WHAT THE FAIRTAX IS NOT.
Over the last few years, I have noticed a trend to either support the FAIRtax or attack the FAIRtax not on its merits as a way of funding the federal government but because it doesn’t achieve the other objectives of the critic.
For example, those who believe that too much money is being spent by the federal government believe that the FAIRtax will reign in the spending. Some who believe that not enough money is being spent on various programs label the FAIRtax as an instrument of their opponents to stop them.
Neither is accurate.
WHAT THE FAIRTAX IS.
The following is a statement made in a report prepared by the Joint Committee on Taxation entitled DISTRIBUTIONAL EFFECTS OF PUBLIC LAW 115-97:
“The primary purpose of a tax system is to raise revenue to fund government expenditures. Analysts generally judge a tax system—as a way of raising a given amount of revenue—in terms of how well the tax system handles issues of economic efficiency, fairness, and administrability. The design of a tax system involves tradeoffs between these different considerations. Measures designed to ensure compliance may increase the complexity of taxation for individual filers. Measures designed to promote simplicity may create distortions in investment decisions. Measures designed to promote growth may alter the distribution of the tax burden.”
This is a surprising statement when you view the remainder of the report in which the Committee uses very questionable logic to try to portray the 2017 tax reform as doing many of the things it described above.
However, the first sentence, The primary purpose of a tax system is to raise revenue to fund government expenditures, is the simple truth. The best tax system is the one that raises revenue for the government in a manner that is least offensive and intrusive to the taxpayer and is the least disruptive to the economy of a country.
The fact that is largely ignored by people who rely on the present income/payroll tax system for their livelihood and for their ability to control others is that all taxes are really taxes on consumption. Unlike the federal government, if a citizen doesn’t only spend in accordance with their income, they are forced into bankruptcy.
Therefore, any levy or tax that takes away from the money that a citizen has to use for consumption will obviously reduce the amount left for consumption. Therefore, a property tax, gasoline tax, Social Security and Medicare tax, income tax and sales tax are all taxes that reduce the amount available for consumption.
The primary difference between these taxes is if they are collected prior to consumption or at the time of consumption. The present income/payroll tax system taxes prior to consumption. You can only use what is left after paying the income/payroll taxes for consumption.
For example, if you get to keep 80% of every dollar from your paycheck, you will only be able to consume an amount up to that amount. This means that if you purchase something for a dollar you will have to earn about $1.25, subtract the $.25 in income/payroll taxes and have the dollar to pay. Under the income/payroll tax system, your consumption is taxed but just hidden.
Contrast this with the FAIRtax. You get to keep all of the dollar you earned because there are no federal deductions for income/payroll tax. The FAIRtax is levied only when you purchase (consume) new retail goods and retail services and is paid with 100 cent dollars.
The FAIRtax eliminates the complexities of the income/payroll tax system by taxing new goods and services when they are consumed. It only requires retailers and providers of retail services to collect and remit the FAIRtax.
These retailers, along with all other companies and people in the U.S., will no longer be burdened with the income/payroll tax system and, in most cases, are already collecting state sales taxes. In addition, the FAIRtax provides compensation to the retailers for collecting the FAIRtax.
GOVERNMENT SPENDING UNDER THE FAIRTAX
Once money collected by the FAIRtax is received by the U.S. Treasury, the Congress and the President will determine how it is spent—just like with the income/payroll tax system.
In the early 1990’s I met with John Sununu, at the time President George H.W. Bush’s chief of staff, and discussed replacing the income tax with a national retail sales tax. He was very familiar with the proposal and told me that it was much better than the income tax and would lead to more economic growth. I then asked him if he would support it and he answered that he could not because it gave Congress too much money that they would recklessly spend.
A few years later, I was in Congressman Charles Rangel’s office when he joined a discussion on the national retail sales tax that I was having with his tax aide. He told his aide that he thought that the U.S. would move to the national retail sales tax because he believed that it was the only way to produce the income to the government needed for the spending he wanted to do.
POSSIBLE EFFECTS OF THE FAIRTAX ON GOVERNMENT SPENDING
While the purpose of the FAIRtax is to raise money for the federal government, there are some important differences between the FAIRtax and the present income/payroll tax system.
Under the present income/payroll tax system:
- Federal taxes are often hidden in the prices of goods which we purchase, thus the consumer has no idea how much of the price goes to federal taxes.
- Compliance costs of the income/payroll tax are hidden in the prices of the goods which we purchase, and again the consumer has no idea how much of the price is paying the compliance costs.
- Although workers see the amounts withheld from their paychecks, they often just assume that the amount they are making is their take-home pay, not their gross pay.
- Congress and the Swamp can change the income tax code at any time and use this threat to let all of us know that they are in charge and can dramatically affect how much of our money they will confiscate.
- Although all U.S. residents are not filing under the income/payroll tax system, almost everyone is a consumer who makes purchases of new goods and retail services daily.
- Because the retail products will no longer contain the costs of the present income/payroll tax system, this will allow prices to fall by at least 10%.
- With each purchase of new goods and retail services, the resident will see the amount payable to the federal government.
- Nothing is hidden in the price of new goods or retail services.
CONCLUSION
After we enact the FAIRtax, a person wanting to reduce government spending can explain to people that by eliminating $X of spending, the 23% rate can be reduced to X%. A person wanting to increase government spending can argue that the new spending will require an increase from 23% to X%.
Much to the consternation of the Swamp and their allies in Congress, all American consumers will see the true cost of federal government spending. They are appalled at the idea that the “little people” will not just trust their betters and be led around like sheep on leashes attached to their noses.
Under the FAIRtax, the amount of the 23% required to fund each program promoted by Congress can be quantified. Even if Congress and the Swamp try to cover up their spending with more loans, it will be easy for each of us to see the amount of the 23% that is being used to pay the interest on the debt.
Because the economy will grow more rapidly under the FAIRtax, there will be more revenues and even if spending continues at the current level, the increased revenues and decreased evasion will narrow the deficit.
If a President and Congress decide that they are going to start paying down the national debt, then they can make a deal with us to increase the FAIRtax from 23% to 25% for example, and put that money in a trust account and use the proceeds to start reducing the national debt. Or they could propose the same trust account to implement any number of additional programs.
The FAIRtax is agnostic on spending. It just provides a way to fund the federal government, but in a way that all U.S. residents see the cost of the government and see how much it costs each of them every time they make a retail purchase of new goods or retail services.
As President John Adams said over 200 years ago, “All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.”
Isn’t it time to take back control from D.C.?
President Trump, “Embrace the FAIRtax and real tax reform! What have you got to lose?”
It is time to PASS THE FAIRTAX!
The truth is the truth. Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO
- I am sure that Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you that their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income/payroll taxes over the next ten years.
- Since most will say they don’t believe their boss has seen the study, either drop off a copy or get an email address and send a copy to them for their boss.
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion.
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law.
- They probably will say their boss believes that simplifying the income tax will handle the problem.
- Explain that when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So it is unlikely that they are going to pay 30% or 40% when they were paying 0% because they have already decided it is okay to cheat.
- Say that the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year.
- Point out that Evaders do not self-identify by putting an “E” on their income tax return.
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well.
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws.
- Then explain that the way to handle evasion without unleashing the IRS audits is the FAIRtax.
If you can see your Member or attend a town hall and ask these questions, you can be even more effective.
FAIRTAX POWER RADIO
#154 Are The FAIRtax Guys Biased Against the Swamp Party?
Recently one of our listeners admonished The FAIRtax Guys for being too tough on Democrats and Liberals. Actually, we like to think of ourselves as “Equal Opportunity Criticizers” who stand ready to take on anyone who tries to demagogue the FAIRtax. And they’re out there.
Since neither the Democrats or Republicans have seen fit to pass the FAIRtax, we like to take both of them to task equally. But there is one party in particular we enjoy criticizing and that is the “Swamp” party.
Listen to this wide ranging discussion that touches on party affiliation, volunteer work, what CPA’s think of the tax code, the difference between “inclusive” and “exclusive” tax rates and a few more topics. The Guys were all over the FAIRtax map in this episode.
Lot’s of good information for you to Share with your friends.
If you believe the FAIRtax is good for America, let others know by turning them onto FAIRtax Power Radio - the ONLY weekly FAIRtax digital TV show in the country! Watch every Wednesday at 11:30 AM (ET). We stream to Facebook LIVE (www.facebook.com/fairtax).
FTPR podcasts for each show are posted on Spreaker (http://bit.ly/2oesbk7), iTunes & iHeart Radio every Friday morning. A free FAIRtax Power Radio app is available for iOS and Android. Since it’s a podcast, you can download it and play it whenever it’s convenient for you.
The FTPR weekly episodes are shared to a number of Facebook pages:
- FAIRtax Official (https://www.facebook.com/FairTax/)
- The FAIRtax Guys (https://www.facebook.com/thefairtaxguys/)
- Democrats for FAIRtax (https://www.facebook.com/DemocratsForFairTax/)
Please help us educate as many Americans about the FAIRtax as possible. Be sure to tell everyone you know about this great new format for FAIRtax Power Radio. Whether you watch the weekly video or listen to the weekly podcast, this is a great way for more Americans to learn about the best tax reform plan in Congress at this time.
Remember, FTPR digital TV every Wednesday at 11:30 AM (ET) followed by the podcast on Friday morning. Please watch, listen, and tell everyone you know about the FAIRtax Power Radio. The FAIRtax: Once You Understand It, You’ll Demand It!
AMERICA’S BIG SOLUTION - THE FAIRTAX PRIMER AMERICA NEEDS
Hard to believe but there still are people who have not heard of the FAIRtax.
For those people, America’s Big Solution provides a starting point in their study of the FAIRtax and is meant for people of any age. And you can download it to your tablet or smartphone right now. It’s also available in print form. See below.
Do you know someone who would like an introduction to the FAIRtax and would prefer to read about it in a booklet rather than search online for Tweets, Posts and Shares? If so, America’s Big Solution is their best 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.
- The website of Americans for Fair Taxation (www.fairtax.org)
- Read the Summary of the Evasion Study
- Welcome to the Online FAIRtax Community (member.fairtax.org)
- The website at which you can help make it happen (bigsolution.org)
- The Facebook page for Americans for Fair Taxation
- The Facebook page for The FAIRtax Guys
- The Twitter page for Americans for Fair Taxation
- YouTube channel for AFFT
- YouTube channel for The FAIRtax Guys
- The Official FAIRtax Logo Store (www.fairtaxlogostore.org)
- POPVOX - Make your FAIRtax voice heard on this national self-survey platform
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Thank you for staying FAIRtax strong!