Rep. Buddy Carter, who brought back Fair Tax Act legislation this week, told Newsmax on Thursday that switching the nation from an income-based tax system to one in which people pay taxes on the purchases they make is "the right move because it's simple and it's fair."
"You know people don't like paying taxes, but given the choice between a consumption tax and a property tax or an income tax, they would much prefer a consumption tax, because that way they're in charge," the Georgia Republican said on "Wake Up America." "They can decide what they want to buy and what they want to pay a tax on."
Fair Tax Act legislation has popped up in Congress before, dating back to when the proposal was first made in 1999. Carter also presented the Fair Tax Act in 2023.
At that time, House leadership opposed the idea, with many Republicans saying they favored reinstating tax cuts President-elect Donald Trump made in his first administration. The legislation did not advance.
The Fair Tax Act calls for repealing the current tax code and replacing it with a national consumption tax. It would eliminate the need for the Internal Revenue Service along with stopping all personal and corporate income taxes, the death tax, gift taxes, and the payroll tax, and replace them with a 23% flat sales tax on purchased goods.
"It catches all the economy," Carter said. "Everybody pays it. We hear all this all the time about, well, illegals aren't paying their fair share or whatever. Well, if they're buying something in America, they're going to be paying a consumption tax."
Critics have said a consumption tax would reduce consumer spending, but Carter said he does not "buy that for one second."
"They're still going to buy and they will get used to it," he said. "They'll have more money in their pocket. This way you don't have to pay the IRS. If you make $40,000 a year, then you're going to get $40,000 a year. You're going to have more income, and you're going to be able to decide how you spend your money and what you want to pay taxes for."
In the current legislation, the tax rate would be 23% as of the 2027 tax year, Kiplinger reported. Some economists have said the rate could go to as high as 30%, which Carter denies.
The total taxes gathered would then be broken down, with 64.83% going to general revenue; 27.43% to old-age and survivors insurance and disability trust funds; and 7.74% to hospital insurance and federal supplementary medical insurance trust funds, according to Kiplinger.
After 2027, the consumption tax rate could vary, based on government spending, with the amount to be based on a 14.91% sales tax that would cover general fund spending, along with variable sales tax rates to cover trust fund spending, to be determined by the Social Security Administration.
Economists have criticized the Fair Tax proposal as being unworkable, with the Brookings Institution arguing that the rates would not be enough to replace the money not being collected through income and other taxes.
But Carter insisted that the Fair Tax Act would be more fair, and would ensure that the wealthy pay their fair share.
"I use the example, look, I'm going to buy a jon boat. The taxes on the jon boat aren't the same as the taxes on a yacht," said Carter. "The taxes on the yacht are going to be a lot more."
He also insisted that "everybody really does like the idea."
"We talked about taking taxes off of tips," said Carter. "You don't have to worry about that anymore because nothing's going to be taxed. Everybody is going to pay it because everybody's a consumer."
It also will put Americans "in control," rather than the IRS, Carter said.
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