Despite earlier calling it a "myth," CNN aired Huckabee's claim that FairTax allows workers to "get their whole paychecks"
SUMMARY: During a report on CNN's The Situation Room, Mary Snow uncritically aired Mike Huckabee's assertion that "[i]f we could free people up to go out and earn -- get their whole paychecks -- it could make a truly huge difference in securing jobs and making the economy work." However, in a previous report, CNN's Ali Velshi had rebutted the claim that, under the FairTax plan, workers would get to keep their entire paychecks, saying, "Promoters like Huckabee talk about how you'd get 100 percent of your salary paid to you. Now, that is a myth."
On the January 22 edition of CNN's The Situation Room, correspondent Mary Snow uncritically aired Republican presidential candidate Mike Huckabee's assertion that "[i]f we could free people up to go out and earn -- get their whole paychecks -- it could make a truly huge difference in securing jobs and making the economy work." However, on the November 29, 2007, edition of The Situation Room, correspondent Ali Velshi rebutted the frequent claim by Huckabee and other supporters that, under the FairTax plan, workers would get to keep their entire paychecks. Velshi said of the plan: "Now, this would be a 23-percent tax on everything you buy. Promoters like Huckabee talk about how you'd get 100 percent of your salary paid to you. Now, that is a myth. ... [Y]ou'd still have to pay all of your state and local taxes and property taxes. And, by the way, everything will be taxed -- including things like rent and health care."
Moreover, in a September 25, 2005, post on the "Nealz Nuze" section of his website, nationally syndicated radio host Neal Boortz, co-author of The FairTax Book: Saying Goodbye to the Income Tax and the IRS (William Morrow, August 2005), wrote: "Now, let's elaborate on the 'keep 100% of your paycheck' line that appears in The FairTax Book. It is certainly true that after the FairTax becomes law there will be no more withholding from your paycheck for any federal taxes. What you earn is what you get. This is not to say that your gross pay will equal what it was before the FairTax. This will depend on what your employer does when the embedded costs represented by the tax burden you have passed on to your employer disappear."
In the post, headlined, "The FairTax --- Straightening Out Some Confusion," Boortz also wrote: "When the FairTax is implemented, and when business and personal income and payroll taxes disappear, your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call 'take home pay' before the FairTax. The employer may also decide to do a little of both."
From the November 29, 2007, edition of CNN's The Situation Room:
VELSHI: Wolf, I'm with all those people who find the yearly tax ritual frustrating, but it is not clear that the FairTax, endorsed by Mike Huckabee, would save most of us much money. The FairTax is basically a consumption tax: means you pay tax on what you spend, not what you earn. Consumption taxes reward people who save money and it penalizes people who spend much.
Now, this would be a 23-percent tax on everything you buy. Promoters like Huckabee talk about how you'd get 100 percent of your salary paid to you.
Now, that is a myth. What's true is that all federal taxes would go away -- income tax, the alternative minimum tax, gift taxes, estate taxes, capital gains taxes -- even Medicare and Social Security premiums would disappear. But you'd still have to pay all of your state and local taxes and property taxes. And, by the way, everything will be taxed -- including things like rent and health care.
Anyone who can disguise themselves as a business will pay no federal taxes, which means, for instance, a $40,000 car for an individual is a $28,000 car for a business -- and that could give birth to all sorts of schemes to avoid paying taxes.
Which leads me, Wolf, to "Myth No. 2" about the Fair Tax -- that the IRS is going away. While the name IRS could disappear, the federal government is still going to have a tax collection and enforcement department, which is pretty much what most people think the IRS is anyway.
Wolf, the appeal of a simpler tax system is clear. What's less clear is who wins and who loses with this specific FairTax -- Wolf.
From the January 22 edition of CNN's The Situation Room:
SNOW: [Republican presidential candidate] Mitt Romney has added economic turnaround to his message. He's calling for tax cuts and mortgage help.
ROMNEY: What you're seeing with the stock market reaction here and around the world is a recognition of these long-term features, and underscoring the need to take a different direction in the economy.
SNOW: Mike Huckabee says that change needs to come by wiping out income taxes altogether and replacing them with a national sales tax.
HUCKABEE: If we could free people up to go out and earn -- get their whole paychecks -- it could make a truly huge difference in securing jobs and making the economy work.
SNOW: But any of these plans are at least a year way, and economists say, right now, time is of the essence.
LAKSHMAN ACHUTHAN (Economic Cycle Research Institute managing director): It's how quickly are these fiscal stimulus initiatives enacted -- that's the real issue. It's about -- it's more about when and not what.
That comes right after he follows through on bombing Jordan. That's where Iraq moved all their WMD's. All those schmucks who said it was Syria were wrong...
No, not finding them is a pretty good clue they weren't there, Mike.
Can you believe the crap Republicans are still shoveling about the 935 lies leading up to the invasion of Iraq?
CTG, No to worry. Use Republans since the letters "IC" have been eliminated in the Republan language. Remember Democrat Party.
Same problem here...first it was my house, then she moved in, it became our house...now, it is HER house. I don't even recognize in when I walk in.
Actually, Velshi delivered what this site likes to call "misinformation". Rent would not be subject to any taxes. The property being rented would still be subject to property tax, and one could argue that the renter essentially pays that tax, but that's no different than what happens today. And besides, the FairTax is a FEDERAL tax reform bill. States will still tax as they always have.
The car is a different story altogether. As Velshi said, ALL SS, Medicare, FICA, and corporate taxes (on the federal level) would disappear. (So, if you live in Nevada or Kentucky for example, you would indeed get %100 of your paycheck, no myth about it, MMFA.) Sorry, back to the car.
OK, corporate taxes. Who pays them? Businesses? NO! YOU pay the corporate taxes for every producer, manufacturer, vendor, affilliate, raw material refiner, mining company, etc. etc. etc. involved in turning that car from raw materials into an automobile. There are alot of hands in the process and they ALL have to pay their taxes. All of the companies involved need to cover their operating costs, cover their tax liability, and maintain a desired margin of profit. After all the numbers are crunched, they set a price and pass it on down the line until the final dollar amount comes from YOUR POCKET. This concept is known as "embedded taxes". You are paying GM's corporate taxes, plus a slice of EVERY other company's that was involved in getting that car to the showroom (not to mention the car dealership). It's all worked into the retail price of the car.
Ok, what portion of the retail price of the car ultimately goes to the government in the form of corporate taxes? Well, if you ask the country's most respected economists (yes, even the ones at Harvard) they will tell you that it is about 22 percent of the retail price. Therefore, General Motors, under the FairTax, could trim 22 percent off of a $20,000.00 car and still cover expenses and profit. The new price of the car (GM's price) is $15,600.00.
Then the FairTax of $6,600.00 is added which makes the RETAIL PRICE $20,200.00 (FairTax included). Now, here's where the 23%/30% debate comes in. Since embedded taxes (and even income taxes, for that matter) are stated as inclusive, the FairTax is stated that way as well. If you state the FairTax of 6600.00 as a percentage of the FULL price of the car (20,200.00), it is 23%. If you state the FairTax as a percentage of what General Motors actually KEEPS, then it's 30%.
But, by that same logic, if you state embedded taxes as a percentage of what General Motors keeps TODAY, then you could argue that a new car ALREADY has a 29% tax built in. See how that works? It's spun to match the argument. So the bottom line is that the car is 1% more expensive under the FairTax than it is today.
BUT, here's the beauty of the plan. You have your ENTIRE paycheck every week. (Yes, yes, you may still pay state taxes, I get it! We're talking about a FEDERAL tax plan here. Deal with your state later.) You don't pay into Social Security or Medicare anymore (even though, under the plan, those programs remain active and fully funded). Plus, you get to fire your tax attorney AND NEVER FILE ANOTHER 1040 AGAIN.
Then, the icing on the cake is this: The team that designed the plan followed the notion that the necessities of life should not be subject to the FairTax. So, under the plan, each household gets a monthly "prebate" equal to the amount of FairTax that they would be expected to pay all the way up to the poverty line. The proposed prebate (based on 23% FairTax and the current census figures on poverty) for a family of 4 is around $330.00 a month. So, that particular household is only subject to the FairTax after they have spent $1,416.00 at the retail level EACH MONTH. Once you get into the details of the plan, you begin to realize that even the lowest wage earners would benefit from the FairTax.
Let's recap, shall we? All taxes on income disappear, all federal withholding and SS/Medicare disappear. Corporate taxes disappear which, in turn, makes embedded taxes disappear. FairTax is implemented. Retail prices see a net increase of about 1 percent. FairTax up to the poverty line is deposited into your bank account every month, to go with your paycheck that just increased 20% or more.
Oh, and one more thing. I know the anti-capitalists are saying "Well, who's gonna make sure that when corporate taxes are taken away, big businesses like GM drop their price by 22%?" I've got a simple, one-word answer for that:
Ford.
Your take on corporate taxes is simplistic. It would only make sense if a corporation based what to charge for a product on what it cost. Rather they charge what they can GET. There is no reason to believe they would lower the price of a car if their taxes went down. Did they lower their prices when they began making their cars in Mexico and their costs went down. I didnt see that happen. By your logic corporations shouldnt pay ANY taxes. I agree with a graduated tax system. The wealthy GET more out of our societal investment on everyone making money and they OUGHT to pay a higher percentage of taxes. Taxes on money people make with their money would be completely exempted and capital should be taxed at a higher rate than labor instead of not taxed at all. Since the wealthy make most of their money in capital gains it would be a windfall for them. This is a bad idea. It would shift the tax burden to the middle class even MORE than has already been done over the past 20 years. I believe Roosevelt was right when he said these things
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
Franklin D. Roosevelt
It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach.
Franklin D. Roosevelt
The test of our progress is not whether we add to the abundance of those who have much. It is whether we provide enough to those who have little.
Franklin D. Roosevelt
We have always known that heedless self-interest was bad morals; we know now that it is bad economics. ...
Solon,
My belief is that if the FairTax were passed, it would be such a nationally publicized event that the consumers would almost immediately demand the prices to drop and the competition in the marketplace would breed lower prices across the board. Remember, a corporations PROFIT does not have to decrease at all for the price to drop. Marketers would tout the price drop loudly to appeal to the consumer, and the corporation would still realize identical profit margins.
By contrast to what you stated about Mexico, I really think that the big 3 sought out mexican labor in order to keep car prices low to compete with the imports. If you are insinuating that the car mfrs. exported the work to Mexico just to reap larger profits in the U.S., then please explain to me why all 3 of them have had to lay off workers and close plants across the country. They have suffered against the likes of Honda and Toyota. Detroit, my friend, is almost a ghost town in the wake of Japanese brands. I, for one, am surprised that Chrysler is still around. Their shift to Mexican labor is, IMO, a move of desperation. However, with the FairTax in place and no tax on capital and labor, the U.S. becomes the world's corporate playground and largest tax haven and those jobs (not to mention the Trillions of dollars in off-shore holdings, foreign investments and savings) get sucked right back across our border.
Think about it. When Daimler and Chrysler merged, the bigwigs had a decision to make about where the company HQ would be. Since the cost of doing business in this country is so much higher than Germany, guess what? We have Daimler-Chrysler. If we had the FairTax in place, we would most certainly have Chrysler-Daimler in a nice, big shiny skyscraper in Detroit.
You said that by my logic corporations shouldn't pay ANY taxes. I think you misunderstood me. My logic is that even today, corporations DON'T pay any taxes. The corporation is merely a collection agency for the government. The entire corporate tax burden in this country is passed through the corporation to the consumer. Thus, every penny forwarded to the government in the name of a corporation ultimately comes out of the pocket of an individual. A consumer. You and I, my friend. And, in my eyes, to ask the government to raise corporate taxes is essentially a request for higher prices at the checkout. Sorry if this is a run-on post, really tired. Thanks for the response.
So how come no Dems are invoking the oft-cited spectre of "class warfare" in this demolition of the nature and mechanism of progressive taxation? For that is precisely what this bumpkin is proposing - that if it is outrageous to take 50% of the ditch-digger's wage as tax, it equally outrageous to take 50% of the billions passed along by the wealthy to the worthless or useless heirs - who if not worthless or useless, would be expected to go do something to earn their own piece of the American Dream.
"Anyone who can disguise themselves as a business will pay no federal taxes, which means, for instance, a $40,000 car for an individual is a $28,000 car for a business"
You'd have to "disguise" yourself as a new car dealer, one who sells brand new cars. This isn't an easy thing to do. Businesses under the fair tax buying anything new that is not for resale in their business will pay the Fair Tax.
I think when anyone hears "whole paycheck" they know this is a plan involving only Federal taxes, not State, Local, etc. The last I checked property taxes are not deducted from a paycheck.
The government will still have a FairTax department, charged with implementation, collection, enforcement, and oversight, but it would be a fraction of the size of the IRS as the States will be collecting the Fair Tax (and be paid to do so) and the SSA will administer the prebate.
The economy gains with the FairTax - $250 billion in annual compliance costs disappearing, America becomes a tax haven where businesses want to locate, not vacate, cash economy starts paying it's fair share, offshore $trillions come back to work in America...
MORE JOBS FOR AMERICANS means less taxes in the long run, as long as Congress starts being fiscally responsible with their spending.