In 2017, the Republican Party introduced the Fair Tax Act (also known as “Tax Cuts Jobs Act”), which proposed to overhaul the existing tax code by replacing federal income taxes with an flat 30% consumption tax. The IRS, individual and corporate income tax, payroll taxes and estate taxes are all eliminated.
They also argue that lowering the corporate tax rate would make thea href=”https://www.thedailyscrum.ca/2023/01/23/the-republican-partys’fair-tax act” title=” United States”> United States/a> more competitive in the global economy. The Fair Tax Act supporters also claim that lowering corporate tax rates would make the United States a more competitive nation in the global market.
Politicians and critics of Fair Tax Act claim that it will disproportionately hurt low- and mid-income Americans. The consumption tax, they say, would be the most damaging to low-income Americans because they spend more of their income for necessities like food and housing.
The Fair Tax Act also eliminates deductions and credit that are used by many Americans, including the mortgage interest deduction, and the child tax credits. The critics also claim that the elimination the estate tax will primarily benefit those who are very wealthy, and that the elimination the corporate income tax will lead to government losing revenue.
The Fair Tax Act would increase the national debt by a significant amount, according to one of the most common arguments against it. Several watchdog groups have stated that the Fair Tax Act will decrease federal revenues significantly during the first decade. The 30% consumption tax will not be enough to replace lost revenue due to the elimination of income and payroll taxes.
Political analysts have pointed out, too, that the Fair Tax Act is a gift for the Democrats. The bill will be regressive and affect lower-income groups as well as the middle class disproportionately. It is possible that the Republican Party will lose a lot of support from these groups during the next elections. It would also increase the national debt. This would be a great gift for the Democrats, as it would result in a loss of support from the lower income groups and middle class.
