Move to abolish income taxes gains traction in Congress | Local Politics


WASHINGTON — Seeming to come out of left field, President Joe Biden last week blasted Republicans for pushing legislation that would abolish federal income taxes and the Internal Revenue Service then replace those revenues with a 30% or so national sales tax.

“It would raise taxes on the middle class by taxing thousands of everyday items, from groceries to gas, while cutting taxes for the wealthiest Americans,” Biden said during a speech at the National Action Network’s Martin Luther King Jr. Day breakfast at the Mayflower Hotel in Washington, D.C.

His comments could almost be written off as unrealistic boogeyman rhetoric aimed at energizing the base by rattling fears — not unlike U.S. Sen. Bill Cassidy, R-Baton Rouge, saying last week that Democrats are poised to take away gas stoves from roux-stirring Louisiana cooks.

But rolling back taxes will be a prime topic as state legislatures convene around the country. Several states, particularly ones run by Republicans, are looking at replacing state income tax revenues with increased sales or consumption taxes. The debate could very well be a centerpiece in this year’s campaigns for Louisiana governor.

As part of his concessions to win over arch-conservative representatives who had withheld their support for him during the speakership donnybrook a couple weeks ago, House Speaker Kevin McCarthy, R-Calif., agreed to bring “Fair Tax” legislation to a floor vote for the first time ever, according to Politico, a Capitol Hill newspaper. The plan has been a dream of conservative radio hosts, bloggers and politicians for a generation.

Republican Georgia Rep. Buddy Carter on Jan. 9 introduced the Fair Tax Act of 2023. Twenty-three Republicans have signed on as co-sponsors, so far, including Marjorie Taylor Greene, of Georgia, and Matt Gaetz, of Florida.

“Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation,” Carter wrote in a news release.

Louisiana’s congressional delegation is staying away from the fray — at least for now.

Should the bill pass the U.S. House, it likely will stall in the Senate, which is controlled by Democrats.

The U.S. has no national sales tax. Each state sets its own tax rates on purchased items, which range from 2.75% to 7.25% on the state level, with local governments in most states, including Louisiana, tacking on their own levies.

Newly elected Arkansas Gov. Sarah Huckabee Sanders promised to phase out that state’s income tax. Mississippi’s House is pressing to eliminate state income taxes, as is Georgia’s General Assembly. In Georgia, income tax revenues would be replaced with a “consumption tax.”

The Louisiana House Ways and Means Committee in September began studying the state’s taxes with a goal of making recommendations for the Legislature to consider when the next regular session convenes April 10.

Mandeville Republican state Rep. Richard Nelson, the son of an IRS agent and candidate for governor, in the past proposed such bills and still argues today that eliminating income taxes would make Louisiana more competitive.

His 2021 bills gained little traction. Those measures would have abolished corporate and individual income taxes, then raised the state portion of the sales tax from 4.45% to 6% while capping local sales tax rates at 3%.

State income tax accounts for $4.3 billion, or 11%, of the state’s $39 billion operating budget, which includes a sizable contribution from the federal government.

“Eliminating this tax would inevitably shift the responsibility for paying taxes from wealthy people and corporations to low-income Louisianans and small businesses and make it much harder to balance the state budget each year,” stated the Louisiana Budget Project, a Baton Rouge-based think tank that advocates on behalf low- and middle-income people.

Jan Moller, the group’s executive director, says arguments from the business community, which buys a lot of stuff, likely caused then-Gov. Bobby Jindal to abandon in April 2013 his plan to replace income taxes with sales taxes.

“I wish I could say it was progressive arguments of fairness, but it was the businesses,” Moller said Thursday. “There’s always been factions on the hard right that have dreamed of getting rid of the IRS and income taxes for a national sales tax. But it’s a faction within a faction.”





Read More: Move to abolish income taxes gains traction in Congress | Local Politics

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