YOU CAN’T MAKE THIS UP
In past reports, we have discussed the “outrage” expressed by governors of states like California, New York, New Jersey and Connecticut that the deduction for state and local taxes was limited to $10,000 under the tax plan passed last year.
Prior to the reform, their residents had been able to deduct from their income, for the calculation of their federal income taxes, the total amount they had paid in state and local taxes. Since these states had higher state income and property taxes, many of their residents would end up paying more in total state and federal taxes under the new tax plan, and this would cause them to be upset.
For example, under the old law, if a family in Connecticut was paying $30,000 of state income and property taxes and was in the 30% federal income bracket, they would be able to reduce their taxable income by the entire $30,000 and this would have saved them $9,000 in federal income taxes (30,000 x .30 = 9,000).
Under current law, the same family would only be able to reduce their income for federal income purposes by $10,000. This means that they would only save $3,000 in federal income taxes (10,000 x .30 =3,000) and not $9,000.
Since all taxes- local, state and federal- reduce the amount of money left for the family to consume, the family would have $6,000, or $500 per month, less to spend. The governors of these states don’t want people blaming their state’s high income and property taxes for this reduction in their consumable income
CONNECTICUT GOVERNOR DANNEL MALLOY
In an article in the CT Mirror by Ana Radelat, Governor Malloy is quoted as stating, “Now, Treasury is attempting to take away the ability of states like Connecticut to mitigate the harmful effects of the law. We will assess our options as we work to protect Connecticut taxpayers,” Malloy added.
Governor Malloy is also quoted as saying that it will affect 200,000 Connecticut families, but he seems to be saying that the other 800,000 families in his state will not be adversely affected. The Governor has also been quoted as attacking the fact that the new tax plan will create a larger federal deficit.
The governors of the other most affected states have made similar assertions and promised to create a way for their affected citizens to “avoid” this unwarranted attack on their wealthy citizens.
WHAT THE GOVERNORS ARE REALLY SAYING
While we are used to hearing “statements of fact” from politicians that are wildly inaccurate, the governors of these states are really making inaccurate statements.
Here is why:
- Apparently 80% of the Connecticut families and likely similar percentages in the other states are not adversely affected and probably are benefited.
- The 80% of their citizens and the remaining Americans across the country are no longer subsidizing the 20% of the citizens of these high tax states.
- The reason is that every deduction taken by a wealthy taxpayer means that they are contributing less to the federal revenue, and other taxpayers, who likely make much less income, in their state and around the country have to pay more taxes to make this up.
- The governors deplore the federal deficit but ignore the fact that allowing their wealthy taxpayers to further reduce their federal taxes actually increases the deficit because it reduces the amount of income into the federal treasury.
- The unstated reason is that the wealthy taxpayers in these states are the ones that contribute most to the political coffers of the governors’ political parties and have a bigger voice than the other state residents.
- The wealthier taxpayers in the state are also more able to “vote with their feet” and move to a lower tax state, thus taking revenue from the state and possibly moving industries and jobs.
- Everyone should pay their taxes in accordance with the law except our wealthy citizens.
THE TREASURY RESPONSE
The Treasury Department recently released proposed regulations effectively telling the states that their attempts at subverting the law will not be accepted, and any person filing federal taxes in reliance on this will be denied the deduction. Although it took 35 pages to say what should have been a simple statement, that is the way the Swamp works.
If you told people that the governors of a few states were boasting about creating state laws that allow certain of their citizens to evade a federal law, few would believe you. They would say it was ridiculous because there are rules about conspiring to break federal laws and no one would be stupid enough to boast about it.
Of course, to the rest of us, these governors are telling us that it is ok to evade a federal income tax law if you are wealthy and live in certain states. Are these actions by the governors going to start to appear in briefs of attorneys representing people who are accused of falsifying deductions on their income tax?
Isn’t it time to step back and think about a simple and effective way to eliminate all of these twists and turns where some Americans are favored over other Americans because they are wealthy?
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.
#127 FREQUENTLY ASKED (AND ANSWERED) QUESTIONS
Starting with a question directly from one of the viewers/listeners, The FAIRtax Guys tackle not only a question about what will happen to state income and sales taxes but they go further by using the Frequently Asked Questions section of the fairtax.org website.
This is a great way to teach people about the FAIRtax because these are questions that have surfaced over the years as people learn about the FAIRtax. So they actually are questions from the public just like the question from John that The Guys started with.
Of course there was our usual update from congress.gov in which we discovered there are almost 1600 proposals to change the tax code so far in the 115th Congress with several months to go. So, will they hit 2000 proposals? Even after claiming the most important “tax reform” in a generation? We shall see.
Be sure to inform everyone you know about the new 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 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.
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. 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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