Chairman’s Report - December 11, 2015

Why Don’t The Big Corporations Endorse the FAIRtax?

Many of you have contacted me and suggested that the large U.S. corporations should be supporting the enactment of the FAIRtax with their influence and their money.  After the FAIRtax is enacted, these large corporations will receive many benefits.  Some of them are:

•    Border adjustability so their exports are less expensive and imports all have to pay the FAIRtax;
•    No need to employ huge corporate tax departments;
•    No corporate income tax returns;
•    Simple sales tax returns like they are filing today;
•    No need to have many business decisions made because of tax consequences and not based on sound business principles;
•    The ability to see the costs of their business inputs reduce by at least 10% so that they can reduce their prices and be more competitive;
•    More U.S. jobs so the market for their products will increase;
•    A rapid increase in cheaper capital investment that will lead to more productivity and the ability to pay higher wages and make higher profits for their investors.

The evidence supporting these points is overwhelming.  The people who run these corporations are obviously very intelligent and understand these points.  However, we still see a lack of interest from these corporations.

Why?

In 1993, Congressman Sam Gibbons and I were invited to speak to the U.S. Chamber of Commerce tax committee quarterly meeting in Washington, D.C.  The audience was composed of the tax directors of many of the largest U.S. corporations.  

Congressman Gibbons explained the benefits of a value added tax and I proposed that the same benefits could be obtained in a much less complex way with a retail sales tax. 

The group politely listened to Sam and me.  They asked some intelligent questions and there was some discussion.  However, it was apparent that even though the promised benefits from both of our forms of consumption tax were great for their companies, these tax directors were really not interested.

During the lunch that followed, I had the opportunity to personally speak with a few of the attendees.  The contrast between the chairman of the tax committee, the CEO of TRW, and the tax directors was pronounced.

The CEO took me aside and said that he would love to see either of our proposals enacted.  He totally understood the benefits to his company and the economy.  However, he ruefully told me that his tax director would oppose either of our proposals.  The reason was that the corporations represented in the room had carved out exemptions and deductions that sheltered much of their income and any tax system change might place their company in a less favored position.  He said that this argument would persuade his board to stay on the sidelines and not endorse either of our plans.

One of the tax directors was more blunt.  He explained that the people in the room were highly paid and had large staffs because of the complexity of the present U.S. tax code.  Adoption of the retail sales tax would result in the loss of their power and maybe their jobs.  He said that he was retiring in a couple of years so he wished me well but said that many people were much younger and would actively oppose my proposal.

Times Are Changing

While many of the tax directors of large U.S. corporations may be more interested in their own job security than what is ultimately best for their company or the nation, times are changing.

It is now apparent that not only the presidential candidates but the Congressional leadership want to change the present broken tax code.  Many corporate leaders have tried to keep the changes limited to reducing the corporate tax rate.  However, the signals from D.C. are that the changes to the tax code may be much more extensive.

This is striking fear in the hearts of many who have made their living off the tax code.  While almost all of the people now dependent on the present tax code will ultimately benefit from the adoption of the FAIRtax, most are not concerned about the long-run but how it affects them in the short run.  This concern is understandable but every advance has resulted in disruption.  Buggy whip manufacturers and their employees saw their lives changed by the automobile but society benefited and almost all of the displaced employees found other employment.

The FAIRtax is an advance that will benefit our fellow citizens, our children and grandchildren and the nation.  We just have to realize that benefit to a few can not be allowed to stop a movement that will benefit everyone.

December D.C. Trip

Peggy’s report shows how much more the FAIRtax is considered a realistic tax reform.  Peggy is doing an incredible job and is using the skills of coalition building that she acquired working in D.C. to bring more and more interest groups into the discussion.  

1040 Club
 
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.


FAIRtax Power Radio

Whether you’re a FAIRtax volunteer or an informed citizen who wishes to be better informed, we encourage you to listen to FAIRtax Power Radio, the online radio show that is available when you are.  Bob and Ron just finished a series of three episodes in which they discuss criticisms of the FAIRtax that we have all heard over the years. This series is episodes 20, 21 & 22 and can be heard on SoundCloud (which is FREE) at these links:
FTPR 20 http://bit.ly/1h2R4pO
FTPR 21 http://bit.ly/1NX8Qrs
FTPR 22 http://bit.ly/1M4NwlE


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