TRUMP’S TAX PLAN WILL BE FINE
This is the title of an article by Nathan Lewis written for Forbes Magazine.
Here are some of the points he makes:
- The Great Depression got started with the passage of the Smoot-Hawley Tariff in the United States, by the Republican Party, which immediately set off a cascade of retaliatory tariffs worldwide.
- This alone did not cause the Great Depression, but it did cause the initial downturn.
- This was followed by a long string of bad decisions in reaction to that downturn, such as Republican Herbert Hoover's 1932 tax increase which took the top income tax rate from 25% to 63%.
- Tariffs are taxes; basically, they are a variant of sales taxes.
- Trump has floated the idea of eliminating the Income Tax altogether, and replacing it with the Tariff as a revenue source. This was actually the regular state of affairs in the United States before the Sixteenth Amendment was passed in 1913. There was no Income Tax.
- Trump is testing the waters for a much more important reform — eliminating the Federal Income Tax altogether, both Individual and Corporate, including a full repeal of the Sixteenth Amendment, and replacing it with a VAT, with a rate of probably around 15%.
- This resembles the "FairTax" national sales tax proposal popular among conservatives, but would be much better in my view.
- In the nineteenth century, the United States had high tariffs, domestic excise taxes (sales taxes), and no income tax. It was the most successful country of that century.
Mr. Lewis is not alone in believing that former President Trump is looking to eliminate the income tax and go to a consumption tax. Governor Walz, the Democrat nominee for vice president, said in his debate with Senator Vance that former President Trump is going to enact a 20% consumption tax.
Mr. Lewis is correct in believing that replacing the income tax would be a good thing, but he goes off the rails in thinking that a VAT would be the ideal replacement. He’s also wrong about a VAT and the FAIRtax being similar in nature. They’re both consumption taxes, but there are major differences in how they are structured, implemented and enforced.
Mr. Lewis points out that the value added tax (VAT) is a tax used by all our trading partners and provides them a great advantage in competing with U.S. products and U.S. exports--as discussed in previous Chairman Reports.
However, he makes the assertion that retail sales taxes of more than 10% are difficult to collect. He doesn’t cite any evidence of this.
Mr. Lewis may not know that 90% of U.S. retail sales are made by companies like Amazon, Walmart and Target. These ultra large retailers represent less than 10% of total number of U.S. retailers. Because of their computerized accounting systems, there is no possibility to evade any sales taxes imposed on their sales.
Mr. Lewis doesn’t address the fact that the evasion rate with a VAT ranges from 4% to 40%. Compare that to the experience of most states who see a 2% to 4% sales tax evasion rate.
Mr. Lewis fails to state that a VAT would require 100% of U.S. businesses, sole proprietors, all corporations and all limited liability companies to file VAT returns. By comparison, only retail businesses—about 10% of total US businesses—would be required to collect and remit the FAIRtax.
Mr. Lewis is only addressing the replacement of the individual and corporate income tax. His proposal would leave the federal payroll taxes that fund Medicare and Social Security intact. These are the most regressive federal taxes on the books. They’re imposed on every dollar a worker earns, and low income earners pay the same rate as high income earners. The FAIRtax eliminates these regressive taxes and ensures the solvency of Social Security and Medicare.
The answer is not the VAT but the FAIRtax. The FAIRtax:
- Is so simple everyone can understand and comply with it without having to hire expensive professional help. Individuals will usually not need to file any tax forms at all.
- Shows the true cost of the federal government on every retail receipt so all of us can understand how much we are paying in federal taxes and determine if the benefits that we are receiving are worth the cost.
- Helps U.S. companies compete with foreign competitors and not be required to move overseas to stay in business.
- Keeps jobs in the U.S. rather than exporting them to other countries.
- Permanently establishes the solvency of Social Security and Medicare.
- Eliminates special treatment for any group of taxpayers.
- Benefits lower income groups more than the present income/payroll tax system and is FAIR.
- Eliminates the need to file tax returns.
- Eliminates the need for the IRS!
- Allows each of us, not the Elites and their minions, to determine the amount of federal tax we pay.
- IS THE LARGEST TRANSFER OF POWER FROM D.C. TO THE PEOPLE SINCE THE CONSTITUTION WAS ADOPTED.
The American people will overwhelmingly support the FAIRtax if they are given the chance and all of us will benefit.
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?
There is going to be a vote on the FAIRtax in the House of Representatives.
We now have the opportunity to force all Members of the House to show where they stand. They can:
- Vote for the present income/payroll tax system or for the FAIRtax.
- Support the corrupt income tax and the IRS or eliminate it. It can’t be any simpler than that.
- Hide the true cost of their government or pass the FAIRtax and show everyone the true cost of government on each retail receipt.
- Support the largest transfer of power from government to the people, the FAIRtax, or not.
If Members think that the FAIRtax needs to be amended to address a problem, then they can propose the change. Don’t reject the entire bill because it has a perceived “flaw” that can be addressed and, if it is a real “flaw”, corrected in the final bill.
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.