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A Project of The Annenberg Public Policy Center

Sales Tax Spin

Dems attack GOP candidates by misrepresenting the FairTax plan.


Democrats are running misleading ads in several House and Senate races accusing Republicans of supporting a "23 percent national sales tax." The ads fail to mention that the proposed tax — while controversial — is designed to replace all federal income and payroll taxes, and comes with cash rebates to offset the sales tax on essentials such as food, clothing and medical care for everyone. Some of those being attacked have not actually said that they support the tax plan specifically, or have only voiced mild support for it.

Some examples:

  • In Colorado, Democratic Sen. Michael Bennet claimed in an ad that Ken Buck "wants to add a new 23 percent national sales tax to everything you buy." Buck says the plan should be considered as an alternative, but that "it was never my alternative."
  • In Mississippi, Alan Nunnelee has been attacked by Rep. Travis Childers and the DCCC for supposedly supporting the plan. But news reports say that Nunnelee has never publicly said that he does, and in one interview, he refused to say whether or not he supports the FairTax. The claim that he does is based on the fact that he listed the FairTax.org page as one his "likes" on his campaign’s Facebook page.
  • In Ohio, an ad from Rep. Mary Jo Kilroy claimed that her opponent, Steve Stivers, has a "swift idea" for a "new national sales tax" where we "pay 23 percent on everything we buy." Stivers did indicate on a federal candidate questionnaire that he would support either a "flat income tax or a national sales tax" in place of the current income tax. But his campaign says he actually supports a "flat tax."

This line of attack has emerged as a major Democratic theme. We counted at least 33 TV spots since August that make this claim, and it’s being repeated in an unknown number of mailers and in ads running on radio or local cable channels, which we cannot monitor.

The claim refers to the FairTax proposal, a controversial idea that was considered and rejected by President George W. Bush’s Advisory Panel on Federal Tax Reform. The panel said the tax would have to be set at 34 percent (not 23 percent) to achieve its goals. It also calculated that the levy and its accompanying cash rebates would benefit both low-income and high-income taxpayers but increase the tax burden on those in the middle — raising taxes on those making between $15,000 and $200,000 a year.

But the Democratic attacks omit all those subtleties and simply strive to create the impression that the new sales tax would come on top of all existing taxes. And that’s not the case.


We’ve written twice this year already about Democrats using this particular line of attack against Republican candidates, and it’s popping up more and more the closer we get to Nov. 2. Since August, we counted at least 33 ads in 20 different House and Senate races.

That’s based on ads monitored by the Campaign Media Analysis Group (a unit of Kantar Media), and it’s just a minimum figure. CMAG does not monitor ads on local cable outlets, where many House candidates run ads. And it doesn’t count radio ads, or the direct mail pieces that are common in House districts where TV is too expensive.

One such mailer was sent to us by one of our readers. It was produced by the Democratic Congressional Campaign Committee and attacked the Republican opponent of Indiana Rep. Joe Donnelly. "Jackie Walorski thinks you don’t pay enough taxes to Washington," the mailer says. "She wants a 23% federal sales tax on nearly everything you buy."

It’s true that Walorski has voiced support for this general idea. She said earlier this year on a tea party radio show that she is "very interested" in the FairTax plan, and "supports the concept." And it’s true that the idea’s backers describe it as a 23 precent tax on newly purchased goods and services, including items such as groceries, gasoline and medicine.

This attack — and others like it — omit mention of two key points, however.

  • The FairTax proposal is intended to replace existing federal taxes, not add to them. According to its backers, it "replaces federal income taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes."
  • The proposal also comes with a "prebate" feature aimed at offsetting the sales tax on essentials, such as food and clothing. A single person would get cash payments of $208 a month ($2,491 per year) and a couple with two children would get $559 monthly ($6,702 per year).

The basic concept behind the plan is to tax everyone on purchases instead of earnings. Americans For Fair Taxation, the group pushing the proposal, claims it is "a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system." But the idea was examined and rejected in 2005 by a bipartisan panel that President George W. Bush set up to recommend ways to simplify the tax system and promote long-term economic growth. For one thing, the panel said the "prebate" feature would in practice become "a new entitlement program — by far the largest in American history." And another problem it found was that — even with the "prebate" — the proposal would greatly increase the federal tax burden on middle-income Americans. Taxes would be lower for those making less than $15,000 a year, and also for those making $200,000 and more:

President’s Advisory Panel on Federal Tax Reform, Nov. 1, 2005: A typical married couple at the bottom 25th percentile of the income distribution earns $39,300 per year and would pay $5,625 dollars in federal taxes in 2006. Under the retail sales tax with a Prebate, the same family would pay $7,997 in net federal taxes after subtracting the Prebate of $6,694, resulting in a tax increase of $2,372, or 42 percent

We neither endorse nor oppose the FairTax idea, or any other tax proposal. We did criticize some of the misleading claims made by FairTax supporters in a 2007 article, "Unspinning the FairTax." For example, we noted that the 23 percent figure used by backers is misleading. Even under their optimistic assumptions, a $100 purchase would have a $30 tax added on — normally thought of as a 30 percent sales tax. (FairTax proponents prefer to figure the tax as a percentage of the total price including the tax. So in their sales pitch, the $30 becomes 23 percent — of $130.) But even a 30 percent tax would not generate enough revenue to replace the other taxes, the president’s panel concluded. The rate would need to be "at least 34 percent, and likely higher."

But the fact that FairTax backers are overselling their proposal is no excuse for Democrats to misrepresent it as a simple 23 percent sales tax with no offsetting tax eliminations or low-income cash payments.

Who Really Backs the FairTax?

Some of the candidates whom Democrats accuse of pushing the FairTax idea are distancing themselves from the proposal, or have voiced only lukewarm backing.

Michael Bennet Ad: "Ken Buck’s Price Tag," aired Sept. 30

In Colorado, Ken Buck, who has been the target of attacks from Sen. Michael Bennet, said in March that he liked "a simplified version of the income tax," a "flat tax," or a "fair tax." But Buck denies that he is specifically pushing the sales tax plan. The Denver Post reported that Buck recently said: "In the primary season, I was asked about it over and over, and I think it has to be recognized as an alternative, but it was never my alternative."

[TET ]

Michael Bennet: I’m Michael Bennet, and I approve this message.

Announcer: Ken Buck wants to add a new 23 percent national sales tax to everything you buy. A bag of groceries — eleven dollars more. A tank of gas — ten dollars more. The medicine you need — 105 dollars more. Ken Buck’s plan would even get rid of your home mortgage deduction, costing Colorado families thousands. Ken Buck, a 23 percent national sales tax, extremely wrong for Colorado. [/TET]

Gabrielle Giffords Ad: "He’s Not Looking Out for My Family," aired Oct. 3

In Arizona, an ad from Rep. Gabrielle Giffords claimed that the state’s families "could never afford" to pay "Jesse Kelly’s sales tax" of "23 percent more on groceries or gas." Kelly is on video saying that he does support the FairTax plan and that he would vote for it. But he also admits that the plan is very unlikely to pass in Congress, and that he would focus on implementing a "flat tax" instead.

[TET ]

Rachel: We’re really struggling at this point, to make ends meet. We could never afford to pay 23 percent more on groceries or gas. Jesse Kelly’s sales tax is gonna hurt my family. And other families in the middle class. People like Jesse Kelly are going to be supporting corporations over people. He’s not looking out for me. He’s not looking out for my family. We could not afford Jesse Kelly’s tax. We absolutely couldn’t.

Gabrielle Giffords: I’m Gabrielle Giffords and I approved this message. [/TET]

DCCC Ad: "Alan Nunnelee is Guilty of Raising Taxes," aired Oct. 1

In Mississippi, Alan Nunnelee has been attacked by Democratic Rep. Travis Childers and the DCCC for supporting the plan. But Nunnelee has "never publicly voiced support for the FairTax bill," according to the Northeast Mississippi Daily Journal. And the Associated Press reported that during one interview, Nunnelee refused to say whether or not he backed the plan.

The claim that he supports the tax is based on the fact that he lists the FairTax page as one of his "likes" on his campaign’s Facebook page. Nunnelee told the AP that doesn’t mean he agrees with the plan, though. "I will support taxes that are lower, that are simpler and more transparent," he said.

[TET ]

Announcer: Travis Childers and Alan Nunnelee — who’s better on taxes? You be the judge. Childers worked to cut taxes for small businesses, the backbone of our economy, with investment incentives and 300 billion dollars in tax cuts. Nunnelee voted for more property and energy taxes, and signed up to support a new 23 percent national sales tax. It’s an open-and-shut case. Alan Nunnelee is guilty of raising our taxes.

Announcer: The Democratic Congressional Campaign Committee is responsible for the content of this advertising. [/TET]

Mary Jo Kilroy Ad: "Slick," aired Sept. 30 – Oct. 2

Similarly, Steve Stivers has "never publicly spoken in favor of a national sales tax," according to a Columbus Dispatch political blog. Stivers — who is challenging Rep. Mary Jo Kilroy in Ohio’s 15th District — indicated on a Union County & Galloway 912 Project survey that he would support eliminating the current "progressive income tax" in favor of "a flat income tax or a national sales tax." But Stivers didn’t specify which option he would favor. His campaign says that he is actually in favor of a "flat tax."

[TET ]

Mary Jo Kilroy: I’m Mary Jo Kilroy and I approved this ad.

Susan: Hi, it’s Susan again. So we know Steve Stivers was a bank lobbyist, but did you know, he voted for the biggest sales tax increase in Ohio history! Now Steve’s got another swift idea. Create a new, national Sales Tax. We’d lose our mortgage, our child deductions, and pay 23 percent on everything we buy. Even groceries! The rich pay less, we pay more. Stivers is pretty slick, watch your wallet. [/TET]

Allen Boyd Ad: "Great Question," aired Sept. 27

[TET ]

Woman: Do you pay your taxes?

Steve Southerland: That’s a great question.

Steve Southerland: Uh, I do pay my taxes.

Announcer: Steve Southerland did not pay his taxes in 05,6,7,8 or 09. In fact Southerland didn’t pay his taxes until he ran for Congress. Now he wants to raise sales taxes by 23 percent. You just can’t trust Steve Southerland.

Allen Boyd: I’m Allen Boyd and I approved this message.

Woman: Do you pay your taxes?

Steve Southerland: That’s a great question. [/TET]

Florida’s Steve Southerland has said that he does like the FairTax proposal "very much." He’s challenging Democratic Rep. Allen Boyd in the 2nd District. But our fellow fact-checkers at Politifact.com noted that Southerland said back in July that the FairTax would not be a "centerpiece of my positions in Congress."

More important, Boyd’s ad, like these other Democratic attacks, leaves out the fact that the FairTax proposal would eliminate income, payroll and other taxes. It’s not a national sales tax on top of what Americans already pay.

— by D’Angelo Gore and Brooks Jackson


Miller, Joe. "Unspinning the FairTax." FactCheck.org. 31 May 2007.

Drobnic Holan, Angie. "Adding Up the Fair Tax." Politifact.com, 23 Jan 2008.

President’s Advisory Panel on Federal Tax Reform. Final Report. Washington: GPO, 2005.

FairTax.org. Americans For Fair Taxation. Accessed 14 Oct 2010.

"Democrats seize on Republicans’ support for reforming tax code in final days of campaign." Associated Press. 15 Oct 2010.

Sherry, Allison. "GOP Senate candidate Buck backs off stance on consumption tax." Denver Post. 7 Oct 2010.

Jackie Walorski Supports the FairTax and Social Security Privatization. YouTube. 24 Aug 2010.

Kelly, Andrea. "Giffords, Kelly differ on fairness of Fair Tax plan." Arizona Daily Star. 28 Sep 2010.

Nash, James. "Campaign Ad Watch – Slick: Kilroy for Congress." Disptach Politics. 24 Sep 2010

Le Coz, Emily. "Political claims not what they seem." North East Mississipp Daily Journal. 3 Oct 2010.

Farley, Robert. "Allen Boyd campaign ad claims Steve Southerland didn’t pay taxes for five years." Politifact.com. 27 Sep 2010.

Hurst, Nathan. "DCCC stands by FairTax ad in 1st District." Detroit News 201 Elections Blog. 18 Oct 2010.