Democrats Attack National Sales Tax Proposal

by Leroy Baker Tax-News.com, New York

28 October 2004

A proposal put forward by some House Republicans for a national sales tax to replace the current system of federal income tax is being attacked in a television commercial sponsored by the Democratic Congressional Campaign Committee.

The ads are running in several states where GOP members are openly supporting a bill known as HR25, which calls for the elimination of federal income tax, estate tax and payroll taxes in favor of a flat national sales tax charged at 23%.

Democrats contend that the proposal will create a regressive tax system, shifting the burden onto low and middle income taxpayers, who spend proportionally more of their income on goods likely to be subject to the tax.

Emphasising this argument, the ad, which is running in South Carolina and parts of North Carolina, Texas, Georgia, Indiana and Kansas, warns that the sales tax system will, for the average taxpayer, mean "a new big tax on every clothes purchase, our food, our cars and trucks, even our homes."

A critique of the sales tax proposal released last month by House Democrat leader Nancy Pelosi claimed that a four-child middle class family with a combined income of $65,000 would face an increase of more than $5,000 in their tax liability.

“A national sales tax would be a burden for middle class Americans, but a boon for the wealthy. Families with children would lose their current tax deductions, and seniors would essentially be taxed twice,” observed Pelosi in her report.

Whilst the national sales tax does not form part of President Bush’s re-election platform, he has paid lip service to the idea. Several senior Republicans are also thought to support the plan, including House Speaker Dennis Hastert.

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