The Chairman’s Report - July 8th, 2016

  • by:
  • Source: FAIRtax
  • 04/09/2021

The Internal Revenue Service

The Bureau of Internal Revenue was created in the Internal Revenue Act that was passed on July 1, 1862.  This act also created the first income tax.  The act called for a commissioner of Internal Revenue to enforce the law. The Civil War income tax was repealed ten years later.

Congress passed a new income tax law in 1894, but the Supreme Court ruled it unconstitutional the following year.  Then in 1913, Wyoming became the last state needed to reach the required three-quarters majority of states necessary to amend the Constitution and pass the 16th Amendment.   The first Form 1040 levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

However, in 1918, the top rate of the income tax soared to 77 percent to help finance World War I.  It wasn’t until World War II that Congress introduced payroll withholding and quarterly tax payments.   Prior to this, people just paid their income taxes for the previous year in a lump sum in March. (In the 1990’s, I had the opportunity to be seated with Milton Friedman and his wife, Rose, at a lunch.  At that lunch when they found that I was promoting the national retail sales tax to replace the income tax, Dr. Friedman agreed that economically it would be much better.  His wife Rose leaned over and said that we could thank Milton for proposing payroll withholding when he was an employee of the Treasury from 1941-43.  Milton rolled his eyes and said that it was a solution to help pay for the War and it was supposed to be repealed when the war was over.)

In the 1950’s, the Bureau of Internal Revenue was changed to the Internal Revenue Service.

Power Corrupts

Lord Acton, an English historian, is famous for his warning, "Power tends to corrupt, and absolute power corrupts absolutely."

It probably should not surprise anyone that if you create an agency that is tasked with the very disagreeable task of extracting money from people, you will have to give it the power to punish those that do not comply.

In the past year, we have all been reminded of the warning by George Washington, “Government is not reason; it is not eloquent; it is force.  Like fire, it is a dangerous servant and a fearful master.”

Why did the IRS employees and their superiors act as “fearful masters?”  Because they could.  The real problem is not just some corrupt IRS employees.  The real problem is that the complexity and incomprehensibility of the Internal Revenue Code (“IRC”) literally precludes almost all black or white, yes or no type answers and this makes these types of abuses not only possible but easy.  When the IRC can be interpreted in any way that they want, an employee’s personal feelings and opinions can lead to violations of the First Amendment like the ones that have become public.

The Same Lady In A Different Dress

Many of the D.C. elites and many Members of Congress are now being forced to consider some type of “reform” of the existing income/payroll tax system.  They hear outrage from their constituents and know that they have to do something. 

Their solution?  Keep the present system but change the dress and promote it as “reform.”  They say that a flat income tax is the solution. Of course, when you look at the flat income tax proposals, almost all of them retain deductions and some of them even have more than one rate.  The reason that this appeals to the D.C. elites is that their flat tax will be easy to change after they enact it.

Real Reform

Will Rogers,a famous humorist and commentator in the 1920‘s and 1930‘s, is remembered for his statement, “Income taxes have made more liars out of the American people than golf.” He also wrote in his weekly newspaper column number 99 in 1924, "Why don't they use a sales tax? That is the only fair and just tax.” 

Like many intelligent people, Will Rogers got it right.  The FAIRtax is a retail sales tax.  It is the only real solution.

Under the FAIRtax:

  • Americans pay their federal taxes as they make purchases of retail goods and services;
  • Only retail businesses will collect the FAIRtax and file tax returns--not the rest of us;
  • The IRS and IRC will be eliminated and the FAIRtax will be collected by the states;
  • Hard work and savings will be rewarded and not punished;
  • Companies will not be punished for bringing jobs to the United States;
  • Imports will no longer have an unfair advantage over products produced in the United States;
  • The economy will grow more rapidly, jobs will increase at a faster rate and the trillions of dollars held overseas by companies will be invested back in the United States;
  • Social Security will be saved and not go bankrupt;
  • Everyone will be exempt from the FAIRtax on their purchases up to the poverty level, but everyone will see the costs of government;
  • Individuals and not bureaucrats will determine how much tax they pay by how and when they spend.


George Washington said, “If the freedom of speech is taken away then dumb and silent we may be led like sheep to the slaughter.”  We see how the IRC is being used by federal employees to take away the freedom of speech of millions. What is the next step?  Do we have a country no longer operating under the Constitution but according to the whim of the government?   We must eliminate the income tax and replace it with the FAIRtax.  There is no other way.

1040 Club and Contributions
Thanks to all of you who are joining and/or remaining members of the 1040 Club. AFFT's 1040 Club members contribute $10.40 per month to AFFT. This provides a steady funding platform and allows us to ensure that we keep the pressure on the elites to prevent them from “putting lipstick on a pig” and not doing real tax reform.
If you are not yet a member of the 1040 Club, or if you are a member but want to join for someone else, please go to this link and sign up.
If you believe that all you can contribute to our efforts is $10, please go to and donate.  We have our best chance now and need your help.  Many of us prefer to make one donation as opposed to monthly donations and this greatly helps.
FAIRtax Power Radio
There are many ways in which people can help us educate more Americans about the FAIRtax.  In Programs 29 & 30, the FAIRtax Guys (Bob Paxton and Ron Maiellaro) describe how listeners can support and promote our efforts. Program 29 concentrates on simple but effective things for people with busy schedules, whereas Program 30 suggests some activities that might take a little more time.  The programs are free to the listeners. Please share these links with your friends and relatives.
We're pleased to announce that FAIRtax Power Radio is now available on iTunes and Spreaker.  A new episode will be posted every Friday morning but you can listen at any time by going to one of these sites. There is no cost to listen. By this time next week, we expect to be on iHeart Radio too. 
Recently Bob and Ron decided to start from scratch discussing the many problems with the current income tax system and the reason why REAL tax reform is so desperately needed in our country.  In episode 3, Thomas Jefferson paid them a visit and gave his opinion of our federal income tax.  As you might guess, he wasn’t very happy with what he saw.  Then we searched for “the perfect tax system”.  
In future episodes, you will hear from Bob “Paxworthy” famous for his “You Might Be A FAIRtax Fan!” routine.  The FAIRtax Guys are always open to your thoughts and opinions.  You can contact them at  
Episodes are still available on SoundCloud and YouTube but Spreaker is the site that lets up branch out to other, more popular sites that cater to podcasting.
The FAIRtax Guys will continue with FAIRtax Power Radio until HR 25 becomes the law of the land in 2017.  After that, I’m sure the episodes will go into the Radio Hall of Fame!  Please share this information with your constituents and anyone else you care to.  The more people we educate about the FAIRtax, the better the chances are that it will become a reality next year. 
To listen to FTPR on SoundCloud (free and audio only) go to these links:
FTPR Program 29 on SoundCloud
FTPR Program 30 on SoundCloud
FTPR Program 29 on YouTube
FTPR Program 30 on YouTube
AFFT National LOGO Store
Rudy has notified me that the special autographed copies of the the FAIRtax book are now sold.  Congratulations to those who were lucky enough to acquire a copy.

When visiting the Store, don’t forget to order a supply of FAIRtax Palm Cards. Besides handing out palm cards at meeting and events, whenever you send mail through the post office, consider including at least one FAIRtax informational palm card in the envelope - keep spreading the word.
Please take a moment and visit our store by clicking here.
Thank You For Opening The FAIRtax Chronicles, Our Sponsored Mailings
We plan to do several of these mailings each month. If you take a minute to open the sponsored emails and click through to the website, you are making an in kind contribution to AFFT. It is not required to actually make a purchase, but your minute of time will ensure that AFFT is paid ever larger amounts from people paying for us to send their offers to our supporters.
Again, we are making every effort to ensure that we work with only reputable companies. If you feel that any FAIRtax-sponsored email is objectionable, please email us at and tell us why. You can also opt to not receive these sponsored email messages but still receive FAIRtax emails.

Thank you for staying FAIRtax strong!

by is licensed under

Help FAIRtax Become The Number One Issue in 2024

Enacting the FAIRtax must be a prominent topic in these times. We did it before, we can do it again, but we need your help!

Help out with a One-Time Contribution

Your gift of $25, $50, $100 – even $1,000 or more if you can possibly spare it – will help bring an end to the IRS and promote a FAIRtax. So, I urge you, please give as generously as you can.

Billing information (REQUIRED)

Payment information (REQUIRED)

To donate by check:
Americans for Fair Taxation
PO Box 4929
Clearwater, FL 33758

If you need to make changes to your existing Monthly Re-Occurring Donation with new card or billing address information, then Please call Adam Yomtov our New York State Co-Director. He is assisting with the administration of our donations, technology services, and website.

Please note: Inputting your new information at our website won't update your donation. The only way to update is by calling Adam Yomtov 917-689-3931 mobile.

Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!