THE BASIC PREMISE IS WRONG
Many pundits and spokespeople for the Swamp (they are often the same) shrilly denounce the recent income tax plan because it “unfairly” limits the state and local tax deduction to $10,000. Discounting that most of these spokespeople and members of the Swamp live in states with high state and local taxes, the argument seems to be that all of the residents of the other states should “subsidize” the state tax burden paid by the people who elect to reside in states with high state and local taxes.
The Merriam Webster dictionary defines “premise” as: something assumed or taken for granted. The basic premise being forwarded by almost all Members of Congress and the Swamp is that the income tax is the only way the federal government can obtain funding. Of course, if you accept this false premise, then you have to try to make any solutions to problems for one or more groups in our society work using the income tax.
This would be like a person deciding that they would never eat fish. If that person was stranded on a remote isle and the only thing to eat was fish but he still wouldn’t eat fish, then that person would eventually starve. The person was true to his basic premise but also starved.
The true basic premise for a tax system should be to most efficiently collect taxes in ways that harm the people the least. The income tax is certainly not the most efficient way to collect taxes in ways that harm people the least.
California Real Estate
An article entitled “Did San Diego county just get ‘kneecapped’ by the new Tax Plan?” by Rodney Satterwhite at Valleycenter.com, illustrates this point. Mr. Satterwhite points out:
- As the cost of homeownership increased for many due to the tax reform, the desire and the demand for buying a home at the prevailing market price goes down.
- The overall home sales in California were estimated to increase 1 percent in 2018, prior to the passage of the tax reform bill. With the tax reform impact taken into consideration, overall home sales are expected to increase 0.3 percent in 2018, a reduction of 0.7 percent from the prior projection.
- The statewide housing supply will be affected slightly by the tax reform as home values soften and homeowners delay trading up/down to their next home.
- Buying a median-priced San Diego County home at $601,200 ZHVI (Zillow Home Value Index 12/2017) with 20% down, will probably mean paying around $6,000 in property tax (assuming no Mello-Roos) eating up 60% of the total $10,000 SALT deduction.
Again, the basic premise of Mr. Satterwhite’s argument is wrong. He is protesting that San Diego county residents should be allowed to deduct all of their state and local taxes in excess of $10,000 so that the rest of us will allow them to get 25% to 40% of these state and local taxes back as a refund of their federal taxes, because his premise is that everything has to be done through a federal income tax.
Let’s assume Mr. Satterwhite changed his premise about taxation and looked for the most efficient way to fund the federal government that is least harmful to our citizens. If he looked at the FAIRtax he would see that, rather than having money collected by the federal government that is in turn partially returned to the taxpayer through a complicated and changing system of “incentives”, we should just give each taxpayer their entire paycheck. Then let the taxpayers determine how best to spend their money.
Why Doesn’t Congress Change Its Premise?
Unfortunately, the answer seems to be based not on rational analysis but on greed and power. If the antiquated and harmful income tax was jettisoned, the Swamp and Congress would lose the ability to reward us if we spend our money like they say we should. In addition, the clients of the Swamp who are relying on the rest of us to make up for their special “deduction” that allows them to pay less in taxes will quit paying the Swamp. With less money, the Swamp will be able to funnel less money to compliant Members of Congress.
Conclusion
Stephen Hawking recently passed away at age 75. He was an acclaimed scientist who defied all of the established premises about ALS, Lou Gehrig’s disease, and lived over 50 years longer than the medical community thought was possible. They were operating on the premise when he was diagnosed with ALS that no one survived more than a few years.
Many of us tried to read one or more of his books but there are probably not many of us who understood all of what he was saying. Although many of his statements have become famous, there are several that seem to apply as we urge Congress to change their basic premise about the type of tax system the U.S. needs:
“I believe alien life is quite common in the universe, although intelligent life is less so. Some say it has yet to appear on planet Earth.”
“I have noticed even people who claim everything is predestined, and that we can do nothing to change it, look before they cross the road.”
“Look up at the stars and not down at your feet. Try to make sense of what you see, and wonder about what makes the universe exist. Be curious.”
“Intelligence is the ability to adapt to change.”
President Trump and Congress, do the right thing. Change your basic premise about tax systems and push the FAIRtax through to passage. Yes, you will offend the Swamp but you will save the country. Remember, the Swamp may give you money, but only the rest of us can give you votes.
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.
FAIRTAX POWER RADIO #100
THE FAIRTAX VS. THE VAT VS. TARIFFS
Why did the President resort to tariffs? Why does he think they are necessary? What is the relationship between the current income tax, the VAT and tariffs. Is there a better way to compete internationally? The current income tax not only makes a royal mess of things here in the US but it ham strings our companies when they try to compete overseas. It’s complicated but it is understandable and there is a fix. There is one solution to the disadvantage our companies face in trading overseas and the many problems citizens and companies face with the income tax here within our borders. Can you guess what that one solution is?
FAIRTAX WINS AGAIN WHEN COMPARED TO INCOME TAX
In last week’s episode, The FAIRtax Guys reviewed the huge differences between the FAIRtax and the income tax such as simplicity vs. complexity or limited evasion vs. huge evasion using a page out of Americas Big Solution, the introduction to the FAIRtax written by Terry Tibbetts (see below). The many advantages of the FAIRtax are spelled out in great detail. The FAIRtax Guys encourage you to use these comparisons to help others understand why the FAIRtax is superior to any other tax plan.
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.
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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!
America’s Big Solution is a basic introduction to the FAIRtax and is meant for people of any age. And you can download it to your tablet or smartphone right now.
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 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. (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)
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