THE INCOME TAX—RIGGED TO INCREASE THE WEALTH OF THE ELITE FEW AT THE EXPENSE OF THE REST OF US
In recent years, a series of bombshell reports confirmed what many Americans long suspected: the wealthiest people in the country often pay a smaller percentage of their "income" in taxes than the average teacher, firefighter, or nurse.While we are continually promised that the current progressive income tax system taxes higher earners more, it has a significant blind spot: it only taxes realized income. That’s money that you actually have in your hand, like your paycheck, or proceeds from the sale of stock, real estate or some other capital asset. The unrealized wealth growth of the ultra-rich remains virtually untouched.
How the Rich Avoid Taxes
For most Americans, taxes are unavoidable because their income comes from a W-2 wage. For billionaires, however, wealth is primarily held in stocks, real estate, and other assets. Under current law, this wealth is not taxed until the asset is sold.
- The "True Tax Rate": A landmark investigation by ProPublica revealed that between 2014 and 2018, the 25 wealthiest Americans saw their wealth rise by $401 billion, yet they paid only $13.6 billion in federal income taxes—an effective "true tax rate" of just 3.4%.
- Zero-Tax Years: According to IRS data, industry titans like Jeff Bezos and Elon Musk have had years where they paid $0 in federal income tax, despite their net worths increasing by billions.
- The "Buy, Borrow, Die" Strategy: The wealthy often live off low-interest loans secured by their stock portfolios. Since loans aren't considered income, they can fund a lavish lifestyle without triggering a tax bill. Upon death, the "stepped-up basis" rule allows their heirs to inherit these assets tax-free, as noted by the White House Council of Economic Advisers.
The FAIRtax Solution: Taxing Spending
The FAIRtax, a national retail sales tax, abolishes the federal personal and corporate income tax, payroll tax, gift tax and estate tax, replacing them all with a single tax on the purchase of new retail goods and services.
1. Capturing Luxury Consumption
Under a sales tax, the "Borrow" phase of the “Buy, Borrow and Die” wealth strategy becomes a taxable event. If a billionaire borrows $100 million to buy a new superyacht, a new private jet, and a new estate, they will pay the national sales tax at the point of purchase.
"The FairTax is not riddled with shelters and loopholes... wealthy taxpayers cannot minimize what they pay in taxes, regardless of how many lawyers they hire." — U.S. Rep. Buddy Carter
- No Cap on Consumption: Under the current system, Social Security taxes are capped at a certain income level ($168,600 in 2024). Under a sales tax, there is no cap. A billionaire buying a new $200 million mega-yacht pays the full tax on every single dollar of that purchase.
- Taxing "Shadow" Wealth: Wealthy individuals often use offshore accounts or complex corporate structures to avoid "income." However, it is nearly impossible to buy a luxury penthouse or a fleet of cars in the U.S. without paying the retail sales tax at the point of purchase.
- Fairness in Luxury: A family of four buying groceries and school supplies is protected by the prebate. A billionaire buying a third vacation home is not.
2. Broadening the Base
A consumption tax reaches the IRS estimated $1 trillion "underground economy". International tourists who currently pay no U.S. income tax also become taxpayers under a sales tax. By shifting the tax to the cash register, the government collects revenue every time wealth is spent in the U.S. economy.
3. Protecting the Poor: The Family Consumption Allowance—the Prebate
Critics often argue sales taxes are "regressive" because the poor spend a higher percentage of their income than the rich.
To solve this, the FAIRtax sends a check at the first of the month to every household to cover the tax on essential spending up to the poverty level for that household.
Comparison: Income Tax vs. National Sales Tax
| Feature | Current Income Tax | FAIRtax |
| Primary Target | Wages and Realized Capital Gains | All New Retail Spending |
| Billionaire Strategy | Avoid realizing income | Pay tax on all new luxury purchases |
| Complexity | 70,000+pages of code | Simple point-of-sale collection |
| IRS Requirement | Extensive audits and filings | No personal IRS filings required |
| Regressivity | Progressive (in theory) | Not Regressive |
Conclusion
While the current system relies on a definition of "income" that the wealthy can easily manipulate, the FAIRtax relies on a metric that is much harder to hide: spending. By taxing the outflow of money rather than the inflow, the FAIRtax ensures that the more an individual enjoys their wealth, the more they contribute to the nation’s revenue.
The FAIRtax creates a sliding scale where the more you spend on luxury, the higher your actual tax rate becomes. This table shows the effective FAIRtax rate for a family of four assuming that every dollar is spent on new retail goods and services.
| Annual Spending | Total Tax Paid (30% markup) | Annual Prebate | Net Tax Paid | Effective Tax Rate |
| $43,280 | $9,954 | $9,954 | $0 | 0% |
| $80,000 | $18,400 | $9,954 | $8,446 | 10.55% |
| $250,000 | $57,500 | $9,954 | $47,546 | 19% |
| $5,000,000 | $1,150,000 | $9,954 | $1,140,046 | 22.8% |
Instead of paying a 0% effective tax rate as many of the ultra-wealthy now do under the income tax, they will pay 22.8%
No wonder the ultra-wealthy are not calling for the elimination of the present income/payroll tax system.
THE FAIRTAX IS THE ANSWER.
The FAIRtax, is a national retail sales tax on new retail goods and retail services which provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT, AND YOU’LL NEVER BE HARASSED BY THE IRS EVER AGAIN.
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.