The Chairman’s Report September 15th, 2023

  • by:
  • Source: FAIRtax
  • 09/15/2023

Unless the Supreme Court stops them, Congress will pick our pockets even more


All of us who have owned a home understand that the property tax we pay is based on the appraised value of the home.   We can live in a home for 20 years and be taxed more each year based on the increase in value of the home.  

However, this is not the case with the income tax.  Until now, an individual’s income is only taxed when it is received.

If a person owns stock that appreciates, the gain in value exists only on paper until the stock is sold and the gain is actually realized.  Consequently, under current law, such capital gains are not taxed until the asset is sold and the seller has the money in his pocket. 

If you have an annual salary of $60,000 and are paid in 12 monthly payments of $5,000, you don’t pay tax on the entire $60,000 all at once.  Taxes are withheld each month as you receive your money.

All of us have heard of the calls for a “wealth tax” that would not tax income but simply the wealth of an individual once a year.  Under such a wealth tax, if someone owned stock that had appreciated in value over the year, that gain in value would be taxed even though the person still owned the stock and had not yet realized the gain.

Of course, Congress has wide authority to tax corporations, and they are not protected from being taxed on unrealized income.  An example is the corporate minimum tax which corporations pay even if no regular corporate income tax is due.

Congress’ ability to tax unrealized gains through either a wealth tax, the alternative minimum tax or some other type of tax may be determined by Moore v. United States, a case coming before the U.S. Supreme Court this fall.

An article published by the Forbes made these points:
  • One of the provisions of the 2017 Tax Cuts and Jobs Act was to assess an income tax on some foreign earnings even if they were not realized by the U.S. taxpayers.
  • The Moores are U.S. citizens who own 11 percent of a farm tool business in India that sells small tools to farmers. 
  • They never received a dividend or distributions, they never sold their stock, and they wake up one morning in 2018, and they owe a tax.
  • They assert that this tax is unconstitutional and not supported by court cases requiring that income actually be realized before it is taxed.
  • The Ninth Circuit Court of Appeals rejected their arguments and the Supreme Court has agreed to hear the case.

Yes, the Moore case is very important.  If the Supreme Court rules that individuals can be taxed on money they haven’t actually received, the income/payroll tax system will become even more abhorrent.

Our personal budgeting and planning is based on our after tax income.  Many of us have put money aside in IRA’s, 401K’s or other retirement vehicles that promise that we will pay no federal income tax until we start to withdraw the money.

If the Supreme Court rules in favor of the D.C. power grab, we could soon find ourselves paying taxes on:
  • The increase in value of retirement accounts, even if not paid to us;
  • The increase in the value of our homes or other investment real estate;
  • The increase in value of our other investments or property we own.
This will be a bureaucrat’s dream.  Think of all the new DC bureaucrats that will have to be hired in order to enforce these new tax calculations and to “determine” if we valued the increases properly.

What happens if the value of an asset goes down?  Will we get a refund?

Are they going to accept our local property assessor’s valuation on our homes, or will we be required to pay for an additional appraisal?

Will they require you to get appraisals on the value of your other investments that have no public market—like your coin collection or ownership in a small business?

What about the value of a farm that may increase every year?

If these new taxes on unrealized income become a reality, you’ll have only three ways to pay them.
  • Pay them out of your pocket thus reducing your disposable income
  • Pay them out of your savings
  • Sell some assets that you would prefer to hold onto
We must always remember that bureaucrats are always seeking to expand their numbers and their power.  In many cases, they realize that the “demand” for the job they do has been artificially created and that we can get along just fine without them.

With the income/payroll tax system, this is glaringly true.  The income/payroll tax system is complex, unfair and discriminates against most Americans.  It interferes with every aspect of our lives and it is totally unnecessary.  There is a much better, fairer and more efficient way the fund the government—the FAIRtax.

Think of why D.C. bureaucrats hate the FAIRtax.  It will put most of them out of work as the FAIRtax will be collected by the states.  

There will be some people in D.C. who will be needed to monitor the FAIRtax collections from the states.  However, the IRS, 260 million tax returns and countless wasted American taxpayer hours spent trying to comply will be gone.

The only reason to have the complex income/payroll tax system is to give jobs to bureaucrats, give D.C. control how much of our incomes we get to keep and to provide politicians an ATM machine to finance their campaigns.  

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!

Congress and D.C. know that there is a better alternative to the present system—the FAIRtax.

Instead of spending time and money doing endless hours of paperwork that don’t create anything of value to yourself, your family or the nation, why not eliminate the unnecessary waste?
The FAIRtax transfers power from the government and bureaucrats to the people.  We, not the bureaucrats and D.C., decide how much tax we pay.

Isn’t it time to end this ludicrous tax collection system and the IRS?

When the FAIRtax is enacted, there will be no need to fear being audited by the IRS or raided by armed IRS agents because there will be no more IRS.  

There is going to be a vote on the FAIRtax in the House of Representatives.  McCarthy and the other elites didn’t want it, but it was forced on them.

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 changed, then they can propose the change.  Don’t let them reject the entire bill because it has a “flaw” that can be easily addressed.  

Please stand with us and demand that your representative support a much fairer, much simpler and much more efficient way to fund the government—the FAIRtax!

The FAIRtax doesn’t pick winners and losers.  Because it taxes spending, not earnings, the FAIRtax lets everyone save for their retirement tax free.  
The FAIRtax will allow us to TAKE BACK CONTROL.

The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”

We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”

We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!

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