Grading PolitiFact: Jon Huntsman and the Nevada flat tax

We always try to get the original statement in its full context rather than an edited form that appeared in news stories.
--About PolitiFact

The issue:

(clipped from PolitiFact.com)

The fact checkers:

Louis Jacobson:  writer, researcher
Kevin Landrigan:  writer, researcher
Bill Adair:  editor


Analysis:

PolitiFact:

During a recent house party in Belmont, N.H., Huntsman responded to a voter's question about whether the aim of the federal tax system should be to raise revenue or influence behavior.

The "recent" house party occurred on July 4.  PolitiFact published this item on July 28.  The story probably skips mentioning the date because, like another recent fact check item from the New Hampshire newbies, the fact check is unusually late by PolitiFact standards.  Writer-researcher Kevin Landrigan works for the Nashua Telegraph, which is part of the group that will constitute PolitiFact New Hampshire.  Thus it figures that Landrigan probably covered Huntsman's July 4 appearance in Belmont, New Hampshire.  An associated website called "The Lobby" features video of Huntsman in Belmont, though I failed to locate a segment that corresponds to the portion quoted in the PolitiFact story.

But it seems safe to say that Landrigan could have provided the full context of Huntsman's statement.

Do we have enough of the context to accurately gauge Huntsman's meaning?  Probably.  But even so the context ends up arguing against PolitiFact's analysis.

The context as we have it (blue highlights added):

During a recent house party in Belmont, N.H., Huntsman responded to a voter's question about whether the aim of the federal tax system should be to raise revenue or influence behavior.

"That's one of those trick questions, right?'' Huntsman asked.

"Possibly,'' said Bill Goetz, a retired, manufacturing executive living in Belmont.

Huntsman went on to describe his philosophy and pointed to his record in Utah.

"We got a flat tax out of it, we cut income taxes by 30 percent, it was a cost-neutral affair where we took out the deductions, we took out the biases almost completely, some we didn't get out, and you know what? The state came to life in part because of that.''

PolitiFact deals with the highlighted portion.  They pretty much ignore the rest.  Then again, they ignore some of the stuff in the highlighted portion.

PolitiFact:

Republicans frequently talk a good game about supporting a flat tax, but they often have difficulty getting political support to change the complicated tax laws. So we wondered if Huntsman and the Utah legislature had succeeded in overhauling the state law to the point where it can be considered a flat tax -- and whether they cut income taxes by 30 percent.

There we have the two facts PolitiFact intends to check ...

We then divide the statement into individual claims that we check separately. For example, a Bill Richardson TV ad produced two claims. (We only make Truth-O-Meter rulings on those individual claims. We don't make them in our articles because they often summarize multiple Truth-O-Meter items that had different rulings.)

About PolitiFact

Yeah, well ... never you mind about that.  PolitiFact, you see, manages to botch both parts of this fact check.  So they might as well combine them into one.

Is it a flat tax?

PolitiFact:

The research arm of the Utah Legislature maintains it was not a flat tax in the purest sense. "Although the new system has a single statutory rate of 5.0 percent, it is not a proportional or 'flat' income tax system. Rather, Utah’s new income tax system remains progressive through tax credits,'' said a January 2010 report of the Utah Office of Legislative Research and General Counsel.

 It's not a flat tax "in the purest sense."  But Huntsman did not present it as a flat tax in its purest sense, so this criticism can't really count against him ("we took out the biases almost completely, some we didn't get out").

PolitiFact:

Conservative groups give Huntsman high marks for the overhaul and have said they consider it to be a flat tax.

Hmmm.  That can't be relevant, can it?  Between the tax counting as a flat tax short of its purest sense and with Conservative groups counting it as a flat tax, one could almost think that Huntsman spoke accurately.


PolitiFact:

On the flat tax question, the changes under Huntsman certainly made it a flatter tax than the one it replaced, since the changes he oversaw combined several tax brackets into one. But the tax remains more complicated to calculate than a pure flat tax would be. In fact, Utah’s system of tax credits make the tax somewhat progressive in practice, which is something a true flat tax would not be.

So ... if it's not a "pure" flat tax then Huntsman's claim is ... "Mostly False"?  Even though Huntsman didn't present it as a "pure" flat tax?

Great, let's see how the lyin' Republican does on his other claim:

30 percent?

PolitiFact:

As for Huntsman's claim that they "cut income taxes by 30 percent," we find that is a significant exaggeration.

He is close to correct if you compare the statutory rate in the top tax bracket before and after the tax system changed. The top rate declined from 7 percent to 5 percent, which is a decrease of 28.6 percent.

In terms of an adjustment to the top marginal rate, that's not significant exaggeration.  It's called "rounding up."

PolitiFact:

But there are two problems with this measurement. First, it doesn’t address the lower tax brackets. Remember, the lowest rate went up from 2.3 percent to 5 percent. So Huntsman’s 30 percent decrease in the statutory rate didn’t apply to them.

There's one big problem with this supposed problem:  PolitiFact doesn't apply it consistently.

...we were not convinced that Obama had actually intended to make the more detailed comparison

What was it that made Huntsman more convincing on that point?

PolitiFact:

Which brings us to the second problem with Huntsman’s 30 percent description -- that just looking at the drop in the statutory rate, as Huntsman does, says very little about how a taxpayer actually fared after the change.

The big problem with the second supposed problem is that Huntsman did not "just" look at the drop in the statutory rate.  He specifically and immediately noted that some biases remained in the system.

PolitiFact:

Huntsman’s 30 percent claim is more misleading. It’s true that the statutory rates in the top bracket declined by almost that much, but the actual reduction in tax dollars paid was far smaller for the overwhelming majority of taxpayers -- usually less than 1 percent of a taxpayer’s adjusted gross income. We think most people hearing Huntsman's comment would believe he was touting a 30 percent cut in what people actually pay at tax time, and the numbers aren’t close to that. So we rate his claim Mostly False.

PolitiFact has assumed for Obama's sake that "tax rates" refers to the top marginal rate.  Minus some convincing justification, Huntsman should receive the same benefit of the doubt as to his intent.  And on the face of it, PolitiFact's contention that "most people" would think Huntsman was talking about a reduction in the tax bill rather than a reduction in the top marginal rate seems ridiculous.  Huntsman asserted that the tax reform was cost neutral.  That means that the costs would remain essentially unchanged for somebody, that somebody depending on Huntsman's intent.  If he means the taxpayer then a small change in the tax bill is exactly what his words lead the listener to expect rather than a significant reduction.  If, on the other hand, he refers to the government, using the term akin to "revenue neutral" then we're left with largely the same logical conclusion.  To keep tax receipts the same the tax bills will collectively have to add up about the same.

It's quite the accomplishment by PolitiFact to ignore so much of the context of Huntsman's words with so little context to work from.

Yes it's a flat tax except in some absolutist sense and yes the top marginal tax rate was cut by (approximately) 30 percent.  The "Truth-O-Meter" rating of Huntsman is a rip off.


The grades:

Louis Jacobson:  F
Kevin Landrigan:  F
Bill Adair:  F

The label "journalists reporting badly" applies.