Why Tax Evasion Should Be Much Lower Under the FAIRtax
One of the strongest arguments for the FAIRtax is not simply that it changes what is taxed, but that it dramatically changes where the tax is collected.
- The federal income-tax system depends on millions of individuals and businesses accurately reporting income, deductions, expenses, credits, capital gains and other transactions.
- The FAIRtax instead concentrates federal tax collection at the final retail sale of new goods and services. That difference sharply reduces the opportunities for tax evasion.
The scale of the present problem is substantial. Former IRS Commissionner Charles Rettig said the tax gap—the difference between federal taxes legally owed and what is actually collected—is approaching and could exceed $1 trillion per year, more than double the agency’s most recent official estimate.
The reason--the income tax requires taxpayers to tell the government what happened. Cash income, business expenses, self-employment income, deductions and transactions create a multitude of opportunities to conceal taxable income.
That evidence helps explain why the FAIRtax's collection mechanism could be more resistant to evasion. Under H.R. 25, the FairTax Act of 2025, the income, payroll, estate and gift tax structure would be replaced by a national retail sales tax administered primarily by the states.
Retail sellers collect the tax from customers and remit it to the appropriate sales-tax authority. The bill even creates special remittance requirements for large sellers; a seller collecting at least $100,000 of FAIRtax during the preceding 12 months is classified as a large seller and generally must remit collected taxes weekly.
This means the federal government would no longer depend on every household reporting wages, interest, investment gains, side-business income and dozens of possible deductions. The tax would be collected when a consumer buys a taxable product or service.
Even more important is the concentration of retail sales. Americans for Fair Taxation estimates that more than 90 percent of retail sales are made by less than 10 percent of sellers. That estimate should be identified for what it is—a FAIRtax advocacy estimate rather than an IRS statistic—but its enforcement implications are significant. Most federal sales-tax revenue would therefore flow through a comparatively small group of large retailers such as major national chains and online sellers.
Large retailers are particularly difficult places to conceal billions of dollars of sales. They have computerized point-of-sale systems, bank deposits, credit-card records, inventories, audited financial statements, employees, shareholders and extensive internal controls.
Economic research has long recognized that large firms can serve as effective fiscal intermediaries because their recordkeeping creates an information trail that makes collusive tax evasion more difficult.
To be completely fair here, no one is claiming that the FAIRtax would eliminate illegal tax evasion entirely. Cash businesses could fail to report sales, sellers could improperly claim that purchases were for business purposes, and illegal transactions would remain difficult to police. However, evasion under the FAIRtax would be dramatically less than it is under the current income tax.
The essential difference is opportunity.
- The income tax attempts to monitor income flowing through an enormous number of taxpayers and transactions.
- The FAIRtax would concentrate enforcement at the retail checkout counter—and most of the dollars would pass through a relatively small number of highly visible companies.
- Fewer collection points, electronic records and concentration among major retailers would make enforcement simpler and make large-scale evasion considerably more difficult.
- That is why the FAIRtax offers the prospect of collecting more of the tax legally owed while requiring far less intrusion into the financial affairs of ordinary Americans.
CONCLUSION
What do you think will happen if you go to a checkout counter and say that you don’t want to pay the 23% FAIRtax?
Imagine a world where there are no more tax lobbyists obtaining tax benefits for wealthy clients who can afford them while the rest of us make up the difference.
When the income tax is gone, everyone pays the FAIRtax on all purchases above the poverty level.
The FAIRtax repeals federal individual and corporate income taxes and federal payroll taxes and replaces them with a transparent national retail consumption tax. The legislation expressly provides for repeal of both the income tax and payroll taxes.
Isn’t it time that we have a federal tax system that rewards things that benefit society?
People are upset with our present income/payroll tax system because it benefits only a small percentage of the population—the very wealthy and Members of Congress who fund their re-election campaigns by selling favorable tax treatment to the highest bidder.
For the rest of us, it’s an expensive, intrusive, incomprehensible mess that none of us fully understands.
THE FAIRTAX IS THE ANSWER.
The FAIRtax Act (H.R. 25) is more than just a proposal for a retail sales tax; it is a fundamental restructuring of the federal fiscal structure. Unlike other excise taxes which normally are applied to specific products and in different percentage amounts, the FAIRtax applies a 23% rate to all new retail products and retail services.
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.