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.
However, before getting to Jade’s article, please go to this national survey and share your thoughts on taxation and the FAIRtax. Your participation will be of great help to getting the attention of D.C. to the support for real tax reform.
FAIRtax: Senior citizens love it!
Our U.S. baby boomer generation was born between 1946 and 1964. For our mathematically inclined readers, this means that in 2008, baby boomers began reaching age 62, which is the earliest Social Security retirement age. For the foreseeable future, we are going to have quite a few retirees and Social Security recipients in our great land.
A logical question naturally arises which is, how do senior citizens fare under our current income tax system relative to the FAIRtax? While everyone’s situation is unique, it is important to explore how the income tax has been treating our seniors and understand the multiple facets and changes that the FAIRtax would usher in.
In the mid 1980’s, U.S. tax laws changed to allow up to 85% of Social Security benefits received to be taxed (again). With the FAIRtax, our seniors will never pay income tax on their Social Security benefits. In fact, no American will pay income tax on any of their income whatsoever!
Grandparents often love to give gifts to their grandchildren or bequeath their estates to their children when they pass. Currently, the IRS levies a hefty estate tax (aka “death” taxes) on estates that often force heirs to sell the inheritance itself in order to deal with the stifling tax burden (sell the farm to pay the death tax). Beginning in 2026, the estate tax threshold is only $6 million, and with inflation over the past three to four years, $6 million sure ain’t what it used to be.
Under the FAIRtax our senior citizens can sleep easy. There are no more estate or even gift taxes. With the FAIRtax, you can contribute a hefty sum to your grandchild’s college savings tax free. Think of the complex tax planning, the estates, stepped-up basis upon death, the trusts, etc.
Are the trusts irrevocable or revocable? Does your brain hurt yet?
Our U.S. senior citizen will never ever have to file a federal income tax return with the IRS again! No more shoeboxes full of receipts or worrying that you’re annoying your middle-aged son or daughter by asking them to help with your tax returns. Many unscrupulous tax preparers target and abuse our senior citizens who are truly our national treasures. No more abuse under the FAIRtax!
If you’re worried about Social Security, wanting to know that it will still be there during your golden years, the FAIRtax actually helps with this as well. The FAIRtax automatically funds Social Security and Medicare by statue. Also, by taxing consumption rather than income, the FAIRtax extends the tax base for Social Security from just those working for a paycheck to everyone who buys things. This puts it on a much firmer financial footing.
Stay with the income tax, and you’ll continue to have to put up with an endless array of loopholes, credits, deductions, exemptions, and exclusions, and not to mention over $1 trillion in annual illegal tax evasion where taxes go uncollected.
Many Social Security recipients live on a fixed income. The FAIRtax prebate allows seniors to purchase what they need to live, life’s necessities, completely tax free, and any purchases of used goods are completely free of taxation as well.
Often, retirees may have qualified or tax-deferred accounts such as IRAs and 401-Ks. These plans were paid with pre-tax dollars and upon withdrawal are currently taxed as income.
Seniors must also deal with the labyrinth of laws around required minimum distributions from these plans, which can be dizzying. The FAIRtax delivers a complete tax holiday to seniors on their pre-tax retirement plans. Let’s say you have $850,000 in your 401-K, and you were expecting to pay income tax as you withdrew it over time. Not anymore, not with the FAIRtax.
You will pay the FAIRtax when you consume but effective tax rates for seniors are usually extremely low, if not negative, thanks to the prebate!
Seniors who have lived in their homes for many years often wish to sell their homes that have appreciated in value substantially over time, especially in recent decades. The FAIRtax allows seniors to sell their homes completely free of capital gains taxes! This is a real concern in high-cost areas such as New York and California, where a senior’s home sale gain can easily exceed the $250,000 or $500,000 (single / married filing jointly) thresholds for capital gains. No more worrying under the FAIRtax.
As a country, we owe it to our parents and grandparents to treat them with respect and dignity. The income tax requires our senior citizens to deal with income tax returns, IRS instruction forms, and IRS audits. It also requires them to endure the double and triple taxation of their Social Security benefits, death taxes, gift taxes, capital gains taxes and the overall burden of myriad IRS rules on their retirement accounts including but not limited to required minimum distributions.
Don’t we owe it to our seniors to provide them with a less burdensome retirement, a retirement free of the IRS and the punitive and narrow income tax? Don’t we owe our senior citizens a more simple and elegant system of taxation? Many seniors will be familiar with Perry Mason, and it is fitting to end with a line he would often use, … I rest my case.
CONCLUSION
One of the things that a real change to our tax system must address is how it affects the various elements of our society.
Jade has done an excellent job of demonstrating that the FAIRtax will be beneficial to Seniors. Of course, many of the reasons for seniors to support the FAIRtax are reasons for the rest of America to support the FAIRtax—it helps everyone.
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, before getting to Jade’s article, please go to this national survey and share your thoughts on taxation and the FAIRtax. Your participation will be of great help to getting the attention of D.C. to the support for real tax reform.
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.