Income would no longer be taxed, and the IRS would be abolished.
Sound too good to be true? Income taxes aren’t indigenous to the United States; in very early days, the federal government subsisted on tariffs.
But aircraft carriers, V.A. health care, and air traffic control cost more now than they did in 1800, so there’s a catch: Everyone will pay a 30% federal sales tax on everything they buy. That includes houses, apartment rent, cars, food, medicines, everything.
In Washington State, which has a 10% sales tax in some counties, the sales tax on a new car could exceed 40%, raising the final cost of a $40,000 car to $56,000.
This is an old idea that’s been kicked around for years. (Republicans haven’t had an original idea in 100 years.) It never got serious consideration because it’s a monstrosity that would massively shift tax burdens away from high earners, who spend less of their income, to middle and lower class households and individuals. And by discouraging consumer spending, taking down our consumer-based economy.
The Hill says (here) the GOP tax scheme “would put a higher tax burden on people making less money.” So Republicans propose to soften the blow with rebates to lower-income households. But how would that work? You’d still have to front the cash for huge increases in your rent and grocery bills, then wait weeks or months for a partial refund.
If the GOP dismantles the IRS, they’ll have to create a giant new federal agency to distribute those funds, which initially will have no infrastructure for doing so. Refunds will become prime targets for hackers and mailbox thieves, and will be delayed or never arrive if people can’t navigate paperwork hurdles or the new agency loses their paperwork. And the U.S. population will expand by millions of people overnight as dishonest claimants rush to submit rebate claims on behalf of people who died or never existed.
Perhaps most notably, the GOP proposal also eliminates the FICA taxes that support Social Security and Medicare. That means these programs would depend on general tax revenues, and become part of the federal budget instead of entitlement programs with their own dedicated funding sources, making it much easier to cut their funding or eliminate them altogether. Republicans have made it clear they’re targeting those programs for cutbacks; in fact, that’s their real motive lurking behind this tax proposal.
According to Raw Story, allowing a vote on this scheme was one of the deals Kevin McCarthy made to be elected Speaker (read story here). Don’t worry, it won’t make it past the Senate or Biden’s veto pen. It merely shows what Republicans would do if they had the power to do whatever they want.