Sen. David Perdue (R-GA) and Sen. Johnny Isakson (R-GA) reintroduced the Fair Tax Act that would abolish the Internal Revenue Service, repeal income taxes and establish a national sales tax.
In a statement Sen. Isakson said, “Moving to the kind of system outlined in the Fair Tax of 2015 is a no-brainer. It’s time that we simplify our tax code, abolish the IRS, and create a more simple way to pay your fair share.”
The Fair Tax Act states that the federal income tax, “retards economic growth and has reduced the standard of living of the American public.”
The bill, which has 62 cosponsors, is in contrast to the President’s call for an increase in taxes for the wealthiest Americans to re-distribute to the middle class.
During the State of the Union address President Obama argued that corporations that take advantage of loopholes in the tax code increase inequality in the country.
“We need a tax code that truly helps working Americans trying to get a leg up in the new economy,” Obama said.
Sen. Perdue and Sen. Isakson, along with several Republican congressmen, don’t believe that increasing taxes on the wealthy is the solution.
In a press statement Sen. Perdue said, “Instituting the FairTax will level the playing field and make America the best place in the world to do business. The FairTax is smart policy that will help protect hardworking Georgians and all American taxpayers.”
Americans for Fair Taxation, a tax reform grassroots organization, supported the re-introduction of the Fair Tax Act.
Robert Frenzel one of the board of directors for Americans for Fair Taxation said, “The beauty of the Fair Tax is that it completely replaces the income taxes as they exist today. They go away along with the IRS.”
“The Fair Tax is the only proposal out there of any tax which completely untaxes the poor,” Frenzel said.
According to Americans For Fair Taxation the bill would include a prebate program.
Each qualifying family receives an advance refund each month “so that purchases made up to the poverty level are tax-free.”
The monthly prebate is calculated by multiplying the poverty guidelines from the Department of Health and Human Services, by the Fair Tax rate and dividing by twelve.
Additionally the organization especially supports abolishing the IRS in order to reform the tax code.
“All those problems we’ve been experiencing with the IRS for the past couple years and their abuse of taxpayers and the system goes away,” Frenzel said.
Frenzel is referring to last year’s scandal in which the IRS was accused of targeting conservative organizations.
Meanwhile Democratic senators who disagree with the tax reform proposed by Republicans have instead proposed the Buffet Rule bill, also known as the Paying a Fair Share Act, which would tax those who make multi-millions to pay at least 30 percent in taxes.
Sen. Tammy Baldwin (D-WI) said in a statement, “If our new Republican majority truly believe in strengthening the economic security of our middle class, they’ll join us in supporting this commonsense idea that if you work hard and play by the rules, you will have the chance to get ahead.”
According to GovTrack.us the Fair Tax Act only has “3% chance of getting past committee,” while the Paying a Fair Share Act only has “1% chance of getting past committee.”