Former Arkansas Gov. Mike Huckabee’s caucus victory in Iowa last week came in part thanks to anti-IRS fiscal conservatives attracted to his support for the “FairTax.” He also finished with a better-than-expected showing in the New Hampshire primary, coming in third.
The media acknowledged the FairTax’s role in Huckabee’s Iowa victory, citing high turnout from members of FairTax groups as one reason for his win over former Massachusetts Gov. Mitt Romney. But in spite of its importance the media have largely ignored the concept. And when they attempted to cover it, they attacked it as unworkable, “fringe,” “radical,” “regressive,” and “crackpot.”
Since Huckabee announced on Jan. 28, 2007, that he was running for president, the top five U.S. newspapers have mentioned his name in more than 1,100 stories, according to the Nexis newspaper database. Only 2.25 percent of those mentioned his support for the FairTax. The broadcast networks – ABC, CBS and NBC – have mentioned Huckabee’s support for the FairTax a total of five times during the same period.
In fact, 70 percent of these print and broadcast stories (21 of 30) about the FairTax and Huckabee mentioned the policy only in passing, offering brief explanations of the proposal and often relying on shoddy or incomplete characterizations.
“Tax professionals generally regard the idea as impractical, regressive and even ‘crackpot,’ as one critic puts it,” the Los Angeles Times reported December 24 in an article representative of the media’s attitude toward the FairTax.
“Tax professionals” may not like the FairTax because it would make their jobs obsolete – but the article didn’t mention that part.
The proposal would eliminate all current federal taxes – personal and corporate income, estate taxes, capital gains and payroll/Social Security taxes, etc. – and replace them with a 23-percent federal sales tax on new goods. It would also include a “prebate” to offset taxes paid on household necessities, a measure intended to prevent the tax from disproportionately affecting the poor.
According to an April 2007 survey from the Tax Foundation, the majority of Americans would like to see changes in the tax system. Of those surveyed, 83 percent said the federal income tax is very complex or somewhat complex, and 78 percent believed the federal tax system needed “major changes” or “a complete overhaul.”
The FairTax is one of two major conservative proposals to reform the tax system. The other, called the flat tax, would establish one income tax rate for all taxpayers to replace the current bracketed system. The Business & Media Institute does not favor one plan over the other. Some of its advisory board members, including National Chairman Herman Cain, support the FairTax proposal, while others support a flat tax.
The FairTax was first introduced in Congress in 1999 by Rep. John Linder (R-Ga.). He has introduced the bill every session since then, and support has grown slowly but steadily. The most recent version, in 2007, earned 68 co-sponsors in the House and four in the Senate, including one Democrat.
FairTax.org, the group behind grassroots support for the measure, says it hopes to see “balanced stories that accurately reflect” the tax. Ken Hoagland, a spokesman for the group, told the Business & Media Institute that, “Generally speaking, the media has been slow to research and report on the actual design elements of the FairTax.”
What Is It, Really?
The majority of the stories – 21 of 30 – mentioned Huckabee’s support for the FairTax briefly, summarizing the complicated concept in one or two sentences. The common characterization was that the FairTax “would replace the income tax system with a federal sales tax.” Entire books have been written on the subject, but reporters used as few as 12 words to summarize the proposal.
“Getting members of the media to actually sit down … and examine the design elements has been a bit of a challenge,” Hoagland said. “That can be difficult to express in one sentence so we have some sympathy for the writers who are writing these articles but in order to be accurate you really need to go beyond a one-sentence description. That’s telling about 25 percent of what the proposal is actually about.”
The New York Times hit both extremes, publishing both the shortest explanation – “which would scrap the national income tax for a national sales tax” – on November 10, and the longest explanation – a 127-word missive on December 16.
Only half of the print and broadcast stories mentioned the FairTax would do away with all federal taxes. Eight stories mentioned some of the taxes it would eliminate, and seven stories didn’t mention any of the existing taxes that would disappear.
The Times’ longest explanation turned out to be among the most balanced of major newspapers’ characterizations, noting that “some reputable economists think the scheme is practicable” but acknowledging that “many others regard it as fanciful.”
But the Times also printed the most one-sided description in a December 15 article, calling the tax “regressive” without attribution and adding “many economists say [it] would put a disproportionate share of the tax burden on people at lower income levels. Critics of the plan say it would be a windfall for the rich.” The article didn’t include any voice of support for the FairTax.
The “regressive label” has haunted FairTax advocates, because the media largely ignore what Hoagland called the most important, but least reported, part of the proposal: the monthly “prebate” intended to offset the taxes paid on household necessities. Only 20 percent of the stories mentioned the measure’s “prebate” proposal. (Click here to read an explanation of the prebate.)
Dismissing the Idea
But even in the nine stories that focused heavily on the FairTax, the media tended to attack it as unworkable, “fringe,” “radical,” “regressive,” and “crackpot.”
A December 24 Los Angeles Times article described what it called Huckabee’s “radical sales tax plan” that “has been around for years but languished on the fringes of practical politics and policy.”
The LA Times report cited conservatives who oppose the measure and attempted to tie it to the Church of Scientology. It referred to FairTax.org, which says it has hundreds of thousands of members, as “a group of Texas millionaires.” The report dwelled on criticism of the plan, mentioning supporters of the FairTax only in a political light and without fully analyzing the plan’s content.
The Washington Post slammed the FairTax as the “Un-FairTax” in a December 31 editorial. The Post also published a news report on the issue December 28. Reporter Jonathan Weisman declared that “a national sales tax won’t work, at least not according to tax experts and economists of all political stripes.”
Weisman mentioned Huckabee, Hoagland and unnamed “FairTax supporters” as proponents of the plan, citing several noted economists who oppose the plan. But Americans for FairTaxation, which operates as FairTax.org, developed the proposal in conjunction with economists and researchers at major universities, a fact Weisman didn’t report.
The broadcast media spent more time discussing the plan, with 3 of 5 stories going beyond simple (mis)characterizations of the FairTax.
On the CBS “Early Show” December 27, anchor Russ Mitchell asked Huckabee about the proposal. Mitchell used the standard summary, adding that “economists say it won’t work, and criminologists say it actually would be, mean an increase in crime. Do they have a point?” While Mitchell’s approach to the question was clearly slanted, he gave Huckabee a chance to address common criticisms of the plan.
Huckabee did defend it, noting as he often does that economists from several prestigious universities developed it. He said it would also bring criminals like drug dealers, pimps and prostitutes into the tax base.
In his own interview with Huckabee December 23, CBS’s Bob Schieffer accurately noted that “we don’t hear much about, never seem to get to it.” But while admitting he knew little about the plan, Schieffer attempted to summarize it anyway, and asked Huckabee how much the tax would be.
Schieffer called it a “radical change” and asked Huckabee about “unintended consequences” tied to the “housing crisis” because “suddenly people wouldn’t be able to deduct their mortgage interest payments under something like that.”
Likewise, The Washington Post reported on Nov. 11, 2007, that the FairTax “would make the tax code simpler, but it would take away breaks many Americans like.” But proponents like radio talk show host Neal Boortz, in his book “The FairTax Book,” say “mortgage interest deductions scrape a bit off the top of your income taxes, but the FairTax eliminates them altogether. Which option do you prefer?”
Weisman’s December 28 report in The Washington Post featured a common example presented by the media, which suggests that an item currently costing $1 would cost $1.30 under the FairTax. Conservative columnist George Will, on ABC Aug. 26, 2007, upped the example saying “if you buy a million-dollar house, you will then write a check to the federal government for $300,000. That’s a tough sell.”
It’s a tough sell, but it’s not exactly true. Proponents argue that a 23-percent national sales tax – meaning 23 percent of the total post-tax cost would go to the federal government – would equal current revenue levels. Opponents call it a 30-percent tax because it would amount to 30 percent of the pre-tax cost.
The media fail to point out, however, that with corporate taxes gone, pre-tax prices would go down. Economists who support the FairTax argue that about 22 percent of the price paid for goods now comes from “embedded taxes.” That means taxes manufacturers pay get passed on to the consumer. With those taxes gone, pre-sales-tax prices would go down, proponents argue. None of the media reports – brief or in-depth – mentioned the idea of embedded taxes figuring into consumers’ costs.
The media have largely failed in delivering a balanced or accurate picture of the FairTax, a major factor in the success thus far of a Republican presidential hopeful. In almost a year, the media have mentioned Huckabee’s support for the proposal only 30 times, and usually attack or mischaracterize it.
But proponents of the FairTax do see a light at the end of the tunnel. Hoagland said he appreciated more in-depth coverage of the issue in the print media since Huckabee’s rise to prominence. Four of the in-depth stories have been printed since December 24.