The Chairman’s Report May 21, 2021

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  • Source: FAIRtax
  • 08/30/2021
D.C. WANTS US TO BE LIKE THE THREE MONKEYS ABOVE

In 2018, the top 1% of income earners earned more than $540,000 each. Collectively, they earned 21% of all U.S. income, and paid 40% of all federal income taxes. The top 10% of all taxpayers who earned more than $151,000, earned 48% of the income and paid 71% of federal income taxes.

The Tax Foundation estimates that 58 million low- and middle-income taxpayers, nearly 40% of all filers, will owe no income taxes in 2021. In fact, Congress’s Joint Committee on Taxation says that most taxpayers earning less than $75,000 will pay no income tax this year.

For many Americans, filing their income tax return is like going to the ATM. They not only get a refund of the money that was withheld from their paychecks, many receive additional cash back in the form of refundable tax credits. They’re happy to have it because the extra money allows them to provide more for their family.

They really don’t see themselves as leeching off others. Instead, they believe that they are simply taking what the system is giving them. Of course, the Ruling Class and their minions make sure these people know who their benefactor is. They want lower income Americans to believe that they are getting money because the Ruling Class is socking “the rich” with higher taxes and making them pay their fair share. They also want to perpetuate the notion that they are only making things fair when they confiscate wealth from “the rich” and redistribute it down to them.

If anyone questions the system, they are told to be like the three monkeys. Don’t ask questions and don’t worry about where the money is coming from. Just be grateful to have it, and leave it to the “smart people” who know about these things.

The Ruling Class doesn’t want anyone questioning them because they know that the myth that the money is coming from taxes on the wealthy will not stand up to any serious scrutiny. In large part, they’re just printing more and more money, believing they’ll never have to worry about paying it back. Doing it this way gives them a seemingly limitless supply of money to hand out without irritating the wealthy who have the resources to fight back against having their wealth confiscated.

Basic economics says that printing more and more money coupled with a rapidly increasing national debt will inevitably lead to serious inflation. However, the past 30 years have seemingly defied this basic economic principle. Inflation has remained low in spite of massive increases in both the nation’s money supply and the national debt.

The D.C. “smart people” are banking on having this trend continue, but the hard truth is that it just can’t continue indefinitely.

INFLATION

Investopedia defines inflation:

Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.

In simple terms, let’s say that $100 today buys 50 tomatoes. Next month that same $100 buys just 49 tomatoes. The following month, it’s down to just 48 tomatoes. It is the same $100, but as the price of tomatoes rises, the same amount of money buys fewer and fewer tomatoes. It’s the same with every product and service throughout the entire economy.

A blog written by Jeff Sparshott for the Wall Street Journal points out that inflation is happening now:

In recent months, inflationary pressures have caused the cost of living to rise faster than paychecks. After adjusting for inflation, wages of production workers and nonmanagers fell 3.3% in April from a year earlier, the largest such decline since an inflation shock and recession in 1980. A fall in inflation-adjusted wages hits low- and moderate-income households especially hard, because they dedicate a larger share of their paychecks to covering daily living costs. The numbers might be temporarily skewed, but if inflation persists and is fueled by the Fed or the Biden administration’s policies, it could raise questions about the costs and benefits of those policies for working Americans...

Larry Summers was Treasury Secretary under President Bill Clinton. He started warning about inflation in February, saying that he's more concerned now than he was several months ago. He added that "Data are pointing more towards higher inflation than I expected, and sooner."

So, what does this mean for lower income Americans who are currently benefiting from the tax system? Not only will these people see their everyday purchasing power eroded significantly, they can expect to pay more for any loans they take out as well.

Lenders tie the interest rates they charge on loans to inflation. If the interest rate for an auto loan was calculated assuming a 2% inflation rate and the inflation rate rises to 4%, the loan interest rate will have to increase by at least 2% in order to maintain the same level of return to the lender.

The same “inflation” impact will rapidly increase the interest rate on home loans. The bottom line is that inflation will make our money worth a lot less in terms of how much it will buy.

This is particularly harmful to seniors who are retired and on a fixed income. They may see inflation drive the value of their homes up, but they will also see it start to erode the value of their savings. If a senior thought their retirement was secure based on an inflation rate of 2%, as has been the norm for the past 30 years, they may have to reevaluate their situation if the inflation rate goes to 4% or higher.

Here is a chart showing the effect inflation has on prices.
 
INFLATION RATE YEARS IT WILL TAKE FOR
PRICES TO DOUBLE
2% 36
4% 18
6% 12
8% 9
10% 7.2

FAIRTAX SOLUTION

The FAIRtax is a better way for the U.S. government to collect revenue. It will greatly improve the economy and bring in increasing amounts of revenue for the government.

The FAIRtax will not stop Congress from spending the money they don’t have. However, it will make it much harder for them to continue spending more money than they take in.

Any of us can look at one number, the amount of FAIRtax collected, and compare that with the amount of the federal budget and see what is happening. In that case, the popular mantra in DC that the wealthy are just not paying their fair share doesn’t hold up.

All of us will be paying as we spend. In fact, with the FAIRtax, many of the wealthy will end up paying much more than they currently pay in income tax. This is because there are no loopholes, deductions and exemptions in the FAIRtax. The FAIRtax taxes what you spend, and it’s just a fact that wealthy people spend more than those who don’t have as much wealth.

With the FAIRtax, Congress will be incentivized to not play one group against the other but to help all of us prosper more. The more we prosper the more we spend. The more we spend the more the government gets in revenue.

Of course, some of the “smart people” in D.C. don’t want us to prosper. They want to maintain control over people’s lives by keeping them dependent on government for the things they need.

CONCLUSION

Most of us remember the children’s game of musical chairs. A group of children march around a group of chairs while music plays. When the music stops, each child has to scramble for a chair and sit down. The only problem is that there is always one less chair than there are children, and the child left standing is out of the game.

If inflation continues, and basic economic theory says it will, then people will start to realize that the music is about to stop and they’re going to have to scramble to maintain their financial security. People are already noticing that their money doesn’t go as far as it once did. They will eventually figure out that it was the “smart people” in DC and their excessive borrowing that caused the problem, not the wealthy or corporations being greedy.

People receiving the benefits generated by printing money will demand that the “smart people” in D.C. provide them more benefits to replace the purchasing power lost to inflation. This will be like a cat chasing its tail. It will not end well.

It’s a vicious circle. Printing money fuels inflation. As inflation rises, purchasing power is lost. As purchasing power is lost, there’s a greater demand to print more money which fuels more inflation. It gets worse with every trip around the chairs. The world will eventually take note of the real condition of the US economy, and interest on our massive debt will begin to spiral upward.

As George Bernard Shaw once said, A government which robs Peter to pay Paul can always count on Paul’s support.

Knowing this, the “smart people” will be scrambling to find another way of providing additional cash to people. They know they can’t break the cycle of inflation by simply stopping the payments. That would make a lot of people really mad, and they’d likely take their anger out on the party in power.

The FAIRtax will save the “smart people” from themselves because it will provide an increasing amount of money without the need to print any more. Instead of seeing the value of our assets ravaged by runaway inflation, the FAIRtax will restore economic stability allowing our assets to retain their value.

It is time that Americans take control of our country by eliminating the income/payroll tax system.  No more games that profit only the Ruling Class and their minions the politicians.   ENACT THE FAIRTAX!

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.

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.”

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?”
 
Three monkeys by BrianAJackson is licensed under Envato Elements