A Theoretical Note On Tax Evasion: The Case Of The American FAIRtax Plan

This is the title of an article published in Scientific Research Publishing.  The authors are Dr. James Barth, Dr. Yinan Ni and Dr. Richard Cebula.  

Dr. Cebula is the author of Estimated Future Tax Evasion under the Income Tax System and Prospects for Tax Evasion under the FairTax: New Perspectives which accurately calculated the amount of current evasion and the projected rate of growth.  His conclusions were in stark contrast to the IRS official position at the time, but have now been acknowledged as true by the IRS.

Here is a summary of the new article Doctor Cebula and his co-authors:

• An issue that always arises with any tax system is the incentive of individuals to evade the tax, whether it is an income tax or a sales tax. 
• Therefore, it is important to consider the extent to which a new sales tax system would be preferable to an income tax system to reduce the incentive and ability of individuals to engage in tax evasion.
• Any effort to evade a FairTax arguably involves at least four types of “transactions costs.” 
• First, an individual would have to spend time, energy, and possibly some money to find an accomplice who would be willing to help him/her evade the FAIRtax. 
• Second, an individual considering evading the FairTax may also recognize that if successful, such an action is not only illegal but immoral and unethical. An individual could therefore incur psychological transactions costs in the form of a “conscience cost.
• Third, if successful in finding a colluder in a tax evasion scheme, an individual would be exposed to potential penalties imposed by the audit-equipped tax collection authority, ranging from a fine to a fine plus imprisonment, should the tax evasion somehow be discovered.
• Fourth, suppose that an individual can recruit an accomplice.  An accomplice isn’t going to expose him/herself to being prosecuted for tax evasion for nothing.  The evader will have to pay the accomplice something.  Such payment could be denoted as a BRIBE. And it will have to be big enough to offset a would-be collaborator’s perception of the risk involved in participating in an illegal venture.
• The FAIRtax will be collected by the 45 states and the District of Columbia, accounting for 98% of the total U.S. population. 
• Nearly all transactions in retail stores involving new goods and services will be recorded at the state level and subsequently reported to existing state sales tax authorities. These records provide formal data on transactions and the FairTax payments due, along with state and local sales tax payments due. It is expected that state and national sales tax collection will be combined on a single report because the state sales tax agencies will be administering the FairTax.  
• The State of California Board of Equalization (BOE) has found sales tax evasion to be minimal and that more than 98 percent of California businesses are operating within the correct legal taxation parameters. 
• Of the sales and use tax revenue, 93% comes from voluntary compliance, 2% from compliance activities (audits, collections, etc.), and 5% goes unreported and/or unpaid. 

Conclusion

There is a growing recognition among economists that do not rely on the present income/payroll tax system for their income and jobs--there is a much better alternative than the income/payroll tax system.  The three economists who prepared this new study were just looking at the best system to fund the federal government.

They were not trying to promote a social agenda. They were not trying to promote either a conservative or liberal political agenda.  They were not trying to attack the income/payroll tax.

They didn’t explain how the present income/payroll tax system harms the American economy and costs U.S. jobs.  They could have, but that was not their purpose.

Of course, the D.C. elite and their minions in Congress are not idiots—even though sometimes we wonder.  They totally understand all of the economic problems created by the income/payroll tax system.  They also are all familiar with how the FAIRtax will solve most of these problems.

They realize that the FAIRtax will be much harder to evade as the present income/payroll tax—for the reasons the three economists point out.

Yet they persist in doing all that they can to prop up a corrupt and failing system.  If they really believed, as many say, that the purpose of any tax collection system is to fund the federal government with the least harm to the citizens, they would immediately demand the FAIRtax.

However, the obvious real agenda of the D.C. elites and their minions in Congress is to use the present income/payroll system to their benefit and not ours.
The FAIRtax eliminates:

• The ability to sell tax benefits to the highest bidder. 
• The ability to enrich tax lobbyists who will in turn make generous donations to the politicians. 
• The need for us to ever again file any type of report showing our business or personal income.
• The need to do all business planning with an eye not only to the current income tax laws but how a change could affect or even destroy the viability of their plans if the tax law changes in an unfavorable way.
• The need for any of us to make payments to tax advisors.
• The need for government to snoop into our financial dealings.
• The ability to change the tax rules to punish anyone or any group with whom the D.C. elite and their minions in Congress disagree.

The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
 

Join us and TAKE BACK CONTROL OF OUR COUNTRY—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.

We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
 
“Nobody made a greater mistake than he who did nothing because he could do only a little.”

We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your 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?

 

We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!

If you want to prevent the IRS from being further weaponized to punish those of us who may object to the D.C. opinions and dictates of what is good for us, then help us PASS THE FAIRTAX!

The IRS will be gone and we will pay our taxes when we make purchases.  WE and not D.C. Elites will decide how much federal tax we pay!

If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org.  Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.

Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax

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.”

Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?”

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