill, which they called “regressive”. They argue that the Fair Tax Act’s sales tax would increase the tax burden on low- and middle-income earners.

Carter, the bill’s author, defended his baby tooth and nail against these accusations. According to the congressman, its creation “is the only progressive tax reform bill currently pending before Congress.”

“Each household will receive a monthly prebate based on federal poverty levels and household size that will allow families to purchase necessary goods, such as food, shelter, and medicine, essentially tax-free. This is similar to our current individual exemption and refundable tax credit system,” he explained on his website.

Finally, as for the viability of the proposal in Congress, it is still unclear whether Carter and his allies will allow many changes to the original bill. James Baker may have the answer in a passage from his book Work Hard, Study, and Keep out of Politics. Again referring to the Tax Reform Act of 1986, he asserted that “to say that ‘it can be changed’ the same day a plan is introduced is like pouring blood into a shark tank.”

Joaquín Núñez es licenciado en comunicación periodística por la Universidad Católica Argentina. Se especializa en el escenario internacional y en la política nacional norteamericana. Confeso hincha de Racing Club de Avellaneda. Contacto: [email protected] // Joaquín Núñez has a degree in journalistic communication from the Universidad Católica Argentina. He specializes in the international scene and national American politics. Confessed fan of Racing Club of Avellaneda. Contact: [email protected]