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- Checking all the Democrat Boxes
H.R. 25, the FAIRtax Act, has received both Democrat and Republican sponsorship since it was first introduced in Congress back in 1999. However, over these 26 years, sponsorship of the bill has been primary Republican. When we examine the FAIRtax, this should surprise anyone who studies politics and what each party purports to believe in and support. Let’s take a look.
First, Democrats have laid their claim to the belief that taxes should be progressive, not regressive, since those who make less are generally considered less able to pay taxes. The FAIRtax is significantly more progressive than the current income and payroll tax system. Let’s take a simple lower income example where a family of four earns and spends $58,000 a year, with no savings and no purchases of any used items. After their $9,729 prebate, they’ll pay a net $3,611 in FAIRtax. That’s a 6.2% rate ($3,611 / $58,000). That’s less than they would pay in payroll tax alone under the current system.
The current payroll tax rate is 7.65%, and it applies to every dollar earned. In addition, part of this family’s income would be taxed at 12% with the remainder falling into the 22% bracket. Clearly, this low income family would be much better off under the FAIRtax. Check.
The FAIRtax un-taxes basic necessities through the prebate and removes the single most regressive element of our current tax system, the payroll tax. This allows workers to keep their entire paycheck free of any federal income tax, all while causing real wages to rise.
Democrats claim that they are the working person’s party and champion those who struggle to realize the American dream. The FAIRtax removes the hidden taxes the working poor pay. Payroll and income taxes imposed on businesses are just like any other cost of doing business. They get passed along to consumers in the prices of their products and services.
In addition, under the FAIRtax, employers won’t need to “match” the 7.65% payroll tax for each employee. This significantly reduces the cost of doing business all through the supply chain. Studies indicate depending on the industry, that costs of retail goods will drop from 10% to 25% with the FAIRtax. For politicians who decry that tariffs and taxes just increase the price of goods we purchase, they’re correct. Check.
The exporting of U.S. manufacturing jobs has meaningfully affected our blue-collar communities- think Detroit, Cleveland, and Allentown. The Democrat platform has consistently courted these communities for decades. The current tax system is a disaster for American companies producing goods for export and is the primary reason that so many American manufacturing jobs have gone overseas.
Most of our foreign competitors operate in countries that have a value added tax (VAT). When those competitors produce a product for export, their government refunds all the VAT that has accumulated along the production chain. The result is that those companies can offer their goods on the world market at significantly lower prices than US based manufacturers. That’s because the prices of US produced goods still contain all the embedded costs of our income/payroll tax system. By removing those embedded costs, the FAIRtax puts American manufacturers back on a level playing field with their foreign competitors. Helping our working poor and blue-collar factory workers. Check.
I’ve heard it said a million times in a million ways, education is the key. Progressives have certainly invested a lot to ensure that they have a significant presence on our U.S. university campuses. U.S. post-secondary education costs have skyrocketed, easily eclipsing rates of inflation for decades, which recently is no small feat. This has left the dream of a college education out of reach for many citizens. If we want more Americans to have a college education, the FAIRtax checks this box as well.
The FAIRtax applies only to retail purchases, and college tuition is considered an investment, not a retail purchase. Therefore, the FAIRtax is not charged on college tuition. Furthermore, education will be paid for with pre-tax rather than post-tax dollars (i.e., you don’t have to earn $140 to net to $100 that you can spend on college. If you earn $140, you have $140 available to spend). Education costs will decrease by up to 40% based on estimates compiled. Check.
The Democrats emphasize the importance of making home ownership more affordable and available as well as ensuring that our safety net programs are secure. The FAIRtax makes home ownership more affordable by creating a stronger economy with studies showing that GDP, real wages, and purchasing power all increase with the FAIRtax. Check.
Plus, nearly 90% of all U.S. home purchases are of previously owned homes. The FAIRtax applies only to new goods. Previously owned homes are not subject to the FAIRtax. Double Check.
A key principle of the FAIRtax is that it is revenue neutral, bringing in the same amount that the treasury currently collects with the income and payroll taxes. Since the FAIRtax abolishes the regressive Social Security and Medicare payroll taxes, some have falsely claimed that the FAIRtax cripples or even eliminates these vital safety net programs. The exact opposite is true. The FAIRtax dramatically expands the tax base for these programs from just those who are working for a paycheck to everyone whose spending rises above the poverty level. Furthermore, the FAIRtax actually puts these programs on much firmer financial footing since taxing consumption is a much more stable and reliable way to raise revenue than taxing income. Check.
Based on this simple analysis, it’s baffling why Democrats are not coming out in droves to support the FAIRtax as a replacement for our outdated, regressive, and intrusive income and payroll tax. I remember driving with my dad when I was probably 13, as he rolled through a red light while turning right. I of course challenged him as teenagers love to do, noting that what he did was illegal. He smiled and I’ll never forget his response, “Do as I say, not as I do.”
CHECKMATE!
CONCLUSION
Jade has clearly demonstrated that the FAIRtax is more fair to the average Americans than the present income/payroll tax system.
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.