UNDERSTANDING SWAMP TALK
House Ways and Means Chairman Kevin Brady said, “It’s time to change the culture in Washington where we only do tax reform once a generation. This legislation is our commitment to the American worker to ensure our Tax Code remains the most competitive in the world.”
Chairman Brady’s statement was made as the Republican leadership introduced their next “round of tax reform.” Since it is widely believed that even if the new measures are passed in the House, the Senate will not have the time or the interest to consider the bills, many consider the proposals nothing more than a political move.
At one level, this political interpretation might be true. It is also true that Chairman Brady’s statements has one meaning to ordinary people and another to denizens of the Swamp.
Meaning to Small Businesses
Having worked as an attorney for small businesses, the one thing that a small business person craves from all levels of government is predictability. A decision to hire more people, purchase equipment or launch a new product is often a decision on which their business survival is dependent. If it doesn’t work out, they may have to close their business. This is why these decisions are normally given a lot of thought and planning.
Under the present income/payroll tax system, after the business has completed its “business” analysis, it must consult with its other partner—the federal income tax code. If the budgeted expense is a purchase, then the ability to deduct the cost of the purchase and the certainty of when to deduct the purchase will be a major determinant in being able to afford the purchase.
For example, if an equipment purchase is for $30,000, which is immediately deductible under Sec 179 on the businesses’ federal tax return and the federal tax rate is 30%, then the actual cost to the business is $21,000. By deducting the $30,000, the business is able to save paying 30% of $30,000 or $9,000 in taxes.
This means that the business decision to purchase the equipment is based on the cost and under current tax law, this is $21,000.
However, if the tax code changes and this type of equipment can no longer be immediately deducted but must be amortized over five years, the business calculation changes. The same purchase can only create a deduction of $6,000 per year from its income.
Assuming the same 30% tax rate, the business will only be able to save $1,800 per year. This dramatically affects the cash flow of a small business. The idea that “tax reform” will now be a continuous process strikes fear into anyone having to make decisions based on cash flow and income tax rates.
The reason that I refer to small businesses is that larger businesses have more access to capital and also have access to highly paid tax practitioners who can help them navigate through the maze of the tax code.
Importance of Small Business
According to the SBA Office of Advocacy: A small business has under 500 employees. Small businesses make up:
- 99.7 percent of U.S. employer firms
- 64 percent of net new private-sector jobs
- 49.2 percent of private-sector employment
- 42.9 percent of private-sector payroll
- 46 percent of private-sector output
- 43 percent of high-tech employment
- 98 percent of firms exporting goods, and
- 33 percent of exporting value
Although to the Swamp a small business doesn’t have much importance because they are not able to pay them huge fees, they are vital to the American economy and American people.
Chairman Brady’s comments have a different meaning to the Swamp denizens. The lobbyists and Congressional staff members who want to become lobbyists were delighted by all of the controversy aroused by the last tax plan. They made millions of dollars and ensured that the added complications guaranteed that they would have clients for years both trying to understand the changes and to get them changed.
Now these same Swamp denizens are hearing from Chairman Brady that if his party remains in charge they will make even more millions of dollars. Of course, they also know that if the Democrat Party takes over, there will be a huge amount spent by all sides trying to change or keep what the last Congress passed. Either way they win.
It is common knowledge that larger businesses often do not object to the complications of the federal income tax code because they know it puts a much greater burden on smaller businesses who may be their competitors and don’t have the resources to adequately deal with the complications.
When you understand the motivations of the larger businesses, it is easier to understand why, despite rhetoric to the contrary, they don’t spend their huge lobbying budgets to really get true tax reform—like the FAIRtax. They actually have become part of the Swamp.
Isn’t it time that businesses of all sizes no longer have to deal with their partner, the federal income tax code, when making decisions about their future and the future of their employees?
Isn’t it time that Members of Congress and their friends in the Swamp can no longer subsidize their friends (defined as people who contribute and/or pay them) and penalize the 99.7% of businesses?
Isn’t it time that Congress is held accountable for continuing a situation that harms the almost all Americans?
The FAIRtax empowers all of us and puts each of us in charge of how much money we have for consumption. The FAIRtax also ensures that our economy will continue to prosper and our children and grandchildren will have the opportunity that we wish for all Americans.
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.
#125 FAIRTAX POWER RADIO ON THE FLY
Due to an unforeseen scheduling conflict at Big Daddy Studios, the Live show was delayed an hour. And because of a prior commitment on his part, we had to postpone our interview with Kerry Bowers.
But the show must go on! And The FAIRtax Guys must adapt.
Fortunately, we had the benefit of interesting questions from our Facebook audience and a couple of great calls from across the country - that is, when the call-in line started working again.
For The FAIRtax Guys, this was one of our most interesting episodes since we didn’t know what was going to go wrong next. In spite of the problems, this is still an information packed 30 minutes. So enjoy watching the ONLY weekly FAIRtax digital TV show in the country.
Be sure to inform everyone you know about the new digital TV show, FAIRtax Power Radio. 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 FAIRtax Power Radio on 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 Facebook videos are saved to a number of 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.
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.
We need to educate as many Americans about the FAIRtax as possible. Be sure to tell all 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. 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 SMALL BOOK ON A BIG SUBJECT - AMERICA’S BIG SOLUTION
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. 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. (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
- YouTube channel for The FAIRtax Guys
- The Official FAIRtax Logo Store (www.fairtaxlogostore.org)
- Xcluded.tv - A new platform for FAIRtax Power Radio Video and other shows.
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