“MR. FLAT TAX’S” MAGAZINE UNDERMINES ITS BOSS
Now that President Trump is about to emerge at the West Front of the U.S. Capitol to take the oath of office, what will he do about his recently floated idea of completely eliminating the income tax? Forbes Media owner Steve Forbes has proposed a flat income tax for years. However, Nathan Lewis, contributing to Steve’s magazine, proposed something different – a Value Added Tax or “VAT.” You can read the article here: https://www.forbes.com/sites/nathanlewis/2024/10/16/now-lets-get-rid-of-the-income-tax/.
Lewis writes: “Trump’s recent proposals are along the lines of uniform flat-rate tariffs, perhaps 10% or 20%. But I think that Trump is intentionally stirring the pot for a much more important discussion, which is to eliminate the Income Tax entirely in favor of a Value Added Tax, or VAT.”
The most common form of VAT is a credit-invoice VAT, a consumption tax on goods and services levied at each stage of the supply chain where value is added, from the initial production of goods and services to the point of sale. The amount of VAT the user pays is based on the cost of the product minus the costs of inputs that were taxed at a previous stage.
A VAT and a retail sales tax, such as the FAIRtax, which have the same rate, hypothetically, get to the same place. However, there are numerous problems with a VAT that our President, Steve Hayes, recently pointed out in a Chairman’s Report as follows:
• It will allow Congress to sell benefits to different special interests.
• It will require every business to complete VAT returns even if they are not retailers.
• It will require an enforcement agency—probably the IRS.
• It will allow Congress to hide much of the true cost of the government. (People will know there is a VAT on what they purchase but after a while it will become invisible—like people assume that their salary is only their take-home pay.)
VATs also tend to compound, like interest on a savings account, raising the cost of goods and services.
We know a better plan: the FAIRtax. The FAIRtax is specifically designed to replace both personal and corporate income taxes along with the federal payroll taxes. The FAIRtax bill specifically repeals the Internal Revenue Code. When the FAIRtax is implemented, all statutory authority to collect an income tax is gone. Furthermore, the FAIRtax bill contains language that requires the repeal of the 16th Amendment. Once that happens, an income tax becomes unconstitutional.
While it’s theoretically possible for a VAT to completely replace the income tax, that’s not how it’s worked out in most of Europe. As these two articles from the Tax Foundation show, most European countries have both a VAT and an income tax.
https://taxfoundation.org/data/all/eu/value-added-tax-2023-vat-rates-europe/
https://taxfoundation.org/data/all/eu/top-personal-income-tax-rates-europe-2023/
It is extremely important that we be vigilant here. We can’t let our politicians get away with imposing a VAT on top of the income tax. We must insist on the FAIRtax. It’s the only way to guarantee that we won’t end up with both an income tax and a consumption tax.
Now that President Trump is about to take the oath of office, you need to let him know that you want REAL tax reform, not just more nibbling around the edges like the politicians have done in the past.
Once Mr. Trump is inaugurated, call the White House at (202) 456-1111 and demand the FAIRtax. If you prefer, you can write to the White House, 1600 Pennsylvania Avenue NW, Washington DC 20500. Finally, after the new administration is reflected on the website, you can leave a message for the President at https://www.whitehouse.gov .
Whichever way you choose to make contact, be polite and respectful, but also be firm in your resolve to accept nothing less than the FAIRtax. Make it clear that a VAT is not an acceptable option.
Of course, it’s a good idea to contact your Member of Congress along with the President. In all likelihood, your representative’s email address is https:// [MEMBER’S LAST NAME].House.gov. Urge your representative to work with President Trump to eliminate the income tax, but make it clear that a VAT is not the solution. We need the FAIRtax.
If you contact President Trump or your Congress Member, please send me a copy at jim.bennett@fairtax.org. I would also love to see the answer you get.
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