The Chairman’s Report June 17, 2022

  • by:
  • Source: FAIRtax
  • 06/17/2022

Supply Chain Crisis—Not Covid—Not The Ukraine War
But The Income/Payroll Tax System


Everyone in America knows that there is a supply chain crisis.  We are all used to seeing pictures of ships at U.S. ports waiting to unload their cargos.  All of us have experienced frustration when we go to our grocery store and find that they are out of or have rationed the purchase of many things like toilet paper, paper towels, baby formula, and women’s sanitary napkins.

The pre-2020 days of being able to walk into a car dealership, pick out a car on the lot, negotiate a price lower than the sticker price and drive off in a new car in the same day are long gone.  Now, the dealers who used to have 120 new cars on the lot may have 20.  For the more desired cars, you have to put down a $500 to $1000 deposit to be on the list for the car you want.  Instead of negotiating a lower price than the sticker price you are faced with trying to negotiate down the charges added above the sticker price.

Why did the automobile world and many other parts of our economy change so much?  They need products from overseas that are no longer produced in the U.S. in large part due to our insane income/payroll tax system.

A Simple Way to Reduce the Supply Chain Problem

While the Covid pandemic, the Ukraine war and reckless deficit spending around the globe have certainly contributed to inflation, it would not be so bad if more products were available today.  Since inflation is more money chasing fewer products, if you increase the supply, you will reduce inflation.

Anyone can understand that getting products to US store shelves would be much easier and much quicker if those products and the components that go into them, were made in the US.  You wouldn’t have to wait for weeks or months to have a ship unloaded and then have the products shipped via truck or rail.  

You wouldn’t have to worry that the Asian countries are going to shut down their plants if they believe it will help them fight a pandemic or other perceived crisis.  Many companies that relied on products from Asia have gone out of business because they could not deliver the products that they had sold and had to refund their customers’ money.  Some were able to survive by getting the products they needed to stay in business from other sources.

Members of Congress and the Biden administration want to provide incentives for consumers who purchase products that were made in the U.S., but they refuse to consider the remedy that would most help U.S. companies—replacing the income/payroll tax system with the FAIRtax.

Since World War II, our income/payroll tax has done one thing very well—it has penalized U.S. companies and rewarded foreign producers who export products to the U.S.

Ian Fletcher, former Senior Economist of the Coalition for a Prosperous America, wrote an article entitled, Sorry, But the U.S. Does Indeed Have a VAT Problem.  It addresses the problems that US producers face when competing with companies based in foreign countries that have a value added tax (VAT).  Since all of our trading partners have a VAT, this puts US manufacturers at a severe disadvantage on the world market.

The VAT is added at each stage of a product’s development from raw material to a finished product.  For example, when ore is mined that will be used for jewelry,  the mined ore has an increased value and the VAT is applied to the increased value.  Then the ore is refined and the VAT is levied on the increased value.  This continues at each step of the production process until the jewelry is actually sold.  The average VAT is 15%.  Some countries charge more and others a bit less.

The article states:
  • The VAT is rebated on export. All the accumulated VAT that has built up from the product passing through the supply chain is stripped off, and the exporter gets a check from the government. Why? Because VAT is a tax on domestic consumers (though it's levied at every step in the supply chain), and the consumers of exported products are abroad.
  • When the U.S. exports goods, because we don't have a VAT, there's no tax rebate on export. But, and here's the kicker, the cost of the taxes levied on US producers are still embedded in the price of the exported goods.
  • When the U.S. imports goods, we don't levy a tax to reflect the fact that consumers of imported goods need to pay their same fair share of society's tax burden as consumers of domestic goods. The foreign goods, which bear neither a foreign nor a domestic tax burden, have an advantage.
  • The correct solution is to add a VAT but reduce existing taxes by the amount of money the VAT raises.
The modern VAT came into use in the 1950’s as a way to stop the widespread evasion of local retail sales taxes.  Back then, there were no electronic point of sale accounting systems and there were no mega-retailers like Amazon, Walmart and Target.  Today, 92% of retail sales in the US are done by less than 10% of the country’s retail businesses.
Consequently, there was rampant evasion, and it was thought that by making all of the producers of the product pay the VAT at each step, they would be able to reduce evasion.  In fact, in many countries this has proven not to be the case and the VAT is widely evaded.

The U.S. needs a way to level the playing field.  We don’t need a VAT in the U.S., this just adds unneeded complexity and costs.  The answer is a national retail sales tax—the FAIRtax.  Instead of making all producers of products calculate the added value at each step of the process, you simply levy the tax when a new product is sold to the ultimate consumer.

When the tax is levied only on the retail consumer, then there are no tax costs embedded in the prices of US exports.  This means that with the FAIRtax, U.S.-produced goods will sell for 12% to 20% less than they do now in the U.S. and the manufacturer can still make the same profit.

In addition, US consumers will also pay the FAIRtax on the purchase of imported goods.  The FAIRtax eliminates the 15 to 20 percent price advantage that imported goods currently enjoy.  The result will be more American manufacturing and more American jobs.


Some years ago, many local small businesses were selling appliances, clothes and numerous other items.  Because these businesses, unlike the federal government, have to make a profit to remain in business, most have not survived because of the competition from companies like Walmart, Target and Amazon.

Some small specialty retailers have survived, but now many of them are facing increased pressure from the huge retailers who can buy at much cheaper prices and sell for lower prices.

It is unlikely that many of these local stores will ever be able to compete with the big retailers, but it is certain that we can see a huge increase in the number of products that are made in the U.S. from components made in the U.S. if we pass the FAIRtax.

No one can quantify the amount of increased domestic production when the FAIRtax is enacted.  U.S. producers will still have to make quality products and do so at a competitive price.  

However, what we know using simple math is that U.S.-produced goods can be sold for less and that the competing imported goods will no longer be able to compete at prices that are 15% to 20% less than the products are sold in their home country.

​​​​​The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with 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.”

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!


The IRS will be gone and we will pay our taxes when we make purchases.  

WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!

WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us.  It will be clearly shown on every retail receipt.

If you have friends who don’t know about the FAIRtax, send them to  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

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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