Sen. Bob Menendez Says Radical GOP Tax Proposal Is ‘Dead On Arrival’

NEW JERSEY — A group of Democratic congress members, including Sen. Robert Menendez of New Jersey, are pledging that a controversial House Republican plan to rewrite the nation’s tax code would be “dead on arrival” if it reaches the U.S. Senate.

The plan – which would abolish income taxes and create a 30 percent nationwide sales tax instead – would cause a laundry list of unpleasant financial effects to trickle down for low and middle-class people, the senators allege in their resolution, which can be seen here.

According to the senators, here are some of the potential impacts that people would see from the bill:

• The average yearly grocery bill would rise by $3,500
• The cost of buying a car would go up $10,000
• The cost of buying a home would increase by $125,000

“As New Jerseyans, and Americans all over the nation, are struggling to make ends meet while the economic recovery continues to take hold, the last thing we need is to create an additional tax burden that will further raise costs and squeeze the pocketbooks of hardworking families,” Menendez said.

If it becomes law, the FairTax Act of 2023 would impose a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes and estate and gift taxes. The rate of the sales tax would be 23 percent in 2025, with adjustments to the rate in subsequent years – although critics have said the rate could actually be as high as 30 percent, depending on how its calculated.

Family members who are “lawful U.S. residents” would get a monthly sales tax rebate based upon criteria related to family size and poverty guidelines.

No funding would be authorized for the operations of the IRS after fiscal year 2027. States would be responsible for collecting the new sales tax and passing it along to the U.S. Treasury.

The concept has been around for some time, but hasn’t gained much traction, even among Republicans. While the plan was first introduced in 1999, it has never seen a floor vote, and has only been supported by a small group of GOP lawmakers, a senior economist and research manager at the Tax Foundation told CNBC.

It has seen new life after Republicans claimed a majority in the House of Representatives earlier this year and Speaker Kevin McCarthy assumed power. But most Republican members of Congress appear determined to distance themselves as much as possible from the proposed law, and McCarthy himself said this week he doesn’t support the legislation, Politico reported.

That hasn’t stopped the bill’s primary sponsor, Rep. Earl “Buddy” Carter, from crowing its virtues, however.

“Armed, unelected bureaucrats should not have more power over your paycheck than you do,” Carter opined when he introduced H.R. 25 in January.

But according to Menendez and 14 other Democrats in the Senate, they’re itching to get the chance to vote down the proposal if it ever reaches their chamber, which many experts say is unlikely.

“Any legislation that cuts vital programs like Medicare, Medicaid, Social Security or raises taxes to the middle class is dead on arrival in the Senate,” Menendez said.

Instead, the 15 senators are supporting the passage of a “responsible tax cut” that would benefit hardworking families and grow the middle class, while ensuring that the “ultra-wealthy and billion-dollar corporations pay their fair share.”

“This Senate resolution sends a clear message that Senate Democrats from all over the country are standing united in rejecting the misguided approach by House Republicans,” Menendez said.

Other co-sponsors to the Senate Democratic resolution include Jacky Rosen (Nev.), Jon Tester (Mont.), Catherine Cortez Masto (Nev.), John Fetterman (Pa.), Patty Murray (Wash.), Debbie Stabenow (Mich.), Dianne Feinstein (Calif.), Jack Reed (R.I.), Tim Kaine (Va.), John Hickenlooper (Colo.), Tammy Baldwin (Wis.), Michael Bennet (Colo.), Sherrod Brown (Ohio), and Jeff Merkley (Ore.).

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