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A Project of The Annenberg Public Policy Center

Another False Tax Attack (And One That’s Just Deceptive)


There they go again.

Earlier this month, we called out Democrats for falsely accusing a Republican House candidate in Hawaii of pledging to protect tax breaks for sending jobs overseas. All he did was sign a pledge not to raise taxes. Now a Democratic candidate is making the same false claim against his opponent in another special election in Pennsylvania.

For Democrats, misrepresenting an opponent’s anti-tax position as an anti-jobs position is getting to be a bad habit.

In the latest ad, Democrat Mark Critz levels the false accusation against Republican candidate Tim Burns. They are both running in a tight race to fill the Pennsylvania seat left vacant by the death of veteran Democratic Rep. John Murtha. In the Critz ad, the narrator says, "Tim Burns wants to keep tax breaks for companies that ship jobs overseas." The point is underlined by a picture of a container ship, presumably filled with foreign-made goods coming to the U.S.A.

But this claim isn’t backed up. As justification, an on-screen graphic cites Burns’ signing of a no-tax-increase pledge sponsored by Americans for Tax Reform. But as we noted before, that pledge wouldn’t be violated by overhauling the tax code to remove any incentive for locating jobs abroad, so long as the overall rate of corporate taxation was not increased. For full details, see our April 9 article, "A False Tax Attack."

The Critz ad also cites an article that appeared April 12 in The Hill, a Washington newspaper, but it offers no support either. That piece quoted Democrats attacking Burns for being an executive of a health care company, NDCHealth Corp., that deferred U.S. taxes on some of the income it earned overseas. But the same article quoted Burns as declining to take a position for or against changing the rules on deferral. "In Congress, my focus will be to cut taxes for job creators and reduce government barriers for job growth," Burns was quoted as saying. "Before I make a decision on any bill, I will first evaluate the legislation by this priority." It’s a misrepresentation to characterize Burns’ wait-and-see position as saying he "wants to keep tax breaks for companies that ship jobs overseas."

A Sales Tax Attack

Meanwhile, the Democratic Congressional Campaign Committee is also attacking Burns with another ad claiming that he seeks to impose a 23 percent sales tax on groceries, gasoline, medicine and other goods.

It’s true that Burns has voiced support for the so-called "FairTax" proposal, which would impose a national sales tax that proponents say would be 23 percent. He did that in an interview with a conservative blogger in 2009.

But this ad is quite misleading because it fails to mention that the FairTax proposal would also repeal the federal income tax entirely and do away with the Internal Revenue Service. It would also eliminate gift, estate, capital gains, alternative minimum, Social Security, Medicare and self-employment taxes. But anyone viewing the DCCC’s ad could easily conclude that Burns favored slapping a 23 percent sales tax on top of all existing taxes, which is not true.

Burns isn’t really pushing the FairTax proposal very hard, either. In his 2009 interview, he said it would be impractical to implement it quickly, even though he favors the concept.

Burns May 14, 2009: I would love to ultimately see the FairTax implemented. I’m not at this point ready to say that I am an advocate of the FairTax right out of the gate. I mean, ultimately I would love to see the FairTax implemented in the United States. I’m just not sure that we can go from where we are today to the FairTax: I just don’t know that that’s practical. But I would love to see us get there.

The FairTax idea is highly controversial. It was rejected in 2005 by President Bush’s Advisory Panel on Federal Tax Reform, which examined the idea in detail. The bipartisan panel calculated that a sales tax would have to be set at 34 percent of retail sales prices to bring in the same revenue as the taxes it would replace (not 23 percent). It also concluded that "middle-income Americans would pay a larger share of the federal tax burden" under the proposal. See also our 2007 article "Unspinning the FairTax."

But whether the FairTax is a good idea or a bad idea, characterizing it as a 23 percent sales tax without also mentioning that it would replace all other federal taxes is a deception.