Chairman’s Report - September 18, 2015

All Taxes Are On Consumption

People also get confused when we talk about how the FAIRtax is a consumption tax and think this is a “radical change.”

The truth is that all taxes are really taxes on consumption.  Why do people work or invest money?  Generally, it is to enable them to consume either now or in the future.  
We have to pay rent or mortgage payments.  That is consumption.  We have to purchase food and clothes.  That is consumption.  We purchase a car or bicycle.  That is consumption.  We contribute money to our church or a charity.  That is consumption.  We save or invest money for future consumption.  We leave money to our children.  They are ultimately going to spend that money on consumption.

There are two main ways of taxing consumption.  One is to pre-tax consumption and the other is to tax consumption at the time of consumption.

Pre-Taxing Consumption

The present income tax/payroll tax system used by the federal government and 43 states pre-taxes consumption.   This means that the tax is removed from your pay before you get it.  Then when you make purchases for consumption you are not taxed again—on the federal level.

The funds available for consumption are reduced by the amount of the taxes.  For example, if you make $100 in salary and the inclusive income tax/payroll tax rate is 23%,   $23 is deducted to pay the income tax and social security taxes, and the person has $77 to spend on consumption. 

Taxing At The Time Of Consumption

The other primary type of consumption tax is levied at the time of consumption.  Assuming the same 23% inclusive tax rate, a person making $100 receives the entire $100.   When they decided to use their funds to consume goods or services, only $77 is available for consumption because $23 is paid in tax.  The FAIRtax taxes at the time of consumption.

Don’t Prices Increase Under the FAIRtax?

Many people are concerned that raising prices on things like cars will make it very difficult for the car makers to sell cars.  This is true but does not mean that the car is actually going to cost you more of your money.  Under the present pre-tax system for taxing consumption, a person is only receiving a portion or their earnings to use to purchase the new car.  This explains why a person wanting to purchase a $30,000 car will have to earn $40,000 (income and payroll taxes are taken out before you purchase the car from your earnings) or more to net the $30,000.  

With the FAIRtax, the purchaser receives all of their earnings and investment returns and will pay the tax at the time of the purchase of the car and will pay a total of $39,000 ($30,000 plus 30% of the $30,000).

Of course with the FAIRtax, we know that competition will lower the price of the new car.  We just don’t know how much it will be lowered.

First Meeting of New Board

The directors Americans For Fair Taxation voted to amend its by-laws to have a nine member board of directors and elected the following members: James Bennett, John Collet, Steve Curtis, Peggy Green-Ernst, John Grafer, Randy Fischer, Steve Hayes,  Autry Pruitt and Karen Walby.  Please feel free to contact any of the board members if you have questions.

FAIRtax Power Radio and Would Thomas Jefferson Think We Are Free

Whether you’re a FAIRtax volunteer or an informed citizen who wishes to be better informed, we encourage you to listen to FAIRtax Power Radio, the online radio show that is available when you are.  The FAIRtax Guys discuss and analyze the problems with the current income tax system and the best replacement, the FAIRtax. We also have great guests periodically such as area business people, a Congressman, leaders within the FAIRtax organization and even Thomas Jefferson and Rod Serling (Program 19).  FTPR is FREE to the listener on two different websites - SoundCloud (http://bit.ly/1KNsOof) and YouTube (http://bit.ly/1PZUFVU).  Both SoundCloud and YouTube have free apps for smartphones so you can listen while you’re on the go.  Our goal is to offer a discussion of the most thoroughly researched tax reform proposal, the FAIRtax, and make it seem like a family discussion at the kitchen table. Listen to our programs and then tell your friends and relatives about the show. 

1040 Club
 
Thanks to each of you that have joined the 1040 Club.  You are ensuring that Americans For Fair Taxation can continue to promote the FAIRtax.

If you are not a member of the 1040 Club, or if you are a member but want to join for someone else, please go to this link and sign up. 

AFFT National LOGO Store and Scrolling Signs

Going into the primary system, it is even more important that all of us have FAIRtax signs that we can bring to political rallies.  Many venues will not allow us to bring signs attached to metal or wood holders.  That is why Rudy Treml designed and had printed the scrolling FAIRtax signs. Visit our National Store at www.fairtaxlogostore.org and purchase some Personal FAIRtax℠ Scrolling Handheld Event signs.

It is a handheld scrolling event sign printed in color on both sides with our new logo. When folded up, this banner is only 2” x 9” but opens up to a 27” x 9” presentation
which self-retracts. It is ideal for all political events and easily fits in a pocket, jacket or purse when not in use.  To see a picture of this banner please click here.


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