EVERYONE WANTS TO GO TO HEAVEN
There is the old joke about the minister who came to visit one of his church members in the hospital. He said, "I have good news and bad news." The patient demanded that he tell him the good news. The minister said, "The good news is that you are going to Heaven." The man was ecstatic. After a few minutes of celebrating, the member looked to the minister and asked for the bad news. The minister said, "The bad news is that you are leaving tomorrow."
EVERYONE WANTS TAX REFORM BUT ....
Surprisingly, one of the more controversial aspects of the House Tax Plan, not reform plan because it really is not reform, is the increase in the standard deduction for married couples from $12,700 to $24,000. The stated purpose is to reduce the number of people who are required to itemize their deductions, requiring a much more difficult income tax return, from 30% to 10%.
Logically, how could anyone outside of the Swamp oppose allowing families to exclude $24,000 from income? Our betters in the Swamp have decided that the only way we should be able to exclude income is by spending on things they believe are good for us--like home mortgage interest or charitable donations?
That is the problem, many Swamp dwellers believe that this freedom to spend how we wish must not be given to the people. The Swamp members are shaking their heads. What has gotten into Ryan and Brady? It is ok to talk about simplifying things but come on. Do Ryan and Brady not understand that selling income tax deductions helps finance the Swamp?
One group that is really upset that Americans will receive more of their money without spending it on a home are realtors.
THE REALTORS WANT YOU TO PAY MORE FOR YOUR HOUSE
One of the groups that is very upset with the idea of increasing the standard deduction is the National Association of Realtors. They have just released a PricewaterhouseCoopers studythey commissioned that says that home values will fall more than 10% if the benefits of the home mortgage deduction are significantly reduced or eliminated. Now 10% is lower than the 15% promoted by many spokespersons for the realtors, but it is still a significant number. If the mortgage interest deduction has caused the price of homes to be 10% higher, then it is true that homeowners have paid 10% more for their homes because of the mortgage interest deduction.
According to YCharts.com, the average median price for a U.S. single family home in October is $289,300. Assuming that the home value was increased by 10% because of the mortgage interest deduction, the price that should have been paid is $263,000. This means that the average home purchaser will have to finance the additional $26,300 for 30 years. If the loan is at 4%, then the average home purchaser is paying an additional $126 for 360 months which equals $45,360.
WHAT DOES THE AVERAGE HOME PURCHASER RECEIVE FROM THE MORTGAGE INTEREST DEDUCTION
According to an article published at The Policy, the Pew Research Center defines "middle class" as people earning between $40,000 to $125,000 per year--about 50% of U.S. households. However, the middle class receives only 20% of the tax benefits of the mortgage interest deduction.
The article concludes that the mortgage interest deduction costs the Treasury about $140 billion per year, and while the average middle class household receives $191 in annual income tax savings from this deduction, people with incomes of $500,000 or more receive an average of $4,660 in tax savings--20 times the benefit.
A purchaser of the $289,300 home putting 20% down would be financing $231,440. A 30 year 4% mortgage would have monthly payments of $1,104.93 or $13,259 per year. Assume that the person pays another $2,500 in property taxes.
Under current law, the purchaser would have a $12,700 deduction if they did nothing. The benefit for them is the tax savings on the amount over $12,700. This difference is $13,259 plus $2500, $15,759, minus $12,700 which equals $3,059. If we assume a 20% tax rate, they will save $718 per year in federal income taxes. If the person had an additional $2,000 of charitable donations, then the savings from itemizing can be an additional $400. Of course, this is reduced by the amounts they pay a tax preparer since it is a more complicated tax return.
WHY THE REALTORS OPPOSE INCREASING THE STANDARD DEDUCTION
One sales aid used by realtors in convincing someone to purchase a home is that they point to the tax savings. They explain that the mortgage interest and property taxes will be deductible and show how the government is contributing to the cost of the house. As shown above, the actual benefits for the average purchaser are much less than they pay in additional costs of the home.
If the standard deduction is increased to $24,000, then the realtors are concerned that the average purchaser will not be forced to purchase a home so they can itemize deductions. The middle class will have no "tax incentive" to purchase. They will be able to rent or buy and it will not affect the income tax they pay.
In addition, the middle class will likely see the value of homes they purchase go down in cost. Does this mean that a home that we purchased for $300,000 will likely go down by 10%? In this article many economists disagree and believe that the decrease will be much less--maybe 2%.
Why does anyone take seriously a group that is working to limit the freedom of choice of the American people? The answer is easy--follow the money. According to Open Secrets, the National Association of Realtors contributed $15,884,885 to campaigns or PAC's; spent $64,821,111 to date in 2017 lobbying and was for responsible for getting an additional $11,599,909 spent.
Yes, the Realtors are in favor of tax reform as long as it doesn't affect their privileged position that is subsidized by most of America. The Realtors are not alone. Many other special interests put their privileged position ahead of real reform.
Think what a different world it would be if all of us received our total earnings and then we, not the Swamp, decided how to best use our money and paid our taxes when we spend on new retail goods and services?
Let's tell the Swamp that we, the people who earn the money, should be the ones that decide how much tax we pay.
The only tax reform plan that allows the people who earn the money to decide how to spend it is the FAIRtax. It is time we demand that something is done for us--not the Swamp.
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO
Call up the local or D.C. offices of your House Member and two Senators and you can use the following script:
If you can see your Member or attend a town hall and ask these questions, you can be even more effective.
THE FAIRTAX WILL NOT HURT THE POOR!
FAIRTAX POWER RADIO EPISODE #85
A few people have the knee-jerk reaction, when they first hear about the FAIRtax, “Oh, it’s sales tax. That will hurt the poor.” Our answer: No it won’t! But don’t just take our word for it; listen to FAIRtax Power Radio’s resident CPA, Jade Walle, who has the facts and figures to demonstrate how the FAIRtax will not hurt the poor. In fact, when you listen to this episode, you will learn how it is the best tax plan possible to help lift the poor out of poverty. Listen, learn and tell others about this episode.
Last week, while taking a break for the Thanksgiving Day holiday, The FAIRtax Guys replayed one of their favorite episodes, The FAIRtax Help Line. Originally published last June, the FAIRtax Help Line is a humorous look at the changes America will experience once the FAIRtax becomes the law of the land. Listen to the various callers and the answers given by The FAIRtax Guys which help explain important features of the FAIRtax. It’s an entertaining way to study the FAIRtax. We hope you enjoy this episode as much as we do.
YOU CAN HELP MORE PEOPLE LEARN ABOUT THE FAIRTAX. Telling your friends and relatives about our free weekly podcasts is a great way to help us garner more support. It is the American people who must demand REAL tax reform in Congress. We must inform America about the FAIRtax! Please help us.
You can listen to FTPR on any platform - Mac or PC, iPhone or Android. And it’s 100% free.
Listen on Spreaker.com (http://bit.ly/27oJYlV), iTunes (http://apple.co/1Te8VdF) or iHeart Radio (http://bit.ly/2eqEG7y) on your computer or smartphone. The easiest way to listen to FTPR on your smartphone is by downloading the free FTPR app. Just search for “FAIRtax Power Radio” in your app store, download the app and start listening. If you have trouble finding our free app, download the free Spreaker app.
As stated earlier, we post a new episode every Friday morning. Please listen and tell everyone you know about the FAIRtax Power Radio.
The FAIRtax: Once You Understand It, You’ll Demand It!
AN EASY INTRODUCTION TO THE FAIRTAX WITH AMERICA’S BIG SOLUTION
America’s Big Solution is a basic introduction to the FAIRtax and is meant for people of any age. Do you know someone who would like an introduction to the FAIRtax and would prefer to read about it rather than search online for Tweets, Posts and Shares? If so, America’s Big Solution is your choice.
America’s Big Solution is an introduction to the FAIRtax written by Terry Tibbetts, author of A Spartan Game: The Life and Loss of Don Holleder, with help from Ron Maiellaro, President of the Florida FAIRtax Educational Association.
You can buy an electronic version of ABS as follows: AMERICA’S BIG SOLUTION is available for only $2.99 for the Amazon Kindle (http://amzn.to/1WIRHry), the Barnes & Noble Nook (http://bit.ly/1XeG8bH) and Apple iOS (http://apple.co/1tnqK0P).
You can purchase a print copy at the same Amazon link above for $9.25. Regardless of whether you choose the electronic format or the print format, you’ll find AMERICA’S BIG SOLUTION will give someone the boost they need to begin their study of the FAIRtax and the suggested resources to learn more. Buy AMERICA’S BIG SOLUTION now!
LINKS TO MORE INFORMATION
These links will help you promote and support the FAIRtax, make yourself familiar with the links below. We always do our best to keep our AFFT community up to date, and you can stay ahead of the curve using these convenient sites.
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