The Chairman’s Report August 8th, 2025

This week’s Chairman’s Report is written by Jade Walle.  A practicing CPA has been on the American For Fair Taxation board of directors. 

The FAIRtax or Income Tax- Which is better for U.S. business?

With the one big beautiful bill (“BBB”) signed into law on July 4, 2025, a natural question is which is better for business, the current income tax system as amended by this new law or the FAIRtax?

We should acknowledge that the new BBB did improve the landscape within our current income tax system.  For example, the child tax credit would have reverted back to $1,000 in 2026 without the BBB, and now it has been increased to $2,500 per child.  All current income tax brackets would have increased beginning in 2026, and now they will remain at their current levels.  An increase in income tax rates would have been like a wet blanket on the U.S. economy. 

Other favorable changes include no tax on tips, overtime, and a new expanded deduction to shield most Social Security income, among other benefits.

What if we were to look beyond the income tax system outside of the seemingly endless rearranging of the Titanic’s deck chairs though?  The income and payroll tax system saddles the American people with $1 trillion of annual illegal tax evasion and endless loopholes, exclusions, exceptions, adjustments, deductions and credits. 

The complexity is such that it takes a PhD to even begin to understand it.  No one on earth comprehends it fully.  Not even the people who wrote it.

The income tax is notoriously unstable.  Thousands of changes to the tax code are proposed every Congressional session, and there’s a lobbyist behind just about every one of them.  The end result is a system that imposes an immense cost on U.S. businesses in both time and money.   We’re talking about billions of dollars and hours each and every year. 

Companies must hire high-priced tax attorneys, consultants, and CPAs to scenario plan, strategize, and model out effects of potential changes to the code.  This uncertainty often leads to significant job-producing, economy-cultivating expansion and organic growth investments falling by the wayside.  So, if the current system’s ship is sinking, why do we keep attempting to patch up its broken chandelier? 

Under the FAIRtax, U.S. businesses will have a consistent, level playing field that treats all businesses fairly, with no tax on any business income!  In fact, only an extremely small percentage of U.S. businesses would need to contend with the FAIRtax at all.  Only those businesses engaged in retail sales directly to consumers will have to collect and remit the FAIRtax. 

That means that just a few thousand U.S. companies (e.g., Wal-Mart, Home Depot, Macy’s, Amazon, etc.) would bring in the vast majority of FAIRtax receipts.  This will drastically reducing illegal tax evasion by over 90 percent.  Most U.S. businesses are wholesale companies, selling products or services to other businesses along the supply chain flow.  They would be free of business tax compliance obligations altogether. 

Further, American companies will no longer have an employment penalty.  The current obligation to match each employee’s 7.65% Social Security and Medicare tax withholdings goes away with the FAIRtax.  Think drastic cost decreases for all U.S. businesses! Also, the built-in, embedded, and difficult to see cost of income and payroll taxes along the supply chain, estimated to be over 20% of the cost of all U.S. retail goods and services, suddenly falls out of the cost buildup of U.S.-made products and services.  I’m feeling a groundswell of businesses with an insatiable desire to relocate manufacturing facilities and headquarters to the U.S., the new tax haven of the world!

The FAIRtax does bring some disadvantages that we must also acknowledge.  The ability to divide Americans with proposed changes to the income tax code (e.g., the rich must pay their “fair share”) would no longer be possible.  Having less strife in our country can only lead to ruinous things. 

Every U.S. citizen would keep their entire paycheck, receive their monthly prebate, and pay the FAIRtax when they purchase new goods and services.  The ability to avoid the FAIRtax on life’s largest expenditures such as homes and cars creates a freedom and giving people control over when they pay their taxes would clearly be unhealthy for our citizens. 

The ability for Congress to insert complex nuances, exceptions, and loopholes into the tax code for special constituents, lobbyists, and campaign contributors would vanish overnight.  The party that controls Congress would no longer be able to reward their friends with tax breaks and punish their enemies with tax penalties.  This could cause the entire Washington establishment system to break down.

The IRS’s unfettered access to every U.S. citizen’s personal financial records would go away.  This includes not only income, but property ownership and their home’s details down to its square footage, bank accounts, investments, their healthcare coverage, and even their automobile’s make, model, and mileage. 

The government’s ability to know everything about you would be permanently impaired with the FAIRtax.  The ability to seize Americans’ bank accounts without due process, communication, or cause would vanish as well.  What would the government do without civil asset forfeiture?  I’m aghast, the humanity! 

The FAIRtax would also remove the ability of over 20 million people residing in the country illegally to escape paying into the U.S. Treasury.  Currently, people in the U.S. illegally do not file Form 1040 with the IRS each year to report their income and remit income tax into our U.S. coffers. 

If 20 million people on average spent $50,000 a year multiplied by the 23% FAIRtax rate, that’s $230 billion in annual incremental Treasury receipts (a quarter of the current $1 trillion annual illegal evasion).  Under the FAIRtax, this conservative estimate of 20 million or more people would pay the FAIRtax, with no prebate, as they consume and live in the greatest country on earth. 

Although $230 billion of tax collections are nice, illegal immigration would be disincentivized, a huge handicap of the FAIRtax that we have to concede.

Given the differences between the FAIRtax and income tax, which do you believe would be better for U.S. businesses?  I guess the question really is, should we continue to patch up the Titanic, or get a new ship?

CONCLUSION

Jade clearly explains how the FAIRtax eliminates all of the drama that was needed to pass the BBB and also the complexity needed to write the countless provisions.

While a 21% corporate tax rate is ok, how much better would it be if it was 0%

While no income tax on tips and overtime is nice, the recipients still have to pay the 7.65% FICA tax.
Under the FAIRtax, the tax rate on overtime and tips is really zero because work is no longer taxed.

Many of you have labored tirelessly for freedom from the federal income tax and the IRS.  You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.

It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite.  We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax. 

Make no mistake about it.  The FAIRtax is a grave threat to the Ruling Elites.  It will strip them of their power and their ability to control us though the tax system.  Their opposition to the FAIRtax will be fierce and unrelenting.  And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power. 

However, with the support of this President, we can finally eliminate the income tax and the IRS!!!

Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16^th Amendment as well so no future administration can ever shackle the American people with an income tax again.

We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.

This will take the diligent efforts of all of us.  We need your financial assistance, and we need your grass roots assistance.

If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.

Please email us at info@fairtax.org and we will give you some options on how you can best help us. 

At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax.  If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already.  If not, ask why not.  If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them. 

Please go to this link to invest in AFFT and help us pass the FAIRtax.  It’s an investment in your and your family’s future. 

THE SOLUTION—PASS THE FAIRTAX!

Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations?  The only way that they will is if the rest of us demand it!
   
Isn’t it time to end this ludicrous tax collection system and the IRS?

HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES

By contributing (investing) $10.40 per month, you help provide a financial base to AFFT.  If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
 
Please go to this link to invest in AFFT and help us pass the FAIRtax.  It’s an investment in your and your family’s future.