Republicans battle over tax reform
by Annette Birch
Senior Republicans are opposing an effort by Georgia House Republicans’ effort to replace the current income tax system with a single national consumption tax. These members do not consider the bill to be politically viable.
For Ga. Republicans, the adoption of a flat, 23 percent consumption tax would be the fulfillment of a long-term dream since its first introduction in 1999. As Rep. Woodall (R-Ga.) stated in a press release when he reintroduced the bill on Jan. 3, their aim is to make the tax laws easier for middle-class Americans to understand. Freshman Rep. Doug Collins (R-Ga.), who is among the 53 original supporters of the bill, agreed.
“I believe hardworking, American taxpayers should be able to keep more of their hard-earned money. The Fair Tax accomplishes this goal while simultaneously creating a much-needed reform to our current tax system,” Collins said in a written reply to this paper.
However, the Fair Tax bill, which has not been up for discussion since its latest hearing in July 2011, is not the only tax bill being promoted by Republicans in the House. Rep. Dave Camp (R-Mi.), a veteran Republican and chairman of the major tax committee in the House, stated to Wall Street Journal on August 11, 2012 that even though he liked the idea he would not replace the current income tax system with a single, flat tax. Instead he would reduce the top corporate and individual tax rates to 25 percent.
One of Rep. Camp’s supporters, Rep. Patrick J. Tiberi (R-Oh.), who is on the committee and chairman of an important tax-writing subcommittee, said to Bloomberg BusinessWeek on April 21, 2011, that he did not see the Fair Tax bill as politically viable. Breann Gonzalez, spokeswoman for Rep. Tiberi, confirmed in a written reply to this paper that he still does not support the Fair Tax bill.
“He supports comprehensive tax reform and is therefore focusing his work on Chairman Camp’s effort to pass comprehensive tax reform,” she said in reply to whether Rep. Tiberi supported the Fair Tax bill.
Andrew Pike, professor of law at American University, said that the Fair Tax bill also appears to create a new tax on wages. However, the tax burden would be on the employer, who would not only pay salary to the employee, but also tax to the government.
Derick Corbett, Chief of Staff for Representative Woodall explained that this was not the intent of the law.
“The bill does not impose 23 percent tax on wages, only on consumption,” he said in an interview with this paper.
Rep. Camp ’s latest efforts to create a bipartisan tax reform that can pass both the House and the Senate, does not focus on income tax, but on modernizing tax rules and making it more difficult for financial speculators to abuse derivatives. Economic experts praised Camp in CQ Roll Call on Jan. 30, for being economically responsible. In contrast, Pike argued that the exemptions in the Fair Tax bill of large categories of items like health insurance, expenditures of government and individuals under the poverty level would decrease the overall tax revenue collected by the government.
Corbett maintained that the revenue from the consumption tax would be able to cover the expenses of government.