Few of us have not encountered a person who offered to perform a service and had two prices—one for cash and one for a check or credit card. Most of us know that there is between a one percent to three percent expense associated with accepting credit cards. However, the difference in price is generally 20% or more.
Although we know the reason, if we ask why the large discount, generally the person offering the discount looks at you like you must not be very smart. Many times they will just tell you that cash payments are not reported and this allows them to offer you the discount.
Even though most Members of Congress are aware of the growing evasion problem, many of them seem to be in denial and think that they can just change the income tax/payroll tax model and suddenly people will stop evading the taxes.
As I told Speaker Paul Ryan, when people evade the federal income tax they also evade the payroll tax and any state income tax. Therefore, reducing the federal income tax rate to 20% still involves a true rate of 20% plus the 15.3% of payroll/Medicare taxes and any state taxes. This is likely to be 40% or more. If a person has already decided it is okay to avoid paying taxes on part of their income, why are they going to be okay with not paying zero but 40% of their previously undeclared income?
An Updated Evasion Schedule
We have determined that Congress and the Trump team need to be shown confirmation of evasion by a professional. Then it is no longer anecdotal and is even more difficult to ignore.
We are proud to announce that Dr. Richard Cebula has agreed to update his evasion study and to forecast evasion trends. Here is the agreement for the study:
RE: GRANT PROPOSAL
TOPIC/TITLE: Estimating the aggregate magnitude in the United States of future under-reported income and the resulting future lost tax revenue to the Internal Revenue Service (IRS) during the next decade if the Income Tax System (Internal Revenue Code) remains in place
PRINCIPAL INVESTIGATOR: Richard J. Cebula, Ph.D., Walker/Wells Fargo Professor of Finance, Jacksonville University
TIME FRAME: Project completion by March 1, 2017
STUDY OBJECTIVE: The objective of this study is to provide estimations of the aggregate degree of future income tax evasion for the United States, both in terms of the magnitude of under-reported income and the resulting loss in IRS tax revenues, for a period covering the forthcoming decade, beginning with 2017.
There have been a number of estimates of the magnitude of the so-called “underground economy” over the years. These include studies by Tanzi (1982), the Bureau of Economic Analysis (Ledbetter, April, 2004), Cebula and Feige (2012), and the IRS (2010, 2016), among others. The present study will focus upon the IRS (2010, 2016) estimates as well as those of Ledbetter (2004) and Cebula and Feige (2012). The study seeks to establish whether and to what extent the various tax evasion series are stationary, i.e., mean reverting, so that the future path of the series on average is stable in percentage terms. The tests that will be performed will start with 1986, the year during which the Tax Reform Act of 1986 went into effect, and when, according to Cebula, Coombs, and Yang (2009), there is evidence suggesting a modest shift in the propensity to undertake income tax evasion.
Once that task is undertaken, the focus will turn to predicting the future degree of aggregate income under-reporting. The study will provide estimates which represent both a realistic upper boundary for the degree of income under-reporting and a realistic lower boundary for income under-reporting in the aggregate. These boundaries will be established for the next decade, by year. It is anticipated that the IRS estimates of the “tax gap” will likely constitute both the most credible estimate to Washington lawmakers and at the same time provide the most acceptable and conservative estimates of income under-reporting in the aggregate over time. The Cebula and Feige (2012) estimates will likely provide the highest estimates of under-reported income.
Once those forecasts are completed, the attention will be directed towards predicting the actual lost tax revenue the IRS will face over the same 10-year time frame as a consequence of income under-reporting. The analysis will separately consider each viable set of estimated under-reported income and assess (1) the resulting extent of lost revenue to the IRS using a reasonable measure of the average income tax rate, (2) the resulting extent of lost revenue to the IRS using a reasonable measure of the minimum positive income tax rate and, finally, (3) the resulting extent of lost revenue to the IRS using a reasonable measure of the maximum income tax rate.
The above estimates will be undertaken for each individual year of the next decade, beginning with 2017. Subsequently, the upper and lower ends of the cumulative lost tax revenue will be estimated for the entire decade combined. These highest and lowest estimates of lost income tax revenue will clearly correspond to the most revenue that will be lost and the least revenue that will be lost because of the tax system dependence upon the Internal Revenue Code.
Following the analysis of the income tax, this study will address the fact that the standard cost/benefit model underlying the decision to engage in income tax evasion does not readily apply to the proposed sales tax, i.e., Fair Tax. It is shown that the sales tax system offered by the Fair Tax would be very difficult to circumvent. Considerations such as the transactions costs associated with evasion, including potential illegal collusive behaviors, along with a variety of impracticalities, would make the Fair Tax very difficult to circumvent or even try to circumvent. Indeed, it is shown that the opportunities to engage in sales tax evasion would be both very limited and very complex to address and therefore typically hardly worthy of serious consideration in most cases. Furthermore, incentives to attempt such evasion would be low because of the perceived equity of the Fair Tax (as well as the appealing simplicity thereof).
POLICY IMPLICATIONS: The estimates of future under-reported income and resulting concomitant lost tax revenues imply larger budget deficits over time, and those deficits damage the economy in a host of ways, including elevated long term interest rates and reduced purchases of new plant, equipment, and technology by firms. A major policy implication of this scenario is the superiority of a well-designed replacement for the income tax system in the United States, i.e., replacement thereof by the FAIR TAX, which would benefit from negligible tax evasion and arguably be superior to the income tax on equity grounds as well.
Conclusion
You can directly contribute to helping us pay the cost of this study and to the cost of disseminating the study by clicking here and making a donation.
Dave Barry is a humorist but this statement also reflects the growing sentiment in our country.
“The IRS spends God knows how much of your tax money on these toll-free information hot lines staffed by IRS employees, whose idea of a dynamite tax tip is that you should print neatly. If you ask them a real tax question, such as how you can cheat, they’re useless.”
Get your support of FAIRtax heard by the Trump Transition Team
The President-Elect Donald Trump has asked you to tell your story on how we Make America Great and the FAIRtax is the perfect answer. Click here
This is an opportunity for everyone who is in favor of the FAIRtax to make their voice heard. Imagine, if all of us marked our calendars to submit just one statement about the FAIRtax every single day from now until the inauguration, what impact that might have.
PASS THE FAIRTax!
Don’t Allow False Tax Reform
The results of this election clearly show that the future of tax reform will be decided next year. Americans For Fair Taxation “(AFFT”) is one of the few worthy activities that does not spend your funds on salaries or even office space. It is a group composed of people who are donating their time and even paying their own expenses.
AFFT has been working for a long time to educate people about the FAIRtax. Oscar Wilde said, "You can always judge a man by the quality of his enemies." If you agree with this sentiment, then look at the enemies of the AFFT. It is not the people. It is the D.C. elites who profit from the existing income tax/payroll tax system—even though it is obviously harming the U.S.
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 in 2017.
Please go to this link to invest in AFFT and in your and your family’s future.
New FAIRtax Book
AMERICA’S BIG SOLUTION - An Introduction to the FAIRtax
You can help introduce someone to the FAIRtax by informing them of this book. As the title indicates, it is an introduction to the FAIRtax and is directed toward people who may have heard of the FAIRtax but are not really sure of just what it is. Written by Florida volunteer Terry Tibbetts, the book offers a light hearted approach to a serious subject, reforming the federal tax system. America’s Big Solution gives the reader enough information to get them started in their examination of the most thoroughly researched tax reform proposal our country has ever seen. “ABS” is intended for people who may not be attracted to social media for all the latest news and would like to gather their information in a more traditional form that is not limited to a 140 character “tweet” or a Facebook post.
You can find America’s Big Solution on the three most popular platforms -- Amazon, Barnes & Noble and the Apple iBook Store. To purchase the electronic form for the Amazon Kindle or the print form, go to this website. To find it for your Barnes & Noble Nook, go here. And if you’re an Apple user, go to the iBook store at this site. The print version (only available at Amazon) is $9.25 whereas the electronic versions are all priced at $2.99. (Apparently electrons are less expensive than paper and ink!) All royalties go to Americans For Fair Taxation.
Please share this information with everyone you know. The more people know about the FAIRtax, the easier it will be to steer Congress into the only REAL tax reform proposal on the table at this time.
AFFT National LOGO Store
THE FAIRTAX® LOGO STORE
SUPPLYING EDUCATIONAL/PROMOTIONAL ITEMS
OUTSTANDING STORE BOGO’S
25% DISCOUNT ON ALL BANNERS
PLUS
INTRODUCING THE NEW VINLY FAIRTAX MINI-BILLBOARD (MB)
Now is the time to get the FAIRtax℠ word and logo in public’s eye.
Therefore, the Store is offering numerous promotional BOGO’s (buy one get one free) for the month of November. Also, there are other items on sale plus a 25 % discount on all vinyl banners INCLUDING the NEW vinyl mini-billboard.
This new mini-billboard banner is sized at 4’ by 8’ with grommets every 12 inches on all four sides to allow easy presentation on fences, walls, and simple standalone installation via a sheet of plywood braced with 2 by 4’s.
See MB Standalone installation video at
https://youtu.be/mLNpv7Y5V-w
CHECKOUT THE STORE NOW FOR GREAT BARGINS !!!
When visiting the Store, don’t forget to order a supply of FAIRtax palm cards. Besides handing out palm cards at meetings and events, whenever you send mail through the post office, including at least one FAIRtax informational palm card in your envelope. And remember, many entities send you postage paid envelopes for whatever reason. So, why not send them back with an enclosed palm card and a FAIRtax sticker on the outside for all to see - keep spreading the word.
Please take a moment and visit our store by clicking here.
FAIRtax Power Radio
FAIRtax Power Radio
Who are The FAIRtax Guys? This VIDEO will give you and idea. It is Bob & Ron’s mission to save the entire country from the disastrous federal income tax and the criminal enterprise known as the IRS. In order to do that, we must inform the population of the FAIRtax, the best tax reform proposal ever presented to Congress.
This is the purpose behind FAIRtax Power Radio, a weekly 30 minute radio show which you can listen to online or download as free podcasts. The reach of FTPR has recently expanded to include iHeart Radio along with our other major platforms, iTunes and Spreaker.com. You can also find FTPR on SoundCloud and YouTube. Each of these platforms has a free app for smartphones so you can listen on the go. The format of FAIRtax Power Radio is informative and light hearted.
The FAIRtax Guys delve into every aspect of the FAIRtax beginning with the problems with the current income tax, how the FAIRtax will replace the income tax and what the many benefits will be to the American citizen when the FAIRtax become law. For instance, the FAIRtax will restore many freedoms currently ignored by the IRS.
The current system is so bad that even Thomas Jefferson has weighed in and is featured in several FTPR episodes. The FAIRtax Guys also have interviewed a Congressman, a business man and several Board members of Americans For Fair Taxation, the national organization promoting the FAIRtax. You’ll find out what’s going on in the halls of the nation’s capital and what you can do to help advance the FAIRtax, HR 25 to become the law of the land.
Listen weekly as a new episode is posted every Friday. As The FAIRtax Guys always say, When You Understand It, You’ll Demand It!
Links for Further Information
Please, if you'd like to keep studying and promoting the FAIRtax, make yourself familiar with the links below. We always do our best to keep our AFFT community up to date, and you can stay ahead of the curve using these convenient sites.
- The website of Americans for Fair Taxation
- The FAIRtax website at which you can get involved to help make it happen.
- The Facebook page for Americans for Fair Taxation
- The Facebook page for The FAIRtax Guys
- The Twitter page for Americans for Fair Taxation
- PopVox - Connecting people and lawmakers for more effective participation and better governing
- YouTube channel for AFFT
- Provides FAIRtax promotional materials with authorized AFFT logos.
- Do your shopping, save money and support the AFFT
Thank You For Opening The FAIRtax Chronicles, Our Sponsored Mailings
We plan to do several of these mailings each month. If you take a minute to open the sponsored emails and click through to the website, you are making an in kind contribution to AFFT. It is not required to actually make a purchase, but your minute of time will ensure that AFFT is paid ever larger amounts from people paying for us to send their offers to our supporters.
Again, we are making every effort to ensure that we work with only reputable companies. If you feel that any FAIRtax-sponsored email is objectionable, please email us at info@fairtax.org and tell us why. You can also opt to not receive these sponsored email messages but still receive FAIRtax emails.
Thank you for staying FAIRtax strong!
