MEDIA MATTERS has refused replies from FairTax.org
Here is another try.
As a matter of Media Matters policy a reasoned answer to Media Matters misunderstanding of the FairTax has been rejected for posting. Hmm? If a media outlet gets it wrong, it's OK to work to set the record straight but if Media Matters gets it wrong, corrections are not welcomed. Kinda of sounds like a propagandist's ethic.
So let's try again--off topic, of course, because comments have been closed for the Huck piece on Friday that once again got it wrong on the FairTax substance and design.
The FairTax distributional benefits go primarily to the poor (14% improvement in tax burdens), the middle class (7% reductions) and some benefit remains even for the the wealthy (5% reductions). How can this be and keep tax collections revenue neutral?
Because the taxpayer base is broadened by taxing consumption instead of earnings (illegal immigrants and the $1.5 trillion annual underground economy). In addition, the wealthy pay a 23% rate on consumption--instead of a 15% rate on capital gains. A broader base means more revenues from more people. A tax on consumption means those who spend more, pay higher taxes.
In addition--and ignored by Media Matters and a host of income tax defenders,--the highly regressive FICA tax is eliminated (you know, the one that represents the largest tax payments by poor and moderate income taxpayers). The prebate--based on family size, not income--and the elimination of the highly regressive FICA tax makes the FairTax far more progressive than the income tax system.
Is it 23% or 30%? If expressed as are income tax rates, it's 23%. If expressed exclusive of the base (like most sales taxes) it's 30%. And yes, on everything new. But the combination of taking home a paycheck without FEDERAL withholding or FICA taxes deducted, the monthly prebate (reimburses all federal taxes on spending up to the povery level) and the reduction in retail prices (or wage growth) as income tax costs are eliminated let's consumers come out ahead compared to the the current tax system.
And by the way, The President's Tax Panel did NOT find the FairTax would require a higher rate than proponents argue. They created their own consumption tax--loaded it with exemptions they felt were "realistic", ignored the elimination of FICA taxes (as defined in existing legislation) and then declared their own creation flawed. This "analysis" has since been cited widely--including by Media Matters-- as "proof" the FairTax is regressive and requires a higher rate to be revenue neutral.
These would all be fair game for an honest debate--if only Media Matters would allow such a free-wheeling discussion. Instead, the debate has been squelched to protect the Washington interests who thrive on class warfare, become powerful manipulating the tax system and grow rich selling off pieces of the tax code to favored clients and Congressional contributors. Oh yes, to also protect the public from ideas that differ from the MM official conclusions. Laughable really if not so far from the ethic of the First Amendment.
Media matters, sure. So does honesty and trust in the public to sort through public policy matters if only given the chance to hear all sides of the issues of the day. Scary, huh? The very thought that it is both sides of the debate that really matter--not the "final" word by those with an ax to grind.
Let's see if MM editors are honest and brave enough to allow this post.
- Ken Hoagland / Tuesday January 29, 2008 3:50:54 PM EST
Media Matters editors were honest and brave enough to finally allow this posting and we compliment them for it. - Ed.