Another tax day is upon us and the United States still has a federal income tax. Many of us have worked for years to replace the current income/payroll tax system with a national retail sales tax, the FAIRtax. We find it very frustrating that many Members of Congress ignore the problems caused by the income tax/payroll tax system. Many Members who say they understand that we need a new tax system seem to be ineffective at getting their colleagues to consider the FAIRtax.
We all know FAIRtax supporters who became so frustrated that they just concluded that the FAIRtax was never going to happen because politicians were corrupt or because people were not smart enough or for other reasons.
Others, including myself, were raised to believe that if something wasn’t working the way we intended, we should look to see if we were doing something wrong. Maybe it is our message? Maybe we are not using the few magic words that will sweep away all objections and cause the rapid enactment of the FAIRtax and repeal of the 16th Amendment?
On this tax payment day, let’s take a look at some of the reasons that seem to impede passage of the FAIRtax and explore some ideas of how to move forward.
Big Political Changes Can Take Time
If you asked people if it was proper to exclude over 50% of the U.S. population from being able to vote just because of their gender, very few would support the idea. However, from June 21, 1788, the day the U.S. Constitution was ratified, until the 19th Amendment was ratified on August 18, 1920, women were not allowed to vote in federal elections.
It wasn’t that women didn’t demand the right to vote during this time. The first national convention advocating giving women the right to vote was held in 1848 in Seneca Falls, New York. During the next 72 years, there were continuous demonstrations and demands for women to be allowed to vote.
The FAIRtax was not introduced until July 14, 1999. For the reasons we all understand, the U.S. cannot wait 72 years for the FAIRtax.
Politicians Are Afraid Of Change
Over the past 26 years, I have met with many politicians of both parties. Some I have gotten to know well enough that they shared with me their personal beliefs and concerns. Almost all of them believe that they must not take any actions that will cause them to lose their jobs.
For this reason, many of them see major changes, like the FAIRtax, in the same way that Darrell Royal, the famous University of Texas football coach, viewed the forward pass. He said that three things could happen and two of them are bad. You could not complete the pass. You could have it intercepted by the other team. Your man could catch the pass.
Politicians point out that the income tax/payroll tax system is still bringing in a lot of money and it is in place. If they enact the FAIRtax and completely eliminate the present income tax/payroll tax system all in one year:
- It will bring in the same or more revenues and be accepted.
- It will bring in less money.
- It will create such a disruption in people’s lives that they will throw out the Members of Congress that enacted it.
Although the present income tax/payroll tax system has higher and higher rates of evasion and will collapse in the not too distant future, most politicians just ignore the problems and subscribe to the maxim, “If it’s not broke, don’t fix it.”
We have to educate the Member’s constituents and get them to demand the FAIRtax. This is what has led to our having 81 cosponsors. Members of Congress have to know that failure to support the FAIRtax will lead to active opposition to their being reelected and the loss of their job. Former Senator Russell Long told me that Congress responds not to logic but only when they feel the heat. We have to make them feel the heat.
As Nelson Mandela famously said, “Education is the most powerful weapon which you can use to change the world.” If we educate the constituents and they pressure their Members we will win.
Why We Must Explain That The Present Income/Payroll Tax System Pre-taxes Consumption
One of the primary reasons that the 11,400 word 1913 income tax code has grown to over 10 million words is that many groups and industries have carved out benefits for themselves that aren’t available to others. A person who is benefiting from the income tax system finds it very hard to consider a change to the FAIRtax because it may reduce their income.
It is not just the people who make money from the preparation of income tax returns or tax planning; or the people who receive the earned income tax credit; or the industries that get income tax credits; or the industries that can promote tax deductions if you purchase their products.
For the past 103 years, all of us have become accustomed to thinking in terms of how much money we have after our income and consumption was taxed before we actually received it. It is difficult for many people to really grasp the incredible difference of having all of your money up front and it is only taxed when you purchase a taxable item.
At a tax reform town hall arranged by Congressman John Mica in Longwood, Florida, the president of the Florida Board of Realtors and the head of a large charity were on the panel. Both were proponents of the income tax because it provided deductions for mortgage interest and for charitable deductions.
I responded to them:
- For the past 50 years, charitable giving has averaged 2% regardless of tax rates which have been as high as 70% and as low as 29%;
- The U.S. percentage of home ownership is exceeded by most of the countries in the developed world, and most of these countries do not have a mortgage interest deduction.
- Only the 30% of taxpayers who itemize deductions on their tax returns could benefit from either the mortgage interest or the charitable deduction;
- Because the income/payroll tax system pre-taxes consumption by taking it out in advance of consumption, both deductions only allow you to recover some of the taxes that you pay;
- If you taxed consumption at the point of consumption, the FAIRtax method, then the person would have all of their money they earned and would not need the deduction which only recovers some of the taxes they already paid;
- This means all Americans are treated equally when they make donations and not just 30% of the taxpayers;
- By not pre-taxing consumption, all taxpayers, not just the 30% who itemize, will have an easier time qualifying for a loan;
- Since the mortgage tax deduction increases the cost of homes by between 10%-15%, this costs many people thousands of dollars over the term of the mortgage; (A purchaser of a home that costs $10,000 more needs an additional $2,000 of down payment and an additional $7,000 of interest over the 30-year term.)
There are some companies, like companies who were put out of business when the automobile was introduced, who will go out of business or have to find new ways of generating income. However, they and their employees will also benefit from the “FAIRtax Economy.” We may never convince them of this, but it helps to know that we are not condemning their employees to the welfare rolls. Far from it, we are ensuring that they and all Americans again have the opportunity to achieve the American dream.
Our Friends and Neighbors Often Are Not As Interested In Tax Reform As We Are--So Keep It Simple
The truth is that all of us have causes about which we are passionate. We have all been around people who were very passionate about something which held little interest for us. Often these people are difficult for us to be near and we only half-listen while they explain why their particular passion should be our passion.
If someone is not listening then it is hard to persuade them of anything. Because of the problems of today’s economy, most people are concerned about how they are going to provide for their families and themselves.
One time I asked a group of FAIRtax supporters for the main reason they supported replacing the income/payroll tax system with the FAIRtax. Some listed getting rid of the IRS as the top reason. Others listed freedom from the government deciding how much tax they paid or controlling them through the tax code. Some pointed out the invasion of privacy by the government with the requirements of filing income tax forms. Some pointed to the great economic growth resulting from taxing at the point of consumption. Others stated that they could make business decisions based on what is good for their business and not what is the best way to minimize tax. There were other reasons but it showed me that it would not be possible to find that “one thing” that united all Americans behind the FAIRtax.
We have to understand that just because we believe one benefit of the FAIRtax is more important than other benefits, this may not communicate to the person with whom we are speaking. We have to listen to them and see what is important to them. It is almost certain that what is important to them will benefit when the FAIRtax is passed.
The focus groups that were used when the FAIRtax was being developed found a simple truth. If you asked people if it wouldn’t make sense to have a tax that:
- Gave them their entire paycheck without income tax and Social Security deductions;
- Excluded purchases up to the poverty level;
- Grew the U.S. economy faster;
- Kept their total federal tax burden about the same or less; and
- Did not require them to keep records or file tax returns
The focus groups overwhelmingly said, “Sign me up.”
If we stop there and ask for their agreement to get our emails, we will rapidly grow our database. If they are very interested in helping or doing more, they will tell you. Otherwise, we have at least another soldier in our army and over time we can educate them more. Please consider just getting them to go to Bigsolution.org and sign up to receive information. Then as they become more educated they will be more involved and recruit others and we will grow and grow. This will allow us to be more formidable in every Congressional district.
How Many More IRS Tax Days Do We Have to Endure
While it is hard to believe that the FAIRtax will become law next year, we can’t ignore that the two leading Republican candidates for President, Donald Trump and Ted Cruz, have both said favorable things about the FAIRtax. Ted Cruz is a Senate cosponsor of the FAIRtax. Kevin Brady, a cosponsor of the FAIRtax, is now Chairman of the Ways And Means Committee.
It is also true that there is a growing agreement that we must have tax reform. Of course, Bernie Sanders believes that tax reform will be primarily accomplished by increasing income tax rates and limiting deductions. Hillary Clinton is not pushing for the same amount of tax increases as Sanders, but she believes that the government should take more of our money and neither is going to be friendly to the FAIRtax—until they see evasion is skyrocketing.
If the number of independent contractors in the work force grows as projected, they will be 40% of the U.S. work force in the next five years. Income and payroll tax evasion by W-2 employees is very low. However, it is the opposite for independent contractors who receive 100% of the money and then are supposed to set aside the amount of tax they owe. This has led to some income not being reported and some creative “business” deductions. In short, it is almost certain that the combination of more independent contractors and higher tax rates will result in more tax evasion.
A majority of Sanders’ and Clinton’s supporters are government workers, union members, schoolteachers and employees of private companies, all W-2 employees. These people are going to have to pay the majority of the increased taxes. This is going to lead to some very strong outrage when these workers see friends and family members who are independent contractors paying much less in taxes on the same income.
The one thing that we know is that our lack of competitiveness in international trade and the rapid growth in the rate of income/payroll tax evasion will combine to make the U.S. reform its 20th century tax code. If they try to simply combat evasion through more IRS audits, then this will even more rapidly accelerate the death of the income tax. As Abraham Lincoln said, “The best way to get a bad law repealed is to enforce it strictly.”
IRS Jokes
A good joke always has an element of truth. It is said that before a society rebels against an institution or government that they first mock it. No government institution is mocked like the IRS and the income tax. Here are some examples:
A couple of weeks after hearing a sermon on Psalms 51:2-4 and Psalms 52:3-4 (lies and deceit), a man wrote the following letter to the IRS:
I have been unable to sleep, knowing that I have cheated on my income tax. I understated my taxable income, and have enclosed a check for $150.00.Sincerely,
Taxpayer
P. S. If I still can't sleep, I will send the rest.
A visitor from Holland was chatting with his American friend and was jokingly explaining about the red, white and blue in the Netherlands flag. "Our flag symbolizes our taxes," he said. "We get red when we talk about them, white when we get our tax bill, and blue after we pay them."
"That's the same with us," the American said, "Only we see stars, too."
I want to join a violent, armed group with no regard for the law... but the IRS isn't hiring.
This [preparing my tax return] is too difficult for a mathematician. It takes a philosopher. (Albert Einstein)
A tax preparer, uncertain as to whether a client's wife was entitled to an additional exemption for being sixty-five years of age, sent the husband an e-mail requesting the information. The next day he got an answer back: My wife says she is not 65, nor will she ever be!
Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag. (Jay Leno)
It is difficult to predict the future of an economy in which it takes more brains to figure out the tax on our income than it does to earn it.
Being a success today means the government takes away in taxes what you used to dream of earning.
Patrick Henry ought to come back and see what taxation with representation is like.
Whomever said that truth never hurts never had to fill out a Form 1040.
Why is a tax loophole like a good parking spot? As soon as you see one, it's gone.
After one pays their income tax, one knows how a cow feels after she's been milked.
Did you ever notice? When you put the two words "The" and "IRS" together it spells: "THEIRS."
Income tax is Uncle Sam's version of "Truth or Consequences."
People who complain about paying their income tax can be divided into two types: men and women.
"What's the difference between an overzealous tax auditor and a rottweiler? Answer: "A rottweiler eventually lets go!"
"How can you tell when a tax auditor is trying to trap you into a confession?" Answer: "When his lips are moving."
"Why do sharks not attack tax auditors?" Answer: "Professional courtesy."
Due to taxation, politicians find it increasingly difficult to reconcile their net incomes with their gross habits.
What's the definition of a good tax accountant? Someone who has a loophole named after him.
Conclusion
The obstacles to the FAIRtax are not as formidable as they may seem. When I was in Germany on business during the early 1980’s, most Germans I spoke with felt that the Berlin Wall would come down in thirty or forty years. However, six years later on November 9, 1989, the Berlin Wall came down and soon after Germany was reunited.
It is frustrating that progress seems slow. But like the Berlin Wall, the income tax/payroll tax system is collapsing—it is only a matter of time. We need to continue telling people the truth and getting them so educated and convinced that they will literally threaten to throw out of office any Member who does not support the FAIRtax.
As we prepare for our next FAIRtax presentation, we should remember the words of hockey great Wayne Gretsky, “You will miss 100% of the shots you don’t take.”
America’s Big Solution
Please take a look at the BigSolution.org. America does need a big solution and the FAIRtax is the big solution! Please send your friends to AFFT.org and Bigsolution.org.
1040 Club and Contributions
To those of you not familiar with the 1040 Club, AFFT is asking people to contribute $10.40 per month to AFFT. This provides a steady funding platform and allows us to spend our time not trying to raise money but actually working with groups to help make passage of the FAIRtax a reality. Thanks to each of you who have joined the 1040 Club. You are ensuring that Americans For Fair Taxation can continue to promote the FAIRtax.
If you are not a member of the 1040 Club, or if you are a member but want to join for someone else, please go to this link and sign up.
If you believe that all you can contribute to our efforts is $10 please go to FAIRtax.org and donate. We have our best chance and need your help.
FAIRtax Power Radio
There are many ways in which people can help us educate more Americans about the FAIRtax. In Programs 29 & 30, the FAIRtax Guys describe how listeners can support and promote our efforts. Program 29 concentrates on simple but effective things for people with busy schedules, whereas Program 30 suggests some activities that might take a little more time. The programs are free to the listeners. Please share these links with your friends and relatives.
To listen to FTPR on SoundCloud (free and audio only) go to these links:
FTPR Program 29 on SoundCloud: http://bit.ly/1ZGihQp
FTPR Program 30 on SoundCloud: http://bit.ly/1RwsPfF
FTPR Program 29 on YouTube: http://bit.ly/1PAAKXb
FTPR Program 30 on YouTube: http://bit.ly/1Rnxrbi
AFFT National LOGO Store
Be Prepared for “April Showers”
THE FAIRtax℠ UMBRELLA
The FAIRtax Patriot Automatic Folding Umbrella was such a success when offered some time ago, we just had to restock and offer this special promotional sale again. This umbrella has a 42” canopy with a silkscreened FAIRtax on one panel, folds up to only 15” long, matching fabric case with shoulder strap and a matte black handle. Plus, for every umbrella order you receive FREE 1 tote bag, 5 adhesive bumper stickers, 2 ABS pocket planners and 10 ABS informational business cards.
IMPORTANT LOGO INFO
The National Organization has issues new logo PMS color guidelines for promotional items moving forward as follows:
RED: PMS Red 200
BLUE: PMS Blue 280
GRAY: PMS Gray 429
NEW ITEM: When explaining the FAIRtax, how often do you get to the prebate side of the equation and need specific numbers? Wouldn’t it be nice to have those numbers at your finger tips, any time? Your Store has the solution!
We now offer an ABS business card (easily fits in a purse or wallet) with one side showing FAIRtax facts and the other side showing the current 2016 Prebate Schedule. A GREAT addition to educational supplies in your Store.
We encourage FAIRtax supporters to purchase their promotional needs from the Store to maintain its viability.
Visit your National FAIRtax Store frequently and secure your promo supplies for educational meetings, debates, town hall meetings, and other political events. Don’t forget to order your FAIRtax Palm Cards – never run out of cards when the opportunity exists to educate the public.
Thank You For Opening The FAIRtax Chronicles, Our Sponsored Mailings
We plan to do several of these mailings each month. If you take a minute to open the sponsored emails and click through to the website, you are making an in kind contribution to AFFT. It is not required to actually make a purchase, but your minute of time will ensure that AFFT is paid ever larger amounts from people paying for us to send their offers to our supporters.
Again, we are making every effort to ensure that we work with only reputable companies. If you feel that any FAIRtax-sponsored email is objectionable, please email us at info@fairtax.org and tell us why. You can also opt to not receive these sponsored email messages but still receive FAIRtax emails.
Thank you for staying FAIRtax strong!
