Democrats are eyeing the “fair tax” as a wedge issue in the 2010 elections, hoping to force Republican candidates across the country to take a stand on the conservative proposal.
The so-called fair tax — which would replace the current income tax system with a 23 percent national sales tax — has been a campaign plank for some conservatives for years, but it has gained prominence with the rise of the Tea Party movement. The Tea Party “Contract from America,” released last week, calls for a “single-rate tax system.”
Republican leaders in Washington have voiced general support for the Tea Party platform but have shied away from endorsing its specific proposals. For Democrats, highlighting the “fair tax” issue is a component of their strategy of trying to splinter the GOP from the Tea Party movement.
Democrats say the proposal would benefit the rich at the expense of working families, a line that dovetails with their broader campaign message that Republicans are backing big-money interests rather than “Main Street.”
“This radical new tax hike from House Republicans and their candidates would have a devastating impact on middle-class families,” said Ryan Rudominer, a spokesman for the Democratic Congressional Campaign Committee (DCCC).
While the Tea Party platform calls for a single-rate tax, it does not specify whether the tax should be on income or sales. The executive director of the New Patriot Journal, Shelby Blakely, said the goal was a system in which “everybody pays the same proportional tax.”
“Once we get there, we can debate which one is the better idea,” Blakely said.
House GOP leaders John BoehnerJohn Andrew BoehnerFeehery: The next Republican wave is coming Rift widens between business groups and House GOP Juan Williams: Pelosi shows her power MORE (Ohio) and Eric CantorEric Ivan CantorRepublicans eager to take on Spanberger in Virginia Virginia emerging as ground zero in battle for House majority McAuliffe's loss exposes deepening Democratic rift MORE (Va.) released statements of support for the “Contract from America,” although spokesmen for both noted that they were not endorsing all of the specific provisions. The chairman of the National Republican Congressional Committee (NRCC), Rep. Pete Sessions (Texas), said Tuesday that the national party would unveil its own issue platform after Labor Day.
In the May 18 special election in Pennsylvania to replace the late Rep. John Murtha (D), the DCCC is running a television ad attacking the Republican nominee, Tim Burns, for supporting the fair tax, using the issue to accuse him of supporting higher taxes on groceries, gas and medicine.
The ad refers to an interview Burns gave last year in which he said he “would love to ultimately see the fair tax implemented.” He went on to suggest that pursuing the fair tax “straight out of the gate” would be impractical because it would require overhauling the entire tax code.
A Burns campaign spokesman, Kent Gates, said the DCCC ad “is a complete distortion at best.” Burns issued a statement to The Hill saying he supports “making our tax code flatter and fairer.”
“Any discussion like the fair tax would have to be part of a debate on creating an entirely new tax code,” Burns said.
The DCCC has a list of seven other GOP candidates in competitive districts whom it plans to target for supporting the “fair tax.” Yet the Democrats’ strategy could be complicated by growing talk within their own ranks of a “value-added tax,” or VAT, a levy on goods and services that advocates see as supplementing the income tax rather than replacing it.
While there are key differences between how the “fair tax” and a VAT would be envisioned and administered, both would likely involve the taxes on everyday staples that Democrats are now attacking Republicans for supporting.
Discussions about a VAT have increased in recent months as Democrats grapple with the likelihood that they will need to tap additional sources of tax revenue to close the soaring budget deficit. Former Federal Reserve Chairman Paul Volcker, who has advised President Barack ObamaBarack Hussein ObamaPolitics must accept the reality of multiracial America and disavow racial backlash To empower parents, reinvent schools Senate race in Ohio poses crucial test for Democrats MORE, has said it should be considered, as has Sen. Kent Conrad (D-N.D.), chairman of the Budget Committee. And retiring Sen. George Voinovich (R-Ohio) has also said it should be an option.
Speaker Nancy Pelosi (D-Calif.) said last fall that the VAT should be “on the table” along with other tax proposals and that it’s “fair to look at” a value-added tax.
“Considering the new taxes they have proposed to pay for their government spending spree, Democrats may want to think twice before challenging their opponents to a meaningful debate on the issue,” said Paul Lindsay, spokesman for the NRCC.
The VAT could be considered by the blue-ribbon deficit and debt commission that Obama established earlier this year. The panel will hold its first meeting next week.
Even as the deficit committee prepares to begin its work, the Obama administration has distanced itself from the VAT talk, wary of it becoming an issue in the fall campaign. The commission will not release its recommendations until after the November election.
“This is not something the president has proposed, nor is it under consideration,” White House press secretary Robert Gibb told reporters on Monday when asked about the value-added tax.