BALD KNOB — U.S. Rep. John Boozman said Wednesday that just because he’s a co-sponsor of a bill to replace the income tax with a 23 percent national sales tax doesn’t mean he necessarily supports it.
U.S. Sen. Blanche Lincoln has criticized Boozman for sponsoring the sales-tax plan, saying it’s the wrong thing to do “while families struggle” in the current recession.
Boozman of Rogers, a Republican, is challenging Lincoln of Little Rock, a Democrat, who is up for re-election this year.
“What Sen. Lincoln is trying to do is confuse the public that I’m advocating an additional sales tax on top of all the taxes we’ve got now, and that’s not fair. It’s a half-truth, and she knows it,” Boozman said after touring a natural-gas pipeline station in rural White County.
In January, Boozman signed on as one of 63 cosponsors to H.R. 25, called the “Fair Tax Act of 2009.”
According to the Library of Congress, the bill would:
Repeal the federal income tax and estate tax.
Impose a national sales tax of 23 percent, with exemptions for purchases for business, export and investments.
Give rebates to families making under certain amounts of income.
Give states the authority to collect the sales tax and turn over the money to the federal government.
The idea is similar to what former Arkansas Gov. Mike Huckabee, a Republican, pushed in his unsuccessful run for president in 2008.
Arkansas has a sales tax that would be unaffected by the national “fair tax” legislation. Its general rate is 6 percent, although lower rates apply to some purchases, such as groceries and energy bought for manufacturing purposes. Also, some items are exempt from the state sales tax altogether.
In addition, some cities and counties have their own sales taxes. Arkansas also has an income tax, which would continue despite any U.S. tax change.
The federal “fair tax” bill was introduced in the House in January 2009 and is pending before the House Ways and Means Committee. A similar bill is pending in the Senate. Lincoln is not one of the co-sponsors.
“What I hear from the people of Arkansas is that they want something fair [in tax policy], and they want something that’s simple,” Boozman said. “I’m in favor of really looking at three options.”
He listed those as:
Reforming “drastically” the current system “to make it fair and simple.”
Replacing the current income-tax system with a “flat tax” similar to what has been advocated by former Republican presidential candidate Steve Forbes. Boozman described it as “where you just have an arbitrary, or not an arbitrary number, but a percentage that everybody would pay.”
Passing the “fair tax” bill.
Lincoln released a television ad last week in which she said, “I think John’s idea for a 23 percent national sales tax on everything you buy is just a plain bad idea.”
She didn’t mention that the plan would abolish the income tax.
Lincoln spokesman Katie Laning Niebaum called the ad “100 percent true.”
“She is working to simplify the current tax code for small-business owners and working families, but she does not favor replacing it with an even more regressive tax like Congressman Boozman has endorsed,” Niebaum said. “His plan is most unfair to seniors and retirees, local governments, charities and low-income working families,” she said.
Critics of the “fair tax” have said it would hurt thepoor, result in less taxes paid by the rich, lead to a sharp decline in consumer spending to the detriment of retailers, and make government budgets harder to predict because sales-tax collections aren’t as easy to predict as income-tax revenue is.
Regarding those points, Boozman said he wasn’t sure about how the “fair tax” would work in practice but it would create “exemptions” for low-income people.
“Right now there has not been hearings on any of this stuff,” he said. “So, I’m really a proponent of going forward with hearings on the fair tax, all these things, the flat tax, looking at revamping our code. That’s going to take Republicans, Democrats, the president, and most importantly the American people.You have to have complete buy-in from the public.”
Explaining why he’s a co-sponsor of something he doesn’t necessarily support, Boozman said, “You have to get on board with some of these things, or you don’t get it necessarily to the next step with committee hearings and things like that. I think it’s really important to start up committee hearings.”
Boozman said that so far the Ways and Means Committee hasn’t been interested in looking at the “fair tax,” which is sponsored by Rep. John Linder, R-Ga. Rep. Sander Levin, D-Mich., is the committee chairman.
He said any change in tax policy is going to take a lot of work.
An effort by a Fort Smith group to institute a similar “fair tax” in Arkansas failed this year when supporters didn’t gather enough signatures to place the issue on the ballot. Opponents said such a tax would force an increase in the state sales-tax rate, pushing it so high that consumers likely would flock to neighboring states for retail purchases whenever possible. Proposal supporters said they may try to get it on the 2012 election ballot.
On another tax issue, Boozman said he disagreed with Lincoln regarding to what extent to extend tax cuts made under President George W. Bush.
Lincoln said Tuesday that she favors extending the taxcuts but not for the “super wealthy.”
Her campaign on Wednesday said that would be “individuals earning [at least] $200,000 a year and families earning [at least] $250,000 a year; nationwide, the top 2 percent of wage earners.”
Boozman said he favors extending “all the tax cuts. Myself and many economists right now feel like it would adversely affect the economy if we increase taxes.”
He said raising taxes for the “super-wealthy” would hurt people working for small businesses.
“So, essentially, for many, many small businesses you would be significantly increasing their tax rate,” he said. “I don’t think that’s something we should be doing. We should be cutting their taxes, with tax credits so they can hire people.”
Boozman has been talking for years about the need to cut the size of the federal government, but significant cuts haven’t happened, even when a Republican was in the White House.
Lincoln has criticized him for previously favoring pork projects for Arkansas but now opposing them.
What assurance can he give that the federal government would be reduced if he were elected?
Boozman said a balanced budget amendment is a must.
“The good thing now is that the American people are wanting that,” Boozman said. “We have an opportunity to get that done. The situation now is different than it was before.”
Will people want cuts if those cuts affect their communities?
“If we give the people a plan, I think the American people are willing to sacrifice,” Boozman said.
Boozman was in Bald Knob to tour the Fayetteville Express Pipeline compressor station, a 40-acre facility in a former rice field. The station is expected to be finished by October.
The $1.3 billion project is a joint venture of Kinder Morgan Energy Partners of Houston and Energy Transfer Partners of Dallas. The pipeline will be 185-miles long and run from Conway County to Panola County, Miss.
The compressor station will help pump the natural gas through the pipeline. The natural gas will come from the Fayetteville Shale deposits in north-central Arkansas. The pipeline will transfer the gas to the Midwestern and Eastern markets.
Lincoln and Gov. Mike Beebe visited the project earlier this summer.
Also Wednesday, Lincoln’s campaign criticized Boozman for not joining her at a conference of economic developers in Hot Springs. The Lincoln campaign said Boozman gave conflicting reasons for not going and questioned whether Boozman was “too busy or just ducking debates.”
Boozman campaign manager Sarah Huckabee emphasized that Boozman has agreed to three debates before the general election Nov. 2.
“We see little point in providing the senator additional debate opportunities for her to run from her record,” Huckabee said.
Front Section, Pages 1 on 08/26/2010