MARGINAL RATES OVER 100%?
In the 1990's when I met with Bob Packwood, the Senator from Oregon who was the Senate Finance Committee Chairman in 1986, he told me a story about a request he made to the Senate Judiciary staff in 1986 during the weeks leading up to the passage of the 1986 Tax Reform bill. Packwood said one night he was very tired and some Senators were demanding that changes be made that would produce more income and lower the deficit from the tax cuts.
Packwood said that he asked the staff to see how much income would be raised if people making more than $250,000 were taxed at 100%? He said he thought the staffers would laugh at him, but they didn't laugh and he forgot about it. The next morning the staffers came back and said that taxing people's incomes over $250,000 at 100% would raise the additional income needed. He said that he thought they were joking but then he realized that the staffers were serious.
Packwood asked them if they really thought that people making over $250,000 would continue working if they knew that all of their income over $250,000 was taxed at 100%. He said that the staffers just looked at him. Packwood said that incident really brought home to him the difference between people who had worked in the real world and people who worked in D.C.
The Taxman Cometh: Senate Bill’s Marginal Rates Could Top 100% for Some
The above is the headline of an article by Richard Rubin in the December 10, 2017 Wall Street Journal.
We have come a long way since1986, but apparently the same lack of real world experience by the Senate staffers who are writing this year's tax proposal is still in evidence. Mr. Rubin says, " Some high-income business owners could face marginal tax rates exceeding 100% under the Senate’s tax bill, far beyond the listed rates in the Republican plan. That means a business owner’s next $100 in earnings, under certain circumstances, would require paying more than $100 in additional federal and state taxes."
Mr. Rubin gives the example of a married, self-employed New Jersey lawyer with three children and earnings of $615,000 who will owe $105.45 in taxes on the next $100 he makes.
Does anyone believe that this change will not lead to people either not working more or, alternatively, finding a way to evade taxes on their income.
Conclusion
The above is from Gallup and reflects the approval ratings of Congress since 1975. It doesn't seem to matter which party is in power, the approval ratings are very low regardless of that circumstance. The Swamp and the politicians in D.C. try to explain that if those of us outside D.C. were as enlightened and smart as they are, then their approval ratings would be the reverse--13% in 2017 would not be the approval rating but the disapproval rating.
The arrogance of the Swamp and the D.C. politicians is so great that they can continue to call their tax plan a tax "reform." They richly deserve their low ratings. The continued and expanding income/payroll tax evasion reflects a real protest against the Swamp and the D.C. politicians who so brazenly create laws that work for them and their friends and harm the rest of us.
If Members of Congress want to see their approval numbers increase dramatically, all they have to do is give the rest of us real tax reform and put our interests in front of their interests. How--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
Call up the local or D.C. offices of your House Member and two Senators and you can use the following script:
- 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.
CONFESSIONS OF A SMALL BUSINESS PERSON
FAIRTAX POWER RADIO EPISODE #87
In this week’s episode, The FAIRtax Guys react to real concerns business people have with the current tax system and discuss how the FAIRtax will improve their business environment. Members of a small business club, Select Business Associates tell all. From harassment by the IRS to the costs and headaches of record keeping to the lost freedoms due to the income tax, these small business people spill the beans and The FAIRtax Guys point out important differences between the current income tax and the FAIRtax.
In last week’s episode, The FAIRtax Guys asked “What is all the hoopla about the tax plan in Congress?” It’s still an income tax, it will still require a tax return with private, personal information (your earnings), it sill has a payroll tax (very regressive), it still maintains the IRS, it still is subject to perpetual tinkering by Congress and it will still have massive evasion on the part of about 20% of the tax payers. The FAIRtax Guys ask, Can this really be called reform? Not by our standards. Get the full scoop in episode #86 of FAIRtax Power Radio, our free podcast for you. New episode every Friday morning.
HELP THE FAIRTAX GUYS EDUCATE OTHERS ABOUT REAL TAX REFORM. 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.
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.
- The website of Americans for Fair Taxation (www.fairtax.org)
- Read the Summary of the Evasion Study.
- The website at which you can help make it happen. (www.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
- PopVox - Connecting people and lawmakers for more effective participation and better governing
- YouTube channel for AFFT
- The Official FAIRtax Logo Store (www.fairtaxlogostore.org)