Libertarian Johnson Pushes National Sales Tax to Woo Republicans

Replacing income tax with 28% levy could draw some defectors

Libertarian presidential nominee Gary Johnson is hoping a proposed consumption tax will win over uncommitted Republican politicians and donors. (Photo By Bill Clark/CQ Roll Call)
Libertarian presidential nominee Gary Johnson is hoping a proposed consumption tax will win over uncommitted Republican politicians and donors. (Photo By Bill Clark/CQ Roll Call)
Posted August 9, 2016 at 5:00am

Libertarian presidential candidate Gary Johnson has appealed for support from undecided Republicans by promoting a national sales tax plan that resembles a proposal backed by dozens of conservatives in Congress.

The former two-term governor of New Mexico is touting as a top fiscal priority a plan similar to a national sales tax bill sponsored by Rep. Rob Woodall, R-Ga., with 73 co-sponsors. Johnson made clear in an interview with the Los Angeles Times published Aug. 1 that he hoped his sales tax plan would attract voters and entice endorsements from uncommitted GOP elected officials and donors.

Johnson said his tax plan was “a proposal that’s been before Congress for 10 years. I think 80 congressmen and women sign onto it every year, so it’s a known product. But it dots the i’s and crosses the t’s on how you accomplish one federal consumption tax.”

In an interview three days later on CNN, Johnson said he and his running mate, former Massachusetts Gov. William Weld, were both former GOP governors from “heavily Democratic states” and would be “able to call both sides out, saying come on to the table, let’s deal with the issues that we have.”

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Johnson calls for replacing the income tax with a 28 percent national sales tax on goods and services, and says his blueprint is revenue neutral and includes incentives for low-income families. The rate would be 5 percentage points higher than the 23 percent national sales tax contained in the Woodall bill and a companion measure by Sen. Jerry Moran, R-Kan., with six co-sponsors.

Longtime political observers like John J. Pitney, a political scientist at Claremont McKenna College, said Johnson’s sales tax plan and “classic Republican” stances on other fiscal issues, such as his support for entitlement curbs and for the Trans-Pacific Partnership agreement, could appeal to some GOP lawmakers.

“Johnson may get an endorsement or two. I don’t think they will support him en masse,” Pitney said.

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He also said he doubted more Republicans would follow the lead of retiring Rep. Richard Hanna, R-N.Y., a member of the centrist Main Street Partnership, who vowed Aug. 2 to vote for Democratic nominee Hillary Clinton. Hanna cited concerns about Trump’s fight with Khizr and Ghazala Khan, parents of a U.S. soldier killed in Iraq.

Several lawmakers such as Rep. Adam Kinzinger, R-Ill., another Main Street member, and Charlie Dent, R-Pa., a leader of the centrist Tuesday Group, have simply said they cannot support Trump, without endorsing another presidential candidate.

Despite such defections, several GOP lawmakers said they saw no evidence Johnson was gaining ground in their caucus. For example, Woodall praised Johnson’s consumption tax proposal, which mirrors his bill, but made clear he backed Trump.

“I appreciate Gary Johnson’s leadership in that direction, but the Republican will get my vote,” Woodall said. He said he and other sales tax advocates would support the tax outline in the “Better Way” House GOP campaign agenda, calling for a top individual tax rate of 33 percent, a corporate rate of 20 percent and a new 25 percent tax on profits of small businesses.

Although the campaign platform would retain the income tax, it envisions border adjustments, or tax breaks, for exported goods leaving the U.S., similar to sweeteners offered by foreign countries to their manufacturers in the form of consumption tax rebates for exports.

Rep. James B. Renacci, R-Ohio, a member of Ways and Means and a staunch supporter of Trump, said efforts to focus taxes on the consumption of goods and services had gained traction with a number of Republicans in recent months, but said he doubted Johnson’s sales tax plan would help him recruit GOP lawmakers.

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Renacci has been promoting his own tax overhaul plan, which would lower and streamline individual rates and replace the 35 percent corporate income tax rate with a 7 percent value-added tax. Renacci said he would encourage Republicans to back Trump whether they like Johnson’s national sales tax plan or not. “We need to be blocking … and get in the end zone,” Renacci said.

Ronald B. Rapoport, a political scientist at the College of William & Mary, said Johnson and Weld did not fit the mold of populist outsiders like Ross Perot, the Reform Party nominee in the 1992 presidential campaign. “Johnson and Weld are from the establishment. They are former governors. I don’t see a groundswell of support,” said Rapoport, who wrote a book on Perot, “Three’s a Crowd: The Dynamic of Third Parties, Ross Perot and Republican Resurgence.”