The 90% and the FAIRtaxToday’s Chairman’s Report is written by Jade Walle. Jade is a partner of a CPA firm and is on the board of Americans For Fair Taxation.
We constantly hear about the top 1% or top 10% of Americans as politicians work to divide our country, pitting one group of constituents against another. My sister-in-law reminded me recently that all too often, government policy is based on how it affects the top 10%. The remaining 90%, many of whom are honest, hard working Americans doing the best they can to provide for themselves and their families, are ignored.
Let’s peer into how the FAIRtax would affect the largest portion of our population, those who derive most if not all of their income from W-2 earnings from employment.
1. The regressive payroll taxes that these employees and their employers currently pay would be entirely eliminated. So would Federal income tax withholding. That means that every single person in the country who works for a paycheck would have significantly more money in their pockets each and every pay period. The payroll tax represents nearly 40% of all U.S. Treasury receipts, and it hits the working poor especially hard. For 68% of Americans, the payroll tax represents the largest (and most regressive) tax that they pay.
2. Every dollar spent on the basic necessities of life would be tax free. Imagine that! A real beauty of the FAIRtax is that you, not politicians and lobbyists, would determine what your basic necessities of life are. Whether you want to buy fancy tenderloin or the London broil, it’s your choice. No matter what you spend it on, if you’re a legal resident, the taxes you pay on your spending up to the poverty level for your household size are reimbursed to you every month in what we call the prebate. You don’t take a dime out of your own pocket to pay the FAIRtax until you’ve provided for your family’s basic necessities.
We should not overlook the psychological effect of putting the power of choice into consumers’ hands when it comes to how, when, and how much they’re taxed. That effect is quite significant! When we choose to purchase new goods or services beyond what we need to sustain ourselves, paying the FAIRtax becomes solely our choice, as opposed to having our level of taxation dictated to us by the IRS. The current income/payroll tax system leads to a feeling of being subdued, hogtied, and oppressed. That mental state of mind creates an environment ripe for illegal tax evasion, which has now reached a level of $1 trillion a year. This melts away under the FAIRtax. Studies have indicated that the FAIRtax will reduce illegal tax evasion by at least 95%.
3. The great men and women who comprise this 90% slice of America would suddenly be relieved of the increasingly complex proposition of filling out income tax returns. Small business owners and other self-employed individuals would no longer have to deal with self employment taxes and making periodic payments of estimated taxes. No more staying up all night researching IRS form instructions to ensure you at least think that you have completed the convoluted IRS tax forms correctly. Instead, nights are now spent with family, connecting with loved ones, pursuing career advancement initiatives, volunteer activities, and even relaxing with your significant other to a nice binge of shows on your favorite streaming network. The amount of time Americans spend each year filling out IRS tax returns and related forms has surpassed 6.5 billion hours. This is highway robbery of our precious time, and we all know that no matter where you are on the planet, the scarcest and most precious resource of all, is time.
4. Like cockroaches in unknown crevices just outside our vision, the embedded costs of the income/payroll tax system hide out in the prices of all the goods and services we consume. Those insipid costs all go away under the FAIRtax. Multiple highly renowned studies have indicated that, depending on the industry, retail prices in the United States will decrease by anywhere from 10 to 25 percent when those costs fall out of the prices we pay. This is an immediate anti-inflationary mechanism, and as long as the U.S. remains a free market capitalist economy (i.e., either efficient or at least semi-efficient to use economic terms), all Americans will see prices drop almost immediately. With these hidden costs gone, the true amount of federal taxes we’re paying will be clearly shown on every retail receipt.
5. The FAIRtax will be the most comprehensive environmental bill ever passed in the U.S.! One of the FAIRtax’s primary principles is that it is levied once and only once on any individual item. After its initial retail purchase, an item can be sold and resold an unlimited number of times without ever being taxed again. By not taxing used items, the FAIRtax will bring about more gently-used resale shops for things like clothing, furniture, gaming equipment and electronics. The saved energy that comes about with increased demand for gently used items will be a boon to the environment, while also saving our country valuable energy that is used in the manufacturing process of new goods.
Additionally, the FAIRtax will give people a way to avoid taxation on the largest purchases they make—homes and cars. Nearly 90% of US home purchases are for pre-existing residences. No FAIRtax will be charged on those purchases. No FAIRtax on the purchase of used cars either.
Think of the more expensive toys we purchase for our families when times are good, such as ATVs, snowmobiles, jet skis, boats, etc. Many of these types of purchases are of used products.
In conclusion, with more paycheck, more choice, more freedom, more transparency and more conservation, we can safely rest our case that the FAIRtax will truly represent a tax system of the people, by the people, and for the people, as the aforementioned benefits accrue to our hard working men and women without prejudice, favor, or reservation.
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives demanding that if the government really wants to eliminate the burden of filing income tax returns, they should enact the FAIRtax and do away with tax returns altogether.
The great 18th century Irish statesman Edmund Burke made a statement that applies in many ways,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Take back control! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”