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.
FAIRtax: The battle of Democracy vs. Bureaucracy
The news is perpetually showcasing the terms “democracy” and “bureaucracy” in recent years. If these two diametrically opposed terms are so important to the country’s ongoing news cycle, it is useful to see how our current income tax system and the FAIRtax would integrate into this lexicon.
Merriam-Webster defines bureaucracy as “a body of nonelected government officials.” It offers another definition, “a system of administration marked by officialism, red tape, and proliferation.” Democracy is defined as a “government by the people: rule of the majority.”
While the U.S. is not technically a democracy, but rather a representative republic, we can use the term democracy loosely enough for our discussion today. So, how would we categorize the income tax and the FAIRtax under these two terms?
First, what does our IRS currently look like? According to a January 9, 2025, Federal News Network article by Jory Heckman, the IRS workforce has surpassed 100,000 employees. That’s a level that has not occurred in more than 30 years. How does our current income tax system collect our nation’s treasury receipts? The collection system is generally an on-your-honor collection system where over 200 million U.S. households and business self-report their various income sources and expense deductions, all while following over 75,000 pages of tax code, regulations, and guidance, totaling over 2.4 million words that everyone in the U.S. is responsible for understanding and accurately applying as they self-report their income on long, complicated forms called tax returns.
Furthermore, a 7.65% payroll tax is withheld and collected from all W-2 working Americans while their employers also pay a matching 7.65% to the government on every working employee. Virtually all of the 20 million people residing unlawfully in the U.S. do not file these required tax returns or pay any federal income tax.
Lastly, over $1 trillion each year is lost to illegal tax evasion. This is money that our current tax laws and regulations say we should collect, but somehow it never finds its way into the Treasury.
The question as to whether this behemoth described above sounds like bureaucracy or democracy does not even pass the laugh test. The IRS and income tax system is the height of nonelected government officials exercising outsized control over our U.S. citizenry. Laws passed by Congress are then metamorphosized into volumes of detailed tax regulations that you and I must follow down to the last footnote on the last page. Furthermore, tax courts with unelected judges make binding rulings when the thousands of pages of tax regulations are not clear enough and when conflicts arise, and of course, these rulings then become part of the universe of laws, regulations, interpretations, and rulings that must be adhered to.
Well, I don’t think any reader could see the income tax and the IRS as anything other than “bureaucracy.” What about the FAIRtax though?
- The FAIRtax is a little over 100 pages, as outlined in H.R. 25.
- The FAIRtax requires no individual tax returns.
- There are no payroll taxes that are withheld from U.S. employees. There are no federal income taxes withheld from U.S. employees.
- This allows our U.S. workers to keep their entire paycheck free of withholding or payroll taxes.
- U.S. employers are no longer penalized (7.65% of all employee wages paid) when they hire more employees.
- Only retail businesses, which comprise a very small percentage of all businesses, will collect and remit the FAIRtax.
- They will use the same systems they already have in place to collect state sales taxes.
- There will be no more tax filings for the over 90% of U.S. businesses that sell products and services to other businesses (i.e., that are not “retail” businesses).
Under the FAIRtax, U.S. residents will pay into the U.S. Treasury without even thinking about it. They will pay their federal taxes as they consume new retail goods and services. A unique feature of the FAIRtax is the “prebate” which un-taxes consumption up to the poverty level. This effectively makes the FAIRtax voluntary as only purchases of new items beyond that required to live, are taxed.
Plus, no difficult or often overlooked tax regulations are necessary to protect the working poor. The prebate keeps the 23% FAIRtax rate paid at the register effectively lower. Currently, over 70% of U.S. families make and spend $80,000 a year or less. Those families would pay an effective rate of 11.5% or less with the FAIRtax.
The FAIRtax elegantly taxes the over 20 million people illegally residing in the U.S. They don’t file Form 1040s with the IRS, but they go to the grocery store and buy clothes, cars, coffee, and candy corn. As if this drastic reduction in illegal tax evasion wasn’t enough, people residing in the U.S. illegally will not receive the prebate, so they will be paying the full 23% rate on every purchase instead of an 11.5% rate our U.S. citizens pay if earning and spending $80,000 or less a year. Wow! Studies have shown that overall, illegal tax evasion drastically falls under the FAIRtax relative to the income tax ($50 billion compared to $1 trillion each year).
As the Disney + character Kuiil in the Mandalorian says, “I have spoken.” The income tax and the FAIRtax accomplish the same goal of funding our U.S. Treasury, but they achieve this objective in vastly different ways.
How would you categorize each tax system? Democracy or Bureaucracy?
CONCLUSION
Jade’s analysis clearly points out that the income/payroll tax system is a major part of the bureaucracy that exists only for the benefit of the Elites and the bureaucracy.
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 16th 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.