Business & Economy

On The Money — House GOP’s plan to change the way you pay taxes

An IRS Form 1040 for 2021 is arranged for a photo illustration on Friday, April 15, 2022.
Greg Nash
An IRS Form 1040 for 2021 is arranged for a photo illustration on Friday, April 15, 2022.

A controversial plan from House conservatives would swap out your income tax with a 30 percent sales tax. We’ll also look at the bipartisan backlash Ticketmaster faced in the Senate and an attempt to ban lawmakers from trading stocks. 

But first, five incredible pictures of space from the Webb telescope. 

Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan LaneAris Folley and Karl Evers-HillstromSubscribe here.

What to know about GOP bill to abolish the tax code

House conservatives are breathing new life into an old proposal to do away with income taxes, payroll taxes, estate taxes and even the IRS itself in favor of a supersized sales tax that would account for nearly all government revenues.  

The Fair Tax Act introduced by Rep. Buddy Carter (R-Ga.) and supported by 30 other Republicans would institute a massive 30 percent sales tax on all purchases in exchange for doing away with income, Social Security and Medicare taxes.

  • That means workers would get to keep the entirety of their paychecks without having to pay out anything to the government.
  • But it also means that buying everything from groceries to automobiles would be hugely more expensive.

HOW GOP MEASURE WOULD REVAMP TAXES IN THE US

The Hill’s Tobias Burns breaks it down here:

The plan would increase the tax burden on the middle class: Having a sales tax as the only source of public revenue would put a higher tax burden on people making less money. That’s because those with lower incomes tend to spend more of what they make while richer people tend to save more of their incomes, investing in retirement accounts, securities and other types of assets.

The IRS would cease to exist in its current form: Instead, it would be the responsibility of state governments to collect the sales tax and then remit it to the Treasury. 

Some conservatives are worried about the message the bill sends: The Fair Tax Act is just one of many bills now being considered in the Republican-led House that have little chance of getting President Biden’s signature but are designed to send a message to voters about Republican priorities. “I love their 30 percent sales tax,” Biden said Tuesday.

“We want to talk a lot about that, but look, I have no intention of letting the Republicans wreck our economy, nor does anybody around this table in my view.” 

The bill would represent an enormous change to the tax system: This would be a fundamental shift in the way the American tax system works and would likely have unforeseen economic consequences.

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UNDER SCRUTINY

Ticketmaster takes heat from senators, witnesses over its power  

Ticketmaster defended its online market power in the digital ticketing space at a packed — and unusually unified — Senate Judiciary hearing Tuesday, after months of increased scrutiny following a chaotic sale of tickets to Taylor Swift’s upcoming tour. 

The company has long been a target of lawmakers after its 2010 merger with Live Nation, but sparks started to fly after the messy rollout and ultimate cancellation of the public sale to the pop star’s nationwide tour.

  • Multiple Democrats suggested that the company should be broken up. Republicans didn’t go as far, but several labeled Ticketmaster a monopoly.
  • The bipartisan tone of the hearing boosts the odds that Congress will push for legislation aimed at Ticketmaster, which controls roughly 70 percent of the ticketing market, including 80 percent of shows at major concert venues.
  • Senators accused the company of threatening to take shows away from concert venues that don’t choose Ticketmaster to undercut competition.   

“I want to congratulate and thank you for an absolutely stunning achievement: You have brought together Republicans and Democrats in an absolutely unified cause,” Sen. Richard Blumenthal (D-Conn.) told a top Ticketmaster executive. 

Karl and Rebecca Klar have the story here

FRAUD CRACKDOWN

Pandemic jobless benefits fraud may have topped $60 billion: watchdog 

Unemployment fraud from pandemic jobless benefits may have topped $60 billion, according to a new report from the U.S. Government Accountability Office (GAO). 

The federal watchdog said the Labor Department reported fraud estimates of about $8.5 billion for regular unemployment insurance programs in 2021.  

However, the government created four new unemployment programs during the COVID-19 pandemic aimed at alleviating the toll on workers. 

The GAO estimated that if the rate of fraud were extrapolated to total spending across all unemployment insurance programs during the pandemic, the fraud total would come out to more than $60 billion. 

The Hill’s Stephen Neukam has more here.

HALT THE TRADES

Hawley introduces Pelosi Act banning lawmakers from trading stocks 

Sen. Josh Hawley (R-Mo.) has introduced a bill that would ban members of Congress from trading and owning stocks, using the name of his legislation to take a jab at Rep. Nancy Pelosi (D-Calif.). 

Hawley on Tuesday introduced the Pelosi Act — or the Preventing Elected Leaders from Owning Securities and Investments Act — renewing a legislative push to curtail stock trading by lawmakers that has failed over the last few years. 

“Members of Congress and their spouses shouldn’t be using their position to get rich on the stock market,” Hawley tweeted in announcing his bill. 

  • Last year Pelosi’s husband, Paul Pelosi, sold millions of dollars worth of shares of a computer chipmaker as the House prepared to vote on a bill focused on domestic chip manufacturing. A spokesman for Pelosi said at the time that he sold the shares at a loss.
  • Members of both parties signaled interest in legislation barring stock trades after then-Sen. Richard Burr (R-N.C.), who at the time was chairman of the Senate Intelligence Committee, unloaded stocks at the onset of the coronavirus pandemic.
  • The Securities and Exchange Commission recently closed a probe of Burr’s trading activities without taking action. 

Here’s more.

Good to Know

The FBI confirmed on Monday that North Korean-sponsored hackers known as the Lazarus Group were behind the theft of $100 million worth of cryptocurrency from California-based crypto firm Harmony. 

Other items we’re keeping an eye on: 

  • Democrats on the House Energy and Natural Resources committees blasted a Republican bill to restrict releases from the Strategic Petroleum Reserve as “reckless” Tuesday, arguing it would limit the federal government’s contingency options in times of crisis.
  • Rupert Murdoch has pulled back his bid to merge News Corp and Fox Corp, two of his largest media properties, four months after floating the idea of combining them.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.

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