Sen. Jerry Moran recently introduced S. 18, the "Fair Tax Act" in the U.S. Senate. This is the 'consumption tax' that many have touted as the fairest type of tax reform.
If it becomes law, it would abolish all income tax, particularly, all corporate tax, and move our country to draw all revenue from a national sales tax. This march to zero income tax and its shifting exclusively to sales tax is the same strategy long sought after by our soon-to-be former Gov. Sam Brownback.
Moran suggests the rate start at a 23 percent federally imposed sales tax on all spending with flexibility in subsequent years to accommodate revenue requirements. This tax would be imposed prior to all state and municipal taxes and would mean a sales tax of over 30 cents on the dollar in many Kansas counties. This would likely be imposed on all consumption, including all food and services like rent and utility bills.
In reality, to accommodate current federal spending and not even taking into account the near $20 trillion in national debt and its growing interest, the actual figure would need to be much closer to 50 percent.
For the record: This tax would be the most regressive tax ever implemented. If you are reading this, you likely spend between 90 percent and 110 percent of your earned income each year, and this bill would require you to spend at least a third of that on a consumption tax. For folks like Soros, Buffet, and Koch, who spend less than 5 percent of their income annually, this would be the largest windfall in history, but for everyone else, it results in the largest tax increase ever.
Another consideration is that millionaires and billionaires don’t make the bulk of their purchases locally. Many of their high dollar luxury items are bought overseas and would be shielded from this tax. Not to mention, they've mastered every loophole and you haven't.
Additionally, consumption is the engine of our economy. To tax that engine while it is sputtering (and for the working class, it is) would kill it. Imagine every local merchant or repairman trying to run their businesses, knowing that every purchase will come with an additional 30 to 50 percent tacked-on tax!
As every politician loves to say, if consumers have extra cash in their pockets, they will spend it locally and strengthen the economy. This is antithetical to that and should be obvious.
Sen. Jerry Moran knows all this, yet he introduced this ludicrous bill anyway. It strikes a similar chord with his support of our new Secretary of Education, Betsy DeVos. While she was adamantly opposed by constituents because she lacked any qualifications in education, she was confirmed by both our senators. Her only skill was in handing over hundreds of millions in campaign contributions and she now has a cabinet seat which will determine the future of our children’s education.
This kind of tax would be wonderful for her and her family. This kind of tax will be the greatest gift in history to the good folks at Goldman Sachs.
This tax, however, would be the single largest shift of taxation onto the middle and working class, a segment of the population already being overburdened and underrepresented.
I urge each of you to ask Sen. Moran why he is being so reckless with our future. He can be reached at 202-224-6521.
— Alan LaPolice is a former candidate for the U.S. House of Representatives for Kansas’ First District.