The Grassroots Corner May 20th, 2024

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  • Source: FAIRtax
  • 05/20/2024

USA Today

A while ago, before House Speaker Kevin McCarthy resigned, the FAIRtax garnered the attention of the national publication USA Today. Search and optimization editor, Anna Kaufman wrote a summary of the bill that overall was fair and accurate. You can read her opinion piece here:

Kaufman avoided editorializing about the merits of the FAIRtax but observed that fellow Republicans opposed the bill and stated that it had little chance of getting through the Senate. Those observations were correct. She also noted that President Biden said he would veto the bill if it reached his desk—also correct.

But one part of her column caught my attention: she wrote
“Certain property and services would be exempt from the tax: … Property or services purchased for state government functions.” 

My first reaction was that the statement was wrong, but then I recalled an obscure section of the bill to which she may have been referring. In Chapter 1 (Interpretation; Definitions; Imposition of Tax; etc.), Section 102 (Intermediate and Export Sales), Subsection (3) of the bill states, “STATE GOVERNMENT FUNCTIONS.—No tax shall be imposed … on State government functions that do not constitute the final consumption of property or services.”

This passage is a real head-scratcher because further on in the bill, we see the following language that makes the opposite clear. Under Chapter 7 (Special Rules), Section 703 (Government Purchases), Subsection (a)(2) (Purchase by State Governments and Their Political Subdivisions), the bill clearly states: “Purchases by State governments and their political subdivisions of taxable property and services shall be subject to the tax … .”

The bill intends to make purchases by state and local governments, including personal services, subject to the tax to encourage privatization. If the bill did not have Section 703(a)(2), your State Department of Transportation would never hire private companies to fix your state’s roads. It would use only its own crews. 

So, I do not think Ms. Kaufman's point is correct, but I can see how she would reasonably reach that conclusion.

I would love to hear if you have any information about why Section 102 of Chapter 1 appears in the bill.

Anna Kaufman covers trending news for USA Today. She is based out of New York and has previously reported on politics and culture. You can contact her at
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