The Chairman’s Report September 13th, 2024

This is the title of an article by Veronique de Rugy, the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.  Here are some of her insights:
 

•        Republican vice-presidential nominee J.D. Vance has been in the news for an old clip of him talking about how the tax code should punish adults without kids. While Vance’s proposal probably aims to address demographic concerns, it represents a misguided approach that contradicts fundamental principles of economic freedom and fairness.
•        Using the tax code to “reward” parents and “punish” nonparents is at odds with the idea of a neutral, efficient tax system.
•        In an ideal and fair world, the tax base would be broad but taxed at a low rate. People making the same income should be paying the same level of taxes no matter how they choose to live their lives.
•        Unfortunately, the tax code is neither fair nor neutral. It punishes and rewards all sorts of behaviors based on what government officials decide is good or bad.
•        Lots of evidence exists showing that government programs of all sorts meant to encourage, reward or stimulate usually fail.
•        Tax breaks for homeowners mean that renters pay more money for the same amount of housing.
•        People who can afford an electric vehicle can secure a tax break that others cannot.
•        Using the tax code as a tool for social engineering is misguided. It leads to economic inefficiencies and infringes on individual liberty.
•        Rather than doubling down on the problematic aspects of our current system, we should be working toward comprehensive reform.
•        Only then can we hope to see taxes as something that truly serves the interests of all Americans, regardless of their personal choices.
•        These tax breaks for some are not just unfair to the taxpayers who don’t get them — they also turn our tax code into a complicated mess that requires many millions of collective hours to comply with. Instead of adding more complexity and bias, we should be moving in the opposite direction — toward a simpler, flatter and more neutral code that treats all taxpayers equally.

CONCLUSION

Ms. de Rugy sets forth the attributes of what a good tax system for the U.S. should be and gives many examples of how our income/payroll tax system fails in every way.  Except for the Elites and their minions, no one disagrees with her statement, Instead of adding more complexity and bias, we should be moving in the opposite direction — toward a simpler, flatter and more neutral code that treats all taxpayers equally.

The tax proposals of former President Trump and Vice-President Harris further highlight the problems with the present income/payroll tax system. 

Ms. Harris wants to reverse the Trump 2017 cuts, increase the income tax rates and eliminate many deductions.  She also wants to change the income/payroll tax system to benefit the people who support her and those she favors.

For example, many in the Harris camp want to eliminate capital gains taxes and make those who profit from trading capital assets pay ordinary income rates on those profits rather than the much lower capital gains rate. 

On the other hand, Trump proposes to extend the 2017 tax cuts, but he can’t make them permanent.  Any changes he would make can and will be overturned the next time the opposition party regains control of the government.

The big losers in this entire system are the American people.  It’s inevitable that control of the government will alternate between the two major parties.  As long as the tax code is subject to being manipulated to achieve political goals, there will be massive instability in our tax laws.  Long range planning, especially for businesses, is impossible because no one knows from one year to the next what the law will be.

Why do supposedly intelligent people in D.C. continue to let this insane income/payroll tax system continue?

As the Deep Throat character says to Woodward and Bernstein in All the President’s Men,  Follow the money.   The two things the government elites crave above all else are power over people’s lives and money, and the income/payroll tax system provides them with plenty of both.

Here are some of the groups that reap tremendous financial benefits from the current tax system:
 

•        Members of Congress.  They know that all they have to do is threaten to change the tax law and donations will pour in from both those who would benefit from the change and would like to see it implemented, and those who would be hurt by it and don’t want it enacted.
•        Washington lobbyists.  A significant portion of the $4 billion received by federal lobbyists in 2023 was related to the income/payroll tax system.
•        D.C. think tanks.  Many DC think tanks owe their very existence to the income/payroll tax system.  They make a lot of money doing study after study on the tax system and coming up with recommendations on how to improve it.
•        The CPA’s who make 90% of their income preparing income tax returns, handling IRS audits and advising taxpayers.
•        The tax attorneys who routinely charge $700 to $1500 per hour advising clients on how to deal with the income/payroll tax system.
•        The various online and in person tax preparation companies.
•        Large corporations who see a complex tax system as a competitive advantage over smaller competitors.  They have the financial resources to lobby for favorable tax treatment, and to hire the best professional help in dealing with an abundantly complex set of tax laws.
•        Bureaucrats who hold jobs that wouldn’t exist if we didn’t have an incomprehensible and ever changing tax system.

When you add to this list the “true believers” who want to use the income/payroll tax system to further their agenda, this is a formidable group of powerful people who are adamantly opposed to adopting a saner and fairer tax system, as Ms. de Rugy recommends.

This is why, despite the overwhelming support of the American people, the FAIRtax has yet to become law.  And it’s not like the people in DC don’t know about the FAIRtax.  They do indeed know about it.  They’ll even admit that the FAIRtax:
 

•        Is so simple everyone can understand and comply with it without having to hire expensive professional help.
•        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.

D.C. is ignoring the one real solution that allows us to remain citizens and not subjects, the FAIRtax.  The FAIRtax is simple, non-invasive, but most of all, IT WORKS!

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.