Despite earlier calling it a “myth,” CNN aired Huckabee's claim that FairTax allows workers to “get their whole paychecks”

Written by Brian Levy

Published

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.