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In tight races around the country, many Democrats are going after Republican opponents who have supported -- even tepidly -- proposals to replace federal income taxes with a tax on retail sales. Supporters of the idea call it "the Fair Tax."
One example is Arkansas Sen. Blanche Lincoln, the Democratic incumbent, who has aired several ads criticizing her Republican opponent, U.S. Rep. John Boozman, for supporting the Fair Tax, which Lincoln believes is a "dumb" idea.
We are fact-checking the latest ad, which begins with a clip from a debate on Sept. 8, 2010, in which Boozman said, "I'm excited about looking at the Fair Tax."
Then comes the voice-over: "John Boozman is excited about putting a 23 percent national sales tax on everything you buy. Calling it a fair tax is like putting a dress on a pig. 95 percent of Arkansans would pay more taxes."
The ad then cuts to another sound bite from Boozman calling the Fair Tax "a workable solution."
In some of the Democratic ad campaigns running around the country, the Republican candidates' support for a national sales tax isn't as clear as the ads suggest. For example, some have spoken about it in terms of one of several options that should be considered.
But Boozman's position is fairly well-documented.
Twice, in 2007 and 2009, Boozman has cosponsored "Fair Tax Act" bills in Congress. The bills, which have come up annually for years, have all failed to progress to a full hearing. The bills sought to repeal the federal income tax, employment tax, and estate and gift taxes, replacing them with a 23 percent "national sales tax on the use or consumption in the United States of taxable property or services." The 2007 bill got 72 cosponsors in the House; and the 2009 bill got 65 cosponsors. But the bills never gained much traction and died.
Here's a fuller context of Boozman's comments about the Fair Tax during the Sept. 8 debate highlighted in the ad:
"I'm excited about looking at the Fair Tax," Boozman said. "I'm excited about getting rid of the IRS...The bill would make it such that you would eliminate all federal taxes. I think it's something that needs to be looked at. It's a workable solution, and it should be gone forward with hearings and things in that manner."
Boozman campaign spokesman Patrick Creamer said Boozman simply wants the Fair Tax and other options to be debated.
"The congressman is a cosponsor of H.R. 25.," Creamer said. "He did so to move the discussion on comprehensive tax reform forward. He believes our tax system is inherently dysfunctional and needs to be overhauled. He would like to abolish the IRS and replace it with an easier and more fair system of taxation, which is why he supports looking into the Fair Tax as one way to achieve this."
Critics of the plan call it a regressive tax system that places too much tax burden on middle and lower income people.
Which brings us to Lincoln's claim that the plan would result in 95 percent of Arkansans paying more taxes. That statistic comes from a 2004 analysis from the left-leaning Citizens for Tax Justice. But it's not an apples-to-apples analysis of the bills repeatedly proposed in Congress. The group's research arm, the Institute on Taxation and Economic Policy, used a 45 percent sales tax for its analysis arguing that was a more realistic percentage for what is needed to raise the same amount of revenue as the current federal tax system. Other economists have criticized the 23 percent figure as well, saying that it would require massive cuts in federal spending (or running up massive debt) if it were used alone to replace the federal income tax. Nonetheless, the figure used in the study is not the 23 percent sales tax figure contained in the bill Boozman cosponsored. What the appropriate percentage for a national sales tax ought to be is a matter for debate, but we think it's misleading to cite the 95 percent figure in the ad based on an analysis of a sales tax that is nearly double the tax rate in the bill Boozman cosponsored.
Our bigger issue with the Lincoln ad -- and a number of similar ads being run against Republicans who have had nice things to say about the "Fair Tax" -- is that it highlights support for a 23 percent national sales tax but fails to mention that it would replace federal income taxes. No matter what you think of the plan, that's a very deceptive omission.
As Creamer, from the Boozman campaign, notes, "Her ads never even mention the fact that it eliminates all your current federal taxes, much less the prebate provisions which give every American an upfront monthly rebate to cover their essential purchases, within the plan."
The so-called Fair Tax is certainly a controversial, wholesale upheaval of our current tax system. And when distinguishing yourself from your opponent, it's certainly fair to call your opponent's plans "dumb." But saying your opponent supports a sales tax increase and failing to mention that it would also mean the elimination of federal income taxes is only telling half the story. And so we rate the ad's claim Half True.
YouTube.com, Sen. Blanche Lincoln campaign ad: John Boozman: Excited About National Sales Tax, Sept. 20, 2010
Fox16, "Boozman, Lincoln faceoff for first debate," by David Goins, Sept. 8, 2010
Institute on Taxation and Economic Policy, "The Effects of Replacing Most Federal Taxes with a National Sales Tax, A State-by-State Distributional Analysis," September 2004
Library of Congress, H.R.25, Fair Tax Act of 2009
Library of Congress, H.R.25, Fair Tax Act of 2007
AP, "Democrats latch onto GOP tax ideas in final blitz," by Andrew DeMillo and Philip Elliott, Oct. 14, 2010
Sen. Blance Lincoln Campaign website, "Facts Don’t Lie, Unlike Congressman John Boozman," Sept. 21, 2010
Arkansas News, "Tax reform becomes an issue in Arkansas politics," by Jason Tolbert, Sept. 26, 2010
Rep. John Boozman campaign, "Tax Relief for All Arkansans"
Rep. John Boozman campaign, "The Truth About the Fair Tax"
E-mail interview with Patrick Creamer, a spokesman for the Boozman campaign, Oct. 15, 2010
Interview with Steve Wamhoff, legislative director of Citizens for Tax Justice, Oct. 15, 2010
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