FAIRtax Friday And The Chairman’s Report - December 2nd, 2016

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  • Source: FAIRtax
  • 04/09/2021

President Reagan famously said in his 1981 inaugural address, “In this present crisis, government is not the solution to our problem; government is the problem.”  President Reagan wanted to reduce the rapid growth of U.S. government revenues and the expansion of government. He said the best way to reduce U.S. government revenues was simple.

A person earning a paycheck should be given the entire amount—preferably in cash.  Then after a time to see and get used to his entire paycheck, the person should then walk into another building with a number of windows.  First, he would go to the federal income tax window and pay from his cash the federal income tax owed.  Then he would go to the Social Security/Medicare window and pay what was owed.  Then he would go to the state window and pay the state taxes from his paycheck.

Reagan said that after a few of these experiences, there would be a revolt and people would refuse to pay.  Well, Mr. President, you may be getting your wish. 

“Who’s Working in the Gig Economy”

For most of the 20th Century, most U.S. workers were employees.  This was known as the traditional economy.  In its November 25, 2016 issue, the Wall Street Journal put up a graphic about the Gig Economy. In the Gig Economy, more and more people are working in non-traditional ways and are being called non-traditional workers. 

There are several categories. Some have multiple employers, some are part-time employees but do independent work for other companies or people—like Uber and Lyft drivers.  Others are independent contractors and are not employees.  Then there are full-time employees who work independently during their off-time—moonlighters.

Here are some of the salient points:
  • Although jobs are scarce, 63% of the non-traditional workers are working by choice in this way
  • 35% of the U.S. workforce are non-traditional workers
  • The largest part of this group, about 35%, are working as independent contractors
  • The next largest part of this group, about 28%, are employed part-time and work the rest of their time as independent contractors
  • The total earnings for these non-traditional workers exceeds $1 trillion per year 
Independent Contractors and Taxes

Independent contractors are not employees and receive payment for their services and products with no income, payroll or state and local taxes withheld.  It is up to the independent contractor to calculate their income, subtract their expenses and pay their taxes on the net remaining.

Many people assume that most independent contractors do not report all of their income.  However, the IRS says that a company must file a 1099-MISC if:
  1. You made the payment to someone who is not your employee;
  2. You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
  3. You made the payment to an individual, partnership, estate, or in some cases, a corporation; and
  4. You made payments to the payee of at least $600 during the year.
Of course, many people provide services that cost each purchaser less than $600 per year and the opportunity exists to “not report” income.

How  Some Non-Traditional Workers Evade Taxes

Taxes are withheld from employees before they receive their check.  On the non-employee portion of the income received by non-traditional workers, the person receiving the income is allowed to deduct the expenses of earning the income from the gross amount of income and only pay taxes based on what is left.

Therefore, while an employee is very limited in their work-related deductions, independent contractors can deduct anything that is needed to do their work.  Some are very diligent and only deduct things that really are proper—although this is not an easy task given the complexity of the present income tax code.

However, many write off not just the business portion but their entire internet bill, cell phone bill, and auto expense.  They write off their apartment rent as an office expense.  Many also just make up deductions.  They can get away with this because the audit rate is so low.

The 2015 Internal Revenue Service Data Book showed that in 2015:
  • 1,228,117 individual income tax returns were audited
  • This means .8 percent of filers were subject to an IRS audit, or 1 in 120 of the households that filed a return
  • People reporting between $25,000 and $100,000 of income had less than a 0.5% chance of being audited
  • Even those reporting income of $200,000 had only a 0.64% audit rate 

President Reagan’s dream is becoming a reality—but not the way that he would have wanted.  President Reagan always preached personal responsibility and the sanctity of the rule of law.  The income/payroll tax requirements and rules are the law of the land.  Many non-traditional workers are taking advantage, both legally and illegally, of their ability to determine how much money to actually report for tax purposes.  They know that their chances of being audited are very low.  They also know that even if audited they will almost certainly only be required to pay the taxes owed. 

It is said that in all humor is some truth.  Late night host Jimmy Kimmel may have been speaking more about what is actually happening than just making a joke when he said, “Tomorrow is the day to mail in your tax returns, which means tonight is the night to start making fake receipts.”


The results of this election clearly show that the future of tax reform will be decided next year. Americans For Fair Taxation (AFFT) is one of the few worthy activities that does not spend your funds on salaries or even office space.  It is a group composed of people who are donating their time and even paying their own expenses. 

AFFT has been working for a long time to educate people about the FAIRtax. Oscar Wilde said, "You can always judge a man by the quality of his enemies."  If you agree with this sentiment, then look at the enemies of the AFFT.  It is not the people.  It is the D.C. elites who profit from the existing income tax/payroll tax system—even though it is obviously harming the U.S.

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You can help introduce someone to the FAIRtax by informing them of this book.  As the title indicates, it is an introduction to the FAIRtax and is directed toward people who may have heard of the FAIRtax but are not really sure of just what it is.  Written by Florida volunteer Terry Tibbetts, the book offers a light hearted approach to a serious subject, reforming the federal tax system.  America’s Big Solution gives the reader enough information to get them started in their examination of the most thoroughly researched tax reform proposal our country has ever seen.  “ABS”  is intended for people who may not be attracted to social media for all the latest news and would like to gather their information in a more traditional form that is not limited to a 140 character “tweet” or a Facebook post. 
You can find America’s Big Solution on the three most popular platforms -- Amazon, Barnes & Noble and the Apple iBook Store.  To purchase  the electronic form for the Amazon Kindle or the print form, go to this website. To find it for your Barnes & Noble Nook, go here. And if you’re an Apple user, go to the iBook store at this site.  The print version (only available at Amazon) is $9.25 whereas the electronic versions are all priced at $2.99. (Apparently electrons are less expensive than paper and ink!) All royalties go to Americans For Fair Taxation.
Please share this information with everyone you know. The more people know about the FAIRtax, the easier it will be to steer Congress into the only REAL tax reform proposal on the table at this time.

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FAIRtax Power Radio

FAIRtax Power Radio Expands Its Reach
Who are The FAIRtax Guys? This VIDEO will give you and idea.  It is Bob & Ron’s mission to save the entire country from the disastrous federal income tax and the criminal enterprise known as the IRS.  In order to do that, we must inform the population of the FAIRtax, the best tax reform proposal ever presented to Congress.

This is the purpose behind FAIRtax Power Radio, a weekly 30 minute radio show which you can listen to online or download as free podcasts. The reach of FTPR has recently expanded to include iHeart Radio along with our other major platforms, iTunes and Spreaker.com. You can also find FTPR on SoundCloud and YouTube. Each of these platforms has a free app for smartphones so you can listen on the go. The format of FAIRtax Power Radio is informative and light hearted.

The FAIRtax Guys delve into every aspect of the FAIRtax beginning with the problems with the current income tax, how the FAIRtax will replace the income tax and what the many benefits will be to the American citizen when the FAIRtax become law. For instance, the FAIRtax will restore many freedoms currently ignored by the IRS.   

The current system is so bad that even Thomas Jefferson has weighed in and is featured in several FTPR episodes.  The FAIRtax Guys also have interviewed a Congressman, a business man and several Board members of Americans For Fair Taxation, the national organization promoting the FAIRtax. You’ll find out what’s going on in the halls of the nation’s capital and what you can do to help advance the FAIRtax, HR 25 to become the law of the land.

Listen weekly as a new episode is posted every Friday.  As The FAIRtax Guys always say, When You Understand It, You’ll Demand It!
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