In tax we trust.
This is the title of a letter posted by a group of 100 millionaires/billionaires who believe that they, as a group, are not paying enough taxes and want us to know that they are really socially conscious and want to help all of us.
Here is the text of the letter:
To our fellow millionaires and billionaires,
If you’re participating in the World Economic Forum’s ‘online Davos’ this January , you’re going to be joining an exclusive group of people looking for an answer to the question behind this year’s theme, ‘how do we work together and restore trust?’
You’re not going to find the answer in a private forum, surrounded by other millionaires and billionaires and the world’s most powerful people. If you’re paying attention, you’ll find that you’re part of the problem.
Trust - in politics, in society, in one another - is not built in tiny side rooms only accessible by the very richest and most powerful. It’s not built by billionaire space travelers who make a fortune out of a pandemic but pay almost nothing in taxes and provide poor wages for their workers. Trust is built through accountability, through well-oiled, fair, and open democracies that provide good services and support all their citizens.
And the bedrock of a strong democracy is a fair tax system. A fair tax system.
As millionaires, we know that the current tax system is not fair. Most of us can say that, while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic - yet few if any of us can honestly say that we pay our fair share in taxes.
This injustice baked into the foundation of the international tax system has created a colossal lack of trust between the people of the world and the elites who are the architects of this system. Bridging that divide is going to take more than billionaire vanity projects or piecemeal philanthropic gestures - it’s going to take a complete overhaul of a system that up until now has been deliberately designed to make the rich richer.
To put it simply, restoring trust requires taxing the rich. The world - every country in it - must demand the rich pay their fair share. Tax us, the rich, and tax us now.
The truth is that ‘Davos’ doesn’t deserve the world’s trust right now. For all the countless hours spent talking about making the world a better place, the conference has produced little tangible value amidst a torrent of self-congratulations. Until participants acknowledge the simple, effective solution staring them in the face - taxing the rich - the people of the world will continue to see their so-called dedication to fixing the world's problems as little more than a performance.
History paints a pretty bleak picture of what the endgame of extremely unequal societies looks like. For all our well-being - rich and poor alike - it’s time to confront inequality and choose to tax the rich. Show the people of the world that you deserve their trust.
If you don’t, then all the private talks won’t change what’s coming - it’s taxes or pitchforks. Let’s listen to history and choose wisely.
WHAT IS MISSING FROM THE LETTER?
Saint Jerome said, Why do you not practice what you preach?
One interesting point about the letter is that there is no discussion about what these rich people can do on their own without waiting for the government to “reform” the income tax. If they wanted to, these wealthy signers could just start making donations to the federal government.
26 U.S. Code § 170 - Charitable, etc., contributions and gifts provides that contributions made to the government for things that benefit the public are deductible as charitable contributions.
Of course, if they are sincere and want to really pay more money to the federal government, they should just make the contributions and not deduct them as charitable donations. Then each $1,000,000 of contribution to the government will not be reduced by $400,000 of income tax savings.
Of course, also missing from the letter is a description of how much tax they are willing to pay. According to Forbes, the wealth of the 400 richest Americans in 2021 was $4.5 trillion. While this is a tremendous amount of money, it represents only 15% of the nearly $30 trillion of U.S. national debt.
If these wealthy people donated one-third of their net worth, $1.5 trillion, to the U.S. government, where do they suggest it be spent? It is unlikely that any of these wealthy people have any confidence that the U.S. government bureaucrats will spend the money wisely, and the letter doesn’t address that.
It is probably tolerable, if you are making $10 million a year and paying $4.2 million in state and federal taxes to pay an additional $800,000. However, what will these wealthy signers think if the federal tax rate was increased to 70% or higher?
CONCLUSION
The wealthy people who signed the letter are the same people who live lavish lifestyles and would likely pay far more in federal taxes when the FAIRtax is enacted.
Most Americans who have investment assets and want to make a major purchase will have to sell enough of the assets, pay income taxes on the gain, and use the net proceeds to pay for their purchase.
These wealthy people who signed the letter probably all use the stratagem used by the wealthy since the start of the federal income tax—they don’t sell assets that are increasing in value. Instead, they obtain low interest rate loans on those assets. Then, if the rate of return on their assets exceeds the interest rate on the loan, they essentially have “free money” to spend as they like.
These wealthy people purchase their yachts, luxurious homes and expensive cars with their loan funds. This allows them to enjoy the lifestyle they crave and pay no income taxes until they eventually sell the assets.
Once the FAIRtax is passed, the wealthy will pay federal tax on all of their retail purchases of new goods and services regardless of where the money came from. They will be treated like all the rest of us.
Everyone is treated fairly! WHAT A CONCEPT!
This change is not popular with the Ruling Class and its minions in Congress. They’re making a lot of money selling special tax benefits to the wealthy. The FAIRtax eliminates that lucrative income source.
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!
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.”
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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