A recent report on how farm tariffs would be much less needed if we had a sane tax system, i.e. The FAIRtax, received some comments and questions. One of the people commenting on this article was a Farmer. He now has to keep extensive books to show the purchases and other expenses to determine if he actually made any taxable income. He thought The FAIRtax was a great plan but if it resulted in more time and expense for him, it wasn’t worth it.
Like most Americans, he is very suspicious of anything from government which “is supposedly going to help him.”
For starters The FAIRtax wasn’t conceived in the government but instead by Individuals who were sick and tired of the tax system directing their business decisions. So when we began working on drafting the first sales tax bill, one essential requirement was The FAIRtax would have to be “user friendly” for businesses as well as the rest of us. Therfore, the good news is The FAIRtax was developed to make things much easier for the Farmer and for other business people.
Under The Income-Payroll Tax System
Under the current income-payroll tax system, if you are a Farmer and are producing a crop you will need many things. To plant, maintain and harvest a crop, the Farmer needs:
- Seeds
- Fertilizer
- Workers
- Interest on crop loans
- Vehicles
- Fuel
- Tools
- Tractors
- And numerous other items
- The Farmer’s expenses are combined with any depreciation on farm improvements allowed for the year and this provides a total of the expenses needed to produce the crop.
- These farm expenses are subtracted from the amount of income the Farmer received from the sale of the crop, his net profit.
- The Farmer must then insert the net profit number from the operation of his farm on his tax return.
- The amount of the Farmer’s farm income is subject to the 15.3% Social Security-Medicare Taxes.
- Social Security-Medicare is payable even if no federal income tax is due.
- For calculation of his federal income tax, the Farmer must confront and complete the 1040 personal tax return. Almost always with the help of a paid tax preparer.
- Only then will the Farmer know how much federal income tax is probably owed. (Probably, because no one really understands the Internal Revenue Code and many deductions are very subjective like, was it a business lunch or business trip?)
- If the Farmer is challenged by the IRS, he will be guilty until he proves himself innocent.
- Often the Farmer, like many taxpayers, will be “coerced” into paying an assessment from the IRS because it will cost more to defend the matter than to just pay the additional tax.
Under The FAIRtax
Under The FAIRtax, life is sooooooo much simpler:
- All retail purchases are subject to The FAIRtax.
- If the Farmer is purchasing items needed for growing his crop, it's not a retail purchase.
- The way the Farmer establishes the items purchased are not subject to The FAIRtax is simple.
- The Farmer applies for and obtains a certificate which can be shown to the sellers of the items.
- This allows the seller to the Farmer to record the certificate number and sell the items to the Farmer without paying The FAIRtax.
- If the Farmer sells the crop to a distributor or directly to a grocery store, there is never a need to collect The FAIRtax because the sale is not a retail sale.
- If the Farmer sells part of the crop at a Farmer’s market selling to consumers, the Farmer will need to register as a retail seller and collect The FAIRtax on these sales.
- There is no IRS.
- There is no federal income tax return.
- There is no IRS audit.
- There is no payment of the Social Security-Medicare taxes based on his farm income (Social Security-Medicare are funded through The FAIRtax, not payroll deductions).
- The FAIRtax is administered by the state sales tax organizations, not the IRS.
- The FAIRtax will allow the Farmer to more effectively and profitably compete with foreign imports and be more competitive when he exports the crop.
The Fact The Swamp Doesn’t Want You To Know About
Because all taxes of any kind are consumption taxes, they reduce the amount the Farmer has to spend on consumption for himself and his family. There are two ways to tax consumption:
- Pre-tax consumption by withholding the income tax and Social Security tax and allowing the Farmer to consume with the remaining dollars.
- Collect the tax at the time of the consumption.
Under The FAIRtax, the only “fair tax”, The FAIRtax is levied when the Farmer purchases new retail goods and services (not used goods). Due to the prebate-tax credit, The FAIRtax is not regressive but instead very progressive.
Under the income-payroll tax everything is pre-taxed. You are purchasing goods and services with after-tax dollars. For most of us this means we have to earn $1.25 or more to net $1.00 after income-payroll taxes. There is no distinction between buying new and used goods.
Since we can only spend what we have left after paying income-payroll taxes, we tend to forget about the fact we are spending after-tax dollars and all of our retail purchases, both of new and used goods and retail services, are actually taxed before we make the purchase.
This means The Swamp and their allies in Congress can hide the true cost of the federal government.
Conclusion
Does the enactment of The FAIRtax and elimination of the income-payroll tax system mean Farmers and small business owners will automatically be more successful? No, but it does mean the burden placed on the business operator will be considerably decreased.
They should maintain good books and records in order to control their expenses and increase their earnings. However, they will no longer be spending countless hours and paying tax practitioners to find “tax benefits.” Instead they can spend the extra time and money on things improving their businesses and the lives of their employees and families.
What motivates The Swamp and their allies in Congress? Money. They will do anything if it means money in their pocket, even though they know the rest of us are paying a huge price for their greed.
Why reward this type of behavior? We shouldn't! Why let the way we collect taxes to fund the government be an auction system where only the wealthy and well-connected really get to bid? We shouldn't!
The FAIRtax is going to help everyone!
Anyone who truly cares about the American people say, “It is time to pass The FAIRtax, the only “Fair Tax”!
The author George Bernard Shaw said, "You see things; and you say “Why”. But I dream things that never were; and I say “Why Not”.
We say to you President Trump, “Embrace The FAIRtax and real tax reform! Stand up to The Swamp. They will oppose you anyway because they see you as a threat. What have you got to lose?”
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.”
Take Back America Again! Pass The FAIRtax Now!
FAIRtax Online Resources
Americans For Fair Taxation - Home Page
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Americans For Fair Taxation - Chairman's Report Podcast on Spreaker
Americans For Fair Taxation - Chairman's Report Podcast on Apple
Americans For Fair Taxation - Chairman's Report Podcast on iHeart Radio
Official FAIRtax Logo Store
The FAIRtax Guys - Home Page
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PopVox - The People’s Voice On All Things Legislative
Read Evasion Study Summary
The FAIRtax Guys
Ron Maiellaro & Bob Paxton perform their FAIRtax Power Digital-TV Show & Podcast. When the show streams to Facebook, The FAIRtax Guys plus a few AFFT experts are responding “live” to your comments and questions. A free app is available for iOS and Android.
Digital TV: Tues-8PM-ET Americans For Fair Taxation - Facebook Page
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Podcasts: Fri-6AM-ET Posted on Spreaker, Apple Podcasts & iHeart Radio.
Digital TV & Podcasts are available on The FAIRtax Guys - Past Shows
This week's Episode #170 - "The IRS - Many Problems, Only 1 Solution"
Did you know the IRS has used the tax code to send illegal immigrants refunds even if they have not paid any taxes?
Did you know the previous IRS Commissioner thought this was a good idea?
In this week’s episode, The FAIRtax Guys use news articles to point out serious problems not only with the income tax code, but also with the behavior of top IRS officials. Yes, due to the behavior of these officials, they have been sending your tax money to illegal immigrants who filed tax returns but paid no taxes.
So on top of dealing with an incredibly complicated tax code, impossible to completely comprehend, IRS officials are gleefully giving away your hard earned money. But fear not! Congress to the rescue!
Yes, the House and Senate recently passed HR 3151, The Taxpayer First Act. This bill was signed into law by President Trump on 7/1/19. Listen to or watch this episode and learn how all our troubles will be over and we will never have problems with the IRS again (Tongue firmly planted in Cheek!) Just wait until you hear all the corrective actions this new law will bring about.
However, on the outside chance HR 3151 is just more bureaucracy trying to fix existing BLOATED bureaucracy, The FAIRtax Guys remind you of the only REAL tax reform plan in Congress - HR 25, The FAIRtax.
Recent comments from viewers encouraged The FAIRtax Guys to relaunch the “Slogan Contest”. There is a lot of talent in the viewership and The FAIRtax Guys would like to use some of that talent to come up with a catchy slogan to assist getting the message out. America loves slogans. So get involved and “slogan away”. Click "Here" to email us your favorite slogan about the IRS.
Enjoy this episode and please Share it with others you know. We need a ground swell of supporters to make this happen.
What Can Each Of Us Do?
Call the local and DC offices of your Representative and 2 Senators. Use the following script:
- I am sure Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you 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 10 years.
- Since most will say they don’t believe their boss has seen the study, drop off a copy, email a copy or click Read Evasion Study Summary and copy/paste the link into an email.
- 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 simplifying the income tax will handle the problem.
- Explain, when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So, it’s unlikely they are going to pay 30-40% when they were paying 0% because they have already decided it’s okay to cheat.
- Say, 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 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 the way to handle evasion without unleashing the IRS audits is The FAIRtax.
- If you meet with your Representative or attend a town hall and ask these questions, you will be even more effective.
American'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 any age.
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 The Florida FAIRtax Educational Association. You can buy an electronic version for only $2.99 for the Amazon Kindle, the Barnes & Noble Nook and Apple iOS. You can purchase a print copy at the same Amazon link above for $9.25.
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Thank you for staying FAIRtax strong!
Respectfully,
Steve Hayes
Chairman, Americans For Fair Taxation