THE NATIONAL ASSOCIATION OF REALTORS’ ADVOCACY FOR THE RICH
A tax benefit has come to mean a provision in the vast Internal Revenue Code that allows the recipient of the tax benefit to pay less income tax. Because a tax benefit reduces the amount of taxes that the Treasury receives, the people not receiving the tax benefit have to pay more—in effect subsidizing the recipient of the tax benefit.
Many lobbying dollars are spent trying to get tax benefits for industries and groups that most of us not only don’t see but often wouldn’t understand if we did see them. One tax benefit, of which most of us are aware, is the mortgage interest deduction (“MID”).
All of us live in a home. The home can be rented or owned. Many of us want to own our home but have to obtain a mortgage (loan) and pay for it over time. Because of the way most home loans are structured, the majority of each payment in the early years is interest. It is only after a number of years that the payments are allocated more to principal than to interest.
As we know, all taxes of any kind reduce the amount that we can use to consume and, for that reason, all taxes are consumption taxes. We know that the federal income/payroll tax system taxes consumption before it happens through withholding. Depending on your income, ignoring state taxes for now, we only take home between $.65 and $.90 cents of each dollar earned.
Unless you are the government, all of us have to use only the amount that we have left after taxes for our consumption. Depending on your income, the MID can increase the amount you have for consumption.
For example, if you pay $1,000 monthly in mortgage interest, MID allows you to reduce your income by $12,000 per year. For example, if your income tax rate was 20%, the MID would save you 20% of $12,000 or $2,400. This means that your monthly home mortgage doesn’t reduce your consumable income as much. Instead of $1,000 per month, the MID means you only pay $800 per month.
Of course, the MID can only be used if you file a Schedule A with your 1040 income tax return that lists out the deductions like interest, charitable contributions, medical expenses and state and local taxes. Prior to 2018, the standard deduction for a married couple was $12,700. If you paid $12,000 in MID and $5,000 in state and local taxes and $2,000 in charitable donations, it made sense to itemize your deductions. You could reduce your taxable income by $19,000.
However, this changed in 2018. Now the married couple has a $24,000 standard deduction. It makes no sense for the taxpayer to itemize and deduct $19,000 when they could just ignore Schedule A and get $24,000 in deductions by filing the standard 1040.
This explains why the number of itemized deduction returns for 2018 is projected to be down from approximately 28% of taxpayers to about 10% of taxpayers. Married taxpayers will receive the $24,000 standard deduction and for most of the taxpayers, this will be in excess of their expenditures that could be itemized. This means that the married taxpayers who rent will get the same deduction as married taxpayers who purchase and have itemized deductions that total less than $24,000.
The National Association of Realtors (“NAR”) correctly believes that the increased standard deduction will make the decision for most taxpayers to purchase or rent a home not determined by the Internal Revenue Code but by the personal desires of the taxpayers.
The NAR sees that the MID is at more risk now because the MID is only a benefit for 10% of wealthier Americans that is paid for by 90% of us.
THE NAR STILL SUPPORTS THE MID
Why does the NAR sill fight so hard for the MID? Obviously, realtors want to sell homes. Since they get paid based on a percentage of the sales price, they make more money on higher-priced homes than lower-priced homes. Therefore, if higher income taxpayers can reduce their income by 35% by deducting MID, they can purchase more expensive homes.
The National Association of Realtors represents over 1.36 million licensed realtors across the U.S. In 2018, the NAR spent over $72 million dollars lobbying for their industry—much of it for the preservation or expansion of the MID.
The NAR recently published an analysis that contained some interesting data.
The first example is a single realtor named Barbara who receives a $58,000 salary and purchased a $205,000 condo:
- Barbara purchases a condo for $205,000 with a 30-year fixed rate mortgage;
- Her first-year mortgage interest would total $7,856 and she would pay real property taxes of $2,050;
- Under the new law, the NAR pointed out that it would only cost Barbara $53 month more to rent than to purchase her own home;
- They concluded, “The new law still offers her an incentive, but it is a shadow of what it was, and is unlikely to be very compelling.”
Then they took the example of a married couple with three children and a combined income of $120,000.
- They purchase a home for $425,000 and have a 30-year fixed mortgage;
- Under the new law, the couple would only save $79 per month by purchasing rather than renting;
- The NAR points out that is “…obviously a far weaker incentive to own.”
CONCLUSION
If the NAR was really interested in benefiting home ownership for the 90% of Americans, they would favor the FAIRtax.
Here is why:
- 5.51 million existing homes were sold in 2017, according to data from the National Association of REALTORS®. 612,000 newly constructed homes were sold in 2017;
- Purchasers of the 5.51 million existing homes (89% of the homes sold) would not pay the FAIRtax and would be able to use 100% of their income, with no reduction for federal income/payroll taxes, to pay and finance their purchases;
- Purchasers of the remaining new homes would pay the FAIRtax on the purchase price but would finance the tax over the life of the mortgage. In addition, they would have their full paycheck to use to service the debt without having to beg the government for some of their money back;
- Renters would pay the FAIRtax on their rental payments, thus creating an incentive for renters to purchase a home.
If we as a nation want to promote home ownership, why not have Congress and the President pass a funding bill that all of us can see? Is this the job of Congress and the President to favor homeowners over renters? Let them be honest and tell all of us what they are doing and not hope that we won’t notice when they sell benefits to the highest bidder.
Contrary to many beliefs in Congress and the Swamp, we are capable of making our own decisions as to what is best for our families and don’t need to be “coerced” by changes to the income tax code to make us do what our betters believe is best.
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
#148 Health Care, the IRS and Tax Insanity
The FAIRtax Guys started the show by announcing our IRS Motto Contest. What do you think the IRS Motto should be. A few suggestions: “Never Let Hard Work Go Unpunished!,” or “We Have What It Takes to Take What You Have!,” or “What Bill of Rights?.” So send us your suggestion(s) for an appropriate IRS motto. The winner will receive something from thefairtaxlogostore.org.
Then The FAIRtax Guys kicked off a wide ranging discussion with a variety of subjects such as the cost of healthcare under the FAIRtax, the man who earned $18,000 and received a $980,000 refund, how the tax code stifles innovators and Congressional misuse of the tax code.
As of air time, Congress has submitted 229 proposals to change the tax code while only being in session 21 days. That right! The House of Representatives have submitted OVER 10 bills each day they have been in session to change the tax code.
The FAIRtax Guys make the case to stop the madness that is the Federal Income Tax and replace it with the FAIRtax.
Listen, Learn and Join the fight.
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 are streaming to Facebook LIVE (www.facebook.com/fairtax). If you’re not a fan of Facebook, you can watch the show on www.xcluded.tv at the same broadcast time - or any time.
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/)
- and many others
www.xcluded.tv is a subscription based site which costs $30 per year and features a number of other shows along with FTPR with no commercial interruption.
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.
Tune into our video broadcast each Wednesday. Or, if you prefer, you can listen to the podcast of the show later. 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/2oesbk7), 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.
Remember, FTPR digital TV every Wednesday at 11:30 AM (ET) followed by the podcast on Friday morning. Please listen and tell everyone you know about the FAIRtax Power Radio. The FAIRtax: Once You Understand It, You’ll Demand It!
A SIMPLE INTRO TO THE FAIRTAX - AMERICA’S BIG SOLUTION
America’s Big Solution provides a starting point in your 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)
- www.xcluded.tv - A new platform for FAIRtax Power Radio Video and other shows
- POPVOX - Make your FAIRtax voice heard on this national self-survey platform
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