CHARITIES JUST DON'T GET IT
It is no secret that all of the major interest groups in the U.S. want to keep the income tax benefit they have paid to be carved out of the Internal Revenue Code. A recent article in the Wall Street Journal described one of the reasons that the failing income/payroll tax system is so difficult to change.
The article discussed the testimony of charitable organizations before the House Ways And Means Committee and their protests against a proposal to increase the standard deduction for families from $12,700 to $24,000. This would cause the number of people choosing to itemize and deduct charitable deductions from approximately 30% of the federal income tax filers to about 5%.
How The Charitable Deduction Works
These leaders of the charitable organizations seem to have the opinion that Americans are only willing to give to charities if their donations are subsidized by the income tax deduction. An income tax deduction reduces the amount of income subject to the present federal income tax and you save the income taxes you would have paid on that reduced portion of your income.
For example, a person with a 25% percent income tax rate who makes a $1,000 donation to a charity will receive $250 in reduced income taxes when they file their income tax return. This means that they receive back $250 in income taxes they would have paid. This means that they only paid $750 of their money.
However, ignored by many seeking to protect deductions is the fact that an income tax deduction does not reduce the amount of your income subject to the Social Security and Medicare tax. Under the current income/payroll tax system your ability to contribute is still reduced by 7.65% if you are an employee and 15.3% if you are self-employed.
The True Facts
Although the 30% of people who itemize their deductions are delighted to get some of the income taxes they would pay returned to them when they list their deductions, the income tax rates don't seem to affect charitable giving.
According to the Philanthropy Roundtable, "What if we calculate charitable giving as a proportion of all national production (GDP)? The math reveals that over the last 60 years, donations as a proportion of our total annual output increased—but only very slightly. For most of the last lifetime, giving has hovered right around 2 percent of our total national treasure."
In the past 60 years, the top tax rates have been as high and 91% and as low as 28% and the percentage of giving has remained the same. Having been on panels containing people from charitable organizations, this is a fact that they don't deny. They even agree that if people have more money in their pocket they tend to be more generous.
Charitable Donations As A Percentage Of Income
Almost all charitable donations are made because the person wants to make the donation. While the $100 million donations get mentioned in the press, as a percentage of income the wealthiest are not the most generous contributors. This article in the Atlantic discusses this in detail and says, "In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income. The relative generosity of lower-income Americans is accentuated by the fact that, unlike middle-class and wealthy donors, most of them cannot take advantage of the charitable tax deduction, because they do not itemize deductions on their income-tax returns."
This data is also ignored by the advocates of the charitable deduction. You would think that they would want to reward the people who make less money by giving them all of their money--not reduced by Social Security and Medicare of income tax. Then they would presumably give more.
The FAIRtax And Charitable Donations
The biggest determining factors for most of us when considering donations is how much money we have in our accounts and our belief that we will have a continuing flow of income. The FAIRtax instantly makes more money available to everyone--whether they now itemize or not, because we get to keep our whole paycheck with no Social Security/Medicare deductions and no federal income tax deductions.
This means that all of us are able to make donations with 100 cent dollars and do not need to file a tax return and wait many months to get the refund of the income tax saved.
Under the FAIRtax, the U.S. will have a much greater growth in our gross domestic product. If the trend in charitable giving continues, the amount of money donated to charity will increase over what it would under the other tax plans. This makes sense because as the economy grows, we will all benefit. As John F. Kennedy said, "A rising tide lifts all boats."
In addition, the FAIRtax is the only revenue-neutral tax reform proposal that treats everyone fairly.
While the above facts seem simple and almost impossible to refute, the problem is that people are so used to thinking in terms of the income tax that they have trouble thinking of any alternative. They have a strong interest in keeping the status quo because they have jobs under the present system and they don't really know what would happen under a new system.
The great writer George Bernard Shaw often sought social change and was frustrated when people resisted change. Shaw said, "Progress is impossible without change, and those who cannot change their minds cannot change anything."
The problem with many special interest groups who are fighting to keep their "tax benefit" is that they don't realize that the system is dying. The amount of evasion, $9 trillion over the next decade, is destroying the income/payroll tax paradigm. All of their frantic efforts will be a waste.
However, as I was told by a tax attorney some years ago, "I will support the FAIRtax because it will not be implemented before I retire next year but it really is the best system for America." He would not have supported it while he was making money from it even though he admitted it was the best system.
If President Trump, Congress and these special interest groups don't change from the income/payroll tax system, the need to slow the evasion of the system will lead to a much more abusive IRS and much more actual tyranny in all our lives.
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. office of the 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.
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
Because of the varied attacks on the Ryan/Brady income tax plan, the White House has announced that they need to start over to determine the best tax plan to propose.
Abraham Lincoln said, “Things may come to those who wait, but only the things left by those who hustle.”
We may only have a limited time to stop the fake tax reform being promoted by some in Congress. If it passes, then the Elites will say that we need to wait before we consider any more changes. To stop this fake reform, we must be able to ensure that our message is clearly heard not only by Congress but also by President Trump. To do this we need your help.
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital in 2017.
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THE FAIRTAX HELPS PROTECT THE ENVIRONMENT
FAIRTAX POWER RADIO EPISODE #69
No, we have not gone off the deep end. Remember that with the FAIRtax, used items are not taxed. This is a big deal when it comes to things like cars and houses. These items require HUGE amounts of energy to produce, so encouraging the purchase of used items helps reduce energy usage and thereby helps the environment. Plus, it saves you a bunch of money! The FAIRtax Guys explain in detail how this important feature of the FAIRtax will help us protect the environment. This should be important to millennials, gen-Xers, baby boomers… Everyone.
In last week’s episode, we discussed how Social Security will be secure when the FAIRtax is our tax system. Currently, funding for Social Security and Medicare is on shaky ground because of our archaic income tax system. We need a 21st Century tax system - The FAIRtax. Under the FAIRtax, EVERYONE who makes a purchase or pays for a service will support Social Security and Medicare. The FAIRtax Guys explain in detail how the FAIRtax will save what is for some people the only retirement system they will ever know. Listen, learn and help educate others.
Help us spread the word about the FAIRtax and FAIRtax Power Radio. Telling your friends and relatives about our free weekly podcasts is a great way to help us garner more support. Help us keep America informed for it is the American people who must demand REAL tax reform in Congress.
You can listen to FTPR on any platform - Mac or PC, iPhone or Android. And it’s 100% free.
Listen on Spreaker, iTunes or iHeart Radio on your computer or smartphone. Spreaker, iTunes and iHeart all have free apps. But 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. As stated earlier, we post a new episode every Friday morning. Please listen in and tell everyone you know about the FAIRtax Power Radio podcasts.
As stated earlier, we post a new episode every Friday morning. Please listen in and tell everyone you know about the FAIRtax Power Radio podcasts.
Learn more. Get involved. Make it happen!
GET YOUR SIGNED COPY OF AMERICA'S BIG SOLUTION
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. For a limited time, you can purchase a print copy, signed by both Terry and Ron from the FAIRtax Logo Store. Go online now and get your copy before they sell out.
America’s Big Solution is meant for people of any age 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 the FAIRtax Logo Store has sold out of the signed copies, you can buy an electronic or print version of ABS as follows: AMERICA’S BIG SOLUTION is available 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. 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
- The FAIRtax website at which you can get involved to help make it happen.
- 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
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- Do your shopping, save money and support the AFFT
- The Official FAIRtax Logo Store
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