Today’s Chairman’s Report is written by Jade Walle. Jade is a partner of a CPA firm and is on the board of Americans For Fair Taxation. Jade explains why the FAIRtax will enable Americans to accomplish even more.
It seems everywhere we look today there is a discussion of federal spending and our national debt. Based on an October 12, 2021 article on thebalance.com by Kimberly Amadeo, our current national debt is $28.4 trillion. If we spent $1 million a day, it would take us 77,808 years to spend this much. With 330 million Americans, this is over $86,000 of debt for every man, woman and child in the country.
Our current system cannot sustain this path much longer. In 2011, S&P downgraded our U.S. debt from AAA to AA+. There have been recent rumblings that another downgrade could occur as well. Now, the S&P AA+ is still “investment grade” with a deemed “very strong” capacity to repay, but imagine that our debt keeps growing to the point where the debt holders just want their money back and there aren’t enough entities willing to purchase more debt to handle our insatiable spending appetite. This would lead to what is called a failed auction. If this occurs, the entire house of cards falls down. Imagine your worst case scenarios for American life, because they’ll be happening real time right in front of our eyes.
In the interest of solving the growing debt problem, the FAIRtax is an incredible system that would replace our current income tax system. However, wouldn’t the FAIRtax be just one factor in the overall equation? After all, when you’re talking about the national debt, you have to consider both inflows and outflows.
So, the question becomes, can the FAIRtax provide a jolt to the system? Can the FAIRtax help reduce, stop or at least slow our ever-growing national debt?
Of course, the FAIRtax only affects the nation’s inflows, however there are several indirect effects that will lead to an eventual decrease of our growing national debt. These concepts include, among others:
- Tax evasion;
- U.S. economic expansion; and
Our annual budget deficit is projected to reach $1 trillion by 2026. The FAIRtax is estimated to reduce illegal tax evasion by 95%, relative to our current income tax system. The FAIRtax would almost singlehandedly wipe out our annual budget deficit, based on our typical $1 trillion a year in deficit spending, prior to the past 18 months and the COVID-19 pandemic.
Under any system of taxation, evasion will still exist, but the configuration of our tax collection system changes everything! The FAIRtax does not tax what is sacred to us, (i.e., our income). Retailers are great at collecting cash and taxes and the FAIRtax enables retailers to collect all our nation’s tax receipts, drastically decreasing the number of tax collectors (retailers rather than all businesses and individuals).
- Here are just a few of the many U.S. economic results of FAIRtax enactment based on decades of thorough research:
- Real wages rise 10% (after years 1, 10 & 25).
- Disposable personal income is up 2% (year 1); 9% (by year 5); & 12% (by year 10).
- Consumption is up 2.4% (year 1); and is up 12% (by year 10).
- U.S. GDP increases 2.4% (year 1); and is up 11% (by year 10).
The FAIRtax accomplishes this for many reasons, including increasing the current tax base of $5 trillion to $9 trillion with no exclusions, exemptions, deductions or loopholes. The incentive to keep trillions in funds offshore suddenly evaporates and comes back onshore as America becomes the world’s tax haven (think 0% corporate income tax rate). Although criminals will exist as long as the sun rises in the east, the criminal underground and anyone in the U.S. illegally will finally pay their full federal tax burden as they consume at the retail register.
Also, the trade deficit will drastically shrink as American products immediately become competitive on the world stage, with the estimated 22% cost of embedded taxes eliminated from U.S.-made goods sold abroad.
With one national FAIRtax rate and prebate schedule, any changes to the tax system will receive unprecedented sunlight, scrutiny and public interest.
Currently there is federal spending, but there is also the ability to reduce net treasury receipts through tax credits, deductions, adjustments and exemptions. This reduction to our Treasury’s coffers through reduced collections will be completely eliminated under the FAIRtax, meaning that a great deal of the smoke and mirrors of the current income tax system will completely vanish. Only true federal spending will be at issue, which will by default receive heightened attention and scrutiny.
Let’s think about how this would play out exactly. After enactment, if a crafty politician wants to exclude certain expenditures from the FAIRtax to pander to a particular interest group, for example excluding all purchases of prescription drugs from the FAIRtax, he or she will need to either reduce the prebate (good luck getting a groundswell of political support on this idea), or raise the uniform FAIRtax sales tax rate (again, not likely a winner with the U.S. public, given every person who consumes in the U.S. would be personally affected). This fact, along with the protection of the prebate un-taxing spending on life’s necessities, provides an incredible natural disinfectant to future potential meddling with the FAIRtax.
The FAIRtax will:
- drastically reduce tax evasion and by default increase tax receipts;
- create a booming economy the likes of which we’ve never seen and by default increase tax receipts; and
- elegantly create the most transparent tax system ever conceived.
What can each of us do?
We can write letters and make calls to our elected representatives demanding that if the government really wants to eliminate the burden of filing income tax returns, they should enact the FAIRtax and do away with tax returns altogether.
The great 18th century Irish statesman Edmund Burke made a statement that applies in many ways,
“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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