President Joe Biden said he would fight his Republican rivals’ plans to tax all goods and services in the United States instead of income, saying such moves would destroy the US economy and the best jobs market in 50 years.
“Why in God’s name would Americans give up the progress we made for the chaos they’re suggesting? I don’t get it,” Biden said on Thursday. “I will not let that happen, not on my watch. I will veto everything they send.”
A group of US House Republicans are pushing to eliminate most federal taxes, including those on income, and replace them with a federal sales tax in a plan that would also abolish the Internal Revenue Service.
Some tax experts say the so-called Fair Tax Act would not be so fair to working families, as it would further reward the wealthiest Americans.
While eliminating individual and corporate income taxes, capital gains, payroll taxes and estate taxes, the proposed 23% sales tax on goods and services would end up making the poorest Americans pay closer to 30% more on everyday purchases.
“This nation has gone through too much, we’ve come too far to let that happen,” Biden said, pointing out the economic gains made by United States under the two years of his Democratic party leadership.
Biden made the remarks on the day when the US Commerce Department reported an annualized GDP growth of 2.9% in the fourth quarter of 2022 – higher than the 2.6% forecast by Wall Street economists despite being lower than the third quarter growth of 3.2%.
Data also showed US durable goods orders for December growing twice more than expected, with a 5.6% gain. Sales of new homes in the United States, a cornerstone of the economy, also rose in December after the Federal Reserve slowed its interest rate hikes for the first time last month after aggressive monetary tightening since June.
The US jobless rate fell to 3.5% in December, well below the 4% rate that the Fed identifies as “full employment.”
“We created nearly 11 million jobs, including 750,000 manufacturing jobs… the unemployment rate is near record lowest for Black and Hispanic workers and the lowest ever recorded for people with disabilities,” Biden said.
The Fair Tax Act was a Republican counteroffer to Democrats’ calls for the two parties work together in raising the US debt limit to avoid the United States defaulting on its debt obligations while keeping the government running. The Democrats kept control of the Senate in the November midterm elections but conceded control of the House of Representatives to the Republicans, allowing their rivals to make laws in the lower chamber of Congress.
The debt limit issue has become a yearly political fight in Congress between the two parties. A drawn-out struggle to raise the nation’s debt ceiling in 2011 triggered a financial crisis that culminated in the credit rating agency Standard & Poors stripping the United States of its top triple-A credit status.
The Treasury Department announced last Thursday that it has taken extraordinary measures to avoid a debt default by temporarily suspending payments not immediately needed by federal retirement, disability and health benefit funds and channeling the money instead to other urgent services needed to keep the government running until June at least.