Consumption taxes on the rise

A House Ways and Means subcommittee will examine a trio of GOP proposals today that would push the U.S. to a more consumption-based tax approach, as Republicans continue to use 2016 to plan for a potential 2017 overhaul of the tax code.The three proposals include a “cash flow” plan (H.R. 4377) from California Rep. Devin Nunes, currently the third-ranking Republican on Ways and Means, a flat tax plan (H.R. 1040) from Rep. Michael Burgess (R-Texas) and the FairTax (H.R. 25) from Rep. Rob Woodall (R-Ga.). (The FairTax, also backed by Mike Huckabee, would establish a national sales tax while basically getting rid of all federal income and payroll taxes.)

So why does this hearing matter? It’s another sign that the GOP orthodoxy, especially on business taxes, is moving toward consumption taxes. Ted Cruz famously has a value-added tax that he won’t call a VAT, but Marco Rubio and Jeb Bush proposed cash flow consumption taxes in their campaigns. (There are also those on the right who are uncomfortable with a VAT, but that’s a story for another time.)

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