The Real Problem
Joe Biden is now the presumptive Democrat presidential nominee.
Mr. Biden has indicated he would like to return to the tax rates and deductions in place before the Trump tax cuts.
In an article published in the Wall Street Journal July 14, 2020, Philip DeMuth stated, if the Trump tax cuts were allowed to expire or be terminated by Mr. Biden as he has promised, this would be the result:
- For a married couple filing jointly with $78,000 of ordinary income, their current marginal rate is now 12%. Under Mr. Biden’s proposal, their marginal rate will more than double to 25%
- The Trump tax reform doubled standard deductions providing a single taxpayer with a standard deduction of $12,200 and a married couple filing jointly with $24,400. This greatly simplifies things for many taxpayers by eliminating the need to itemize deductions. Mr. Biden would cut those deductions in half and require a number of taxpayers to again file itemized returns
- The $11.58 million exclusion from estate taxes would be reduced to $5.29 million or even lower if the Bernie Sanders faction of the Democrat Party prevails
- The Alternative Minimum Tax will again apply to 7 million filers
- A 12.4% Social Security payroll tax will be imposed on incomes over $400,000, if the more radical proposals of lowering the $400,000 threshold to $200,000 aren’t passed
- The capital gains tax rate would increase to a maximum of 39.6%
- The capital gains tax could be applied to assets which have increased in value, but have not yet been sold. In other words, people could be paying taxes on money they have not yet received
The purpose for pointing all this out isn't to attack Mr. Biden for his proposed Infernal Revenue Code changes, but instead to illustrate the utter absurdity of a system allowing for this type of foolishness to go on in the first place
Inability To Plan
One of the casualties of a constantly changing Infernal Revenue Code is our inability to plan for the future. This instability is a MAJOR headache for businesses of all sizes, and it’s detrimental to individuals as well. When we make financial decisions, we don’t want to have to go back and re-examine them every year.
For example, if we purchase a home on a 30-year fixed mortgage, we know our payments are fixed for 30 years. If we purchase a car with a 48-month loan, we know if we make the payments for 48 months the car will be ours. We can plan our monthly budgets knowing these expenses won’t suddenly and unexpectedly go up. This provides us with the stability we need to manage our finances in a way letting us meet all of our obligations.
There was a time when many people financed their homes with a “variable” mortgage. They paid an initial rate, but the lender was allowed to adjust the rate up or down according to market conditions. Sometimes the adjustment worked in the borrower’s favor and his monthly mortgage payment went down, but often the adjustment meant the borrower had to fork out more money every month.
If we are getting a paycheck, we do our budgeting based on our net amount, the amount the government has decided we can keep after they deduct income/payroll taxes. We decide how big a house we can afford, what kind of car we can buy and what other expenses we can take on based on our net income.
When we retire, we budget based on the income we expect to receive from all sources.
However, the courts have ruled the provisions of the Infernal Revenue Code can be modified at any time. All it takes is a majority in Congress and The President’s signature. This can happen with total disregard for the economic cost to people who made decisions based on previous Infernal Revenue Code rules.
The Infernal Revenue Code, for example, could be amended to provide:
- IRA’s valued at over $100,000 will owe income tax on the increase in value from the previous year. However, if you use money from the IRA to pay these new taxes you will have to pay an additional 10% penalty
- All estates over $1,000,000 would be taxable at a rate of between 40% and 80%
- Social Security & Medicare benefits will be reduced by 50% if your household income exceeds $75,000 per year or your assets are valued in excess of $500,000, including the value of your home
- For assets valued in excess of $100,000, any increase in value will be taxed as ordinary income even if the asset is not sold. Again, you could be paying taxes on money you haven’t received
- Employer-paid health insurance premiums for all employees earning over $50,000 per year will be counted as taxable income
- The standard deduction, currently $12,200 for a single taxpayer, would be cut in half for annual incomes over $100,000 and phased out entirely for annual incomes in excess of $200,000
- All employer contributions to retirement plans would be taxed as ordinary income for all taxpayers with annual incomes in excess of $100,000
- Life insurance proceeds in excess of $100,000 would be taxed as ordinary income
Many people say, “There is no way they would be stupid enough to make these changes”. Unfortunately, assuming Congress and a new President would be swayed by people being upset is naive. Remember, they’re of the mindset they know best and they don’t care what kind of pain and hardship they impose on us ordinary people. It’s all for our own good.
Again, Congress and The President hold all the power. Whatever they want to do to the tax code becomes the law of the land.
The FAIRtax Is The Solution
In a free country, the money we earn from any source is our money. With a sane tax system:
- We only owe taxes to the government when we make purchases
- We are sovereign Citizens, not subjects waiting for The Ruling Class and their minions in D.C. to decide how much of our money they are going to take
- We don’t have to feed the lobbyists who delight in raking in money from special interest groups whenever a revision of the income/payroll tax is suggested
- The main thing is, as Citizens and not subjects, we have the right to control our own lives
Yes, we will have to pay The FAIRtax on our purchases of new retail goods and services and this will reduce the amount we have to spend, just like the income/payroll tax. But, like the 30-year mortgage, The FAIRtax is predictable and stable. Our own purchasing decisions control how much tax we pay. Congress and The President can’t step in and mess things up by deciding they want more of our money.
This is the type of control Citizens MUST have over their own financial affairs. The Ruling Class and their minions believe we aren’t Citizens, but instead their subjects. Consequently, like rulers have regarded subjects for thousands of years, they believe our only purpose IS TO ENRICH THEM.
Conclusion
Jean Baptiste Colbert, the Minister of Finances under King Louis XIV, said, “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.
For many years, The Ruling Class and their minions have tried to apply this principle as they stole from us and enriched themselves.
Many people are afraid The Ruling Class and their minions in D.C. will punish them by raising their taxes or cutting the benefits they need to survive. Does this sound like we are Free Citizens?
The Ruling Class and their minions in D.C. are very afraid The American People will find out the extent of their greed and rise up. They are more afraid of us than we should be of them. We have the power to take our country back, all we have to do is demand it.
Demand Congress To Pass
The FAIRtax—the only “Fair tax”!
The FAIRtax—the only “Fair tax”!
The author George Bernard Shaw said these words in a play he 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?”
President Trump, Embrace The FAIRtax, the only real tax reform! Stand up to the Swamp. They will oppose you anyway because they see you as a threat. What have you got to lose?
The truth is the truth! Remember, if we don't continue to tell the truth and demand a change, then George Orwell's "1984" quote may foretell our children's future: “If you want a picture of the future, imagine a boot stamping on a human face, forever"
Thank you for staying FAIRtax strong!
Yours In Liberty! Yours In Freedom!
Steve Hayes
Chairman, Americans For Fair Taxation
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