Morality and the FAIRtax
This week’s Chairman’s Report is written by Randy Fischer, an AFFT board member.
Currently when the United States is fixated on having the moral high ground, the concept of morality is worth exploring as it relates to the FAIRtax. Of course, many astute U.S. citizens are keenly aware of the hypocrisy and double standard that many who claim moral superiority often exhibit.
Nonetheless, let’s dive into what a moral system of taxation looks like, using a nonpartisan, straightforward, and common-sense approach.
Although numerous other adjectives could be used to describe what “moral” means to us, most of us would likely agree that it encompasses all or some combination of the following traits:
- Fair / Principled
- Equitable
- Just / Right / Honest / Proper / Ethical
Although without an ultimate Cornerstone to measure one’s morality against, the concept of morality only precariously holds together in a secular context. However, let’s dive in with this lens.
First, our society today focuses a great deal on diversity and inclusivity as a backbone of fairness. The FAIRtax treats everyone absolutely the same, regardless of skin color, race, sex, or any other differentiating factor. For example, the income tax provides extensive deductions, exclusions, credits, and loopholes that favor groups, such as homeowners, arguably the wealthier among us, who receive a significant reduction in their federal tax obligation via the home mortgage interest deduction.
The FAIRtax charges the same flat rate to everyone. The income tax continues to favor groups that can make large political donations and/or hire expensive lobbyists to twist the nearly 90,000 pages of statutes, rules and regulations in their favor. Diversity and inclusion, check. Equitable, check.
The FAIRtax is also estimated to reduce the annual tax gap by 90% ($100 billion annual illegal evasion compared to the current $1 trillion). A remarkable FAIRtax characteristic is that it does not stir up our darkest human tendency of jealousy and covetousness. Meaning, the FAIRtax only taxes what we individually choose to purchase beyond our basic needs. The ideas of punishment if you’re more successful, stifling and motivation-stunting “assistance” to those who are less successful, and favor for the industry or political flavor of the day all melt away under the FAIRtax.
The income tax creates a psychological environment where we are not only envious of our fellow citizen and wish a higher income tax rate on those who are wealthier, but where we despise the IRS for seizing our hard earned income before we even see it in our bank account. This creates an environment where evading the income tax seems like the prudent or even the moral thing to do.
Today, the vast majority of retail sales are handled by point of sale software. These systems are already collecting state sales taxes and can easily be updated to collect the FAIRtax as well. Good luck telling the Wal-Mart sales associate or Amazon online platform that you’re not interested in paying the FAIRtax today. Just and right, honest, and ethical, check.
Let’s think inclusivity. The income tax as well as the payroll tax (those FICA and Medicare taxes that all wage earners pay at the same rate), are regressive relative to the FAIRtax. One must look at the actual math here because one’s first impulse would be to think that the flat rate FAIRtax can’t possibly be as progressive as a graduated rate income tax.
Here’s what changes the math equation and objectively proves that the FAIRtax is the more progressive (aka fairer) tax system. It’s just two things. First, the income and payroll tax system includes the aforementioned regressive payroll tax that is responsible for nearly 40% of the U.S. Treasury’s receipts. This means that nearly half of U.S. taxes collected are on the backs of employees, including the working poor. Since these taxes are withheld from a worker’s paycheck before the worker even sees it, everyone working for a paycheck is having to pay the government before they provide for their family’s basic needs. The ultra-rich people living on investments and capital gains do not pay this regressive payroll tax.
Second, the FAIRtax undoes this injustice by ensuring that no legal US resident pays the FAIRtax on the purchase of the basic necessities they need to survive. The prebate ensures this with a direct deposit to legal residents’ bank accounts each month, effectively reimbursing them, upfront, for the FAIRtax they’ll pay on life’s necessities. Since you don’t pay a dime of FAIRtax out of your own pocket until you’ve provided for your basic needs, you feed your family before you feed the government with the FAIRtax.
Oh, and if freedom is a characteristic of morality, each person, not the government, decides what their basic necessities are be it milk, mayonnaise, bananas or beer. Again, politics aside and looking at it through a pragmatic, common sense lens, one would be hard pressed to say that the FAIRtax is not honest, just, proper, and ethical in this respect. Inclusivity, check again.
Honest, just, right, well, you get the picture.
Switching gears, let’s think about America relative to the world. Our politicians have an obligation to protect and look out for us as U.S. citizens as well as our businesses and other interests.
The current income and payroll tax system results in embedded taxes totaling anywhere from 15% to 25% of the total cost of our U.S. products or services, depending on the industry. This means that when we sell American-made goods abroad, we put our U.S. businesses at a disadvantage right out of the gate relative to other countries selling the same product or service. This is not equitable, fair, or just.
The FAIRtax creates a system where no income or payroll tax exists. Therefore, these significant embedded current costs fall out of the cost of manufacturing our U.S. products and providing our U.S. services. This finally creates a level playing field where our U.S. widgets can fairly compete with the widgets produced elsewhere based on quality, craftmanship, and customer sentiment, rather than being at a 20% cost disadvantage on day one.
Think about the many countries in Europe that have extensive VAT taxes built into each stage of their widget’s production. When sold abroad, these VAT taxes are refunded to the exporting country’s companies, taking the taxes out of the product’s cost. Such a refund is impossible for American companies given the insidious way that tax costs are invisibly embedded into each product’s overall cost. Since the FAIRtax applies only to retail sales to the final consumer, there are no embedded tax costs in the prices of American products produced for export. American companies can finally compete on a level playing field.
Finally, we will treat our businesses, small and large alike, equitably. Fair, equitable, just, and on we go.
The virtues of the FAIRtax could go on for many more pages, but the above is a good start. Given these basic characteristics of the FAIRtax relative to our current system, the FAIRtax wins on the morality question in a landslide, without the hypocritical baggage!
Conclusion
Randy clearly shows why the FAIRtax is the superior solution.
The choice is easy—do we want a system for funding the federal government:
- That is so simple everyone can understand it.
- That shows the costs of the federal government on every retail receipt so all of us understand what we are paying.
- That helps U.S. companies compete with foreign competitors.
- That keeps jobs in the U.S. rather than exporting them to other countries.
- That permanently establishes the solvency of Social Security and Medicare.
- THAT 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 SOLUTION—PASS THE FAIRTAX!
If you don’t like the idea of the IRS and D.C. requiring you to reveal more and more of your private financial data and changing us from citizens to subjects, you should be helping to pass the FAIRtax.
- Under the FAIRtax, there are no more tax returns. You no longer have to disclose your personal financial information to the government.
- Banks and other financial institutions no longer have to tell the government about the dividends and interest you received, or about how much you made trading stocks, bonds or other capital assets.
- There is no need for the government to know anything about your IRA because you won’t need an IRA. The FAIRtax lets everyone save for their retirement tax free.
- And of course, if the government doesn’t have your confidential financial data, they can’t leak it.
In addition to solving the confidentiality problem, the FAIRtax lets business owners concentrate on making their business more profitable and beneficial for their shareholders and employees.
President Biden and Congress, pass the FAIRtax and:
- Do the right thing for the people of America and fix the broken income/payroll tax system!
- Go down in history as the ones who freed all present and future Americans from the tyranny of the income/payroll tax system.
- Ensure that there can be no more leaks of our confidential information.
- Transfer power back to the American people over how much tax they pay!
The FAIRtax transfers power from Congress and the bureaucrats to the people. We, not D.C., decide how much federal tax we pay.
There is no IRS—the states collect the FAIRtax.
Only retail businesses will have to collect the FAIRtax and remit it to the government.
Since less than 10% of the retailers account for 90% of retail purchases, there will be much less opportunity for evasion.
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 let reject the entire bill because it has a perceived “flaw” that can be 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!
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
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.”
WHAT CAN EACH OF US DO?
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!
TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
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