National US Sales Tax Will Hit Middle Classes, Say Democrats

by Leroy Baker, Tax-News.com, New York

27 September 2004

Proposals being studied by Republicans for a national sales tax to replace the current US income tax system will impose a heavy burden on America’s middle class families according to a lengthy critique prepared by House Democrat leader Nancy Pelosi.

According to Pelosi’s 25-page report, Republican plans for a national sales tax would add $6,000 to the cost of a new car valued at $20,000, whilst the prices of a number of goods and services including prescription drugs, new homes, brokerage fees, insurance premiums and gasoline would escalate.

“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.

The report estimated 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.

“The Republican plan would make it harder for middle class families to make ends meet. A national sales tax would undermine the American value of prosperity,” she argued, adding:

“This proposal is ludicrous and should be dismissed outright.”

Whilst President Bush has mentioned that a national consumption tax is an option worth considering as part of plans to reform the US tax code, the White House has denied that it is a second term objective.

However, senior Republicans, including House Majority Leader Tom DeLay, are said to support the idea.

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