This is the conclusion of last week’s article on the Purpose of Taxes and the Growing Evasion of the Income Tax.
Why Is the Annual Evasion of the Income/Payroll Tax $600 Billion And Growing?
There have been many attempts by the D.C. elites to place the blame for evasion on the “selfish” taxpayers who are unwilling to send their money to D.C. Few of the elites are willing to view the increasing level of tax evasion, despite reporting requirements not even considered in previous years when compliance was much higher, as what it is—an indictment of the policies of the federal government.
In a study titled, Political Alignment And Tax Evasion by Julie Berry Cullen, Nicholas Turner, & Ebonya Washington published in September of 2015, the authors concluded,
We explore whether the decision to evade federal personal income taxes depends on the taxpayer’s level of approval of government. We first demonstrate using survey data the positive association between political alignment with the current president and the respondent’s trust in the administration and support for government taxation and spending. We then show using IRS tax return data and county-level fixed effects regressions that the larger the typical share of county residents who vote for the president’s party the smaller the tax gap across a variety of tax gap measures. Responses are concentrated in income components that are more likely to be invisible to the government, such as small business income. Our results provide real world evidence that a positive outlook on government lowers tax evasion.
Politicians Working On Tax Reform Should Remember Occam’s Razor
While it will take more than a reform of the income/payroll tax system to regain the trust of the American citizens, the right reform will be a big start. Of course, real reform will not be easy.
As Ronald Reagan said, "Most tax revisions didn't improve the system, they made it more like Washington itself: complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers."
When looking at selecting a tax reform, Congress should apply the principles of Occam’s Razor. William of Occam was a 14th Century Franciscan friar and philosopher who lived in the village of Occam in the county of Surrey, England. He observed that many people added complexity to problems and this was an impediment to solving the problems. William developed a theory which he applied to various philosophical and practical problems. It is now known as Occam’s Razor. Roughly translated from the original Latin, "Entities should not be multiplied unnecessarily." It has now evolved into, "The simplest explanation is usually the correct one." (Razor refers to the fact that you are shaving away the inessential and complex.)
Sir Isaac Newton, Albert Einstein and countless others have acknowledged the value of Occam’s Razor to their discoveries.
One might ask, if this principle was good enough for these great minds, what excuse does Congress have for continuing to ignore it when they consider tax reform?
If the purpose of the tax system is to fund government, then should Congress not look at the simplest explanation—the FAIRtax? What could be simpler than;
- Eliminating 10 million words of the Internal Revenue Code and related documents
- Eliminating the filing of all personal and corporate tax returns
- Eliminating the IRS
- Eliminating the incentives for jobs to move overseas
- Eliminating the subsidies for foreign imports
- Eliminating many of the reasons blocking the more rapid growth of the U.S. economy
- Eliminating the hidden taxes that prevent the citizens from knowing the true cost of government
Conclusion
If Congress is not willing to follow the principles of Occam’s Razor and do real tax reform, maybe they will follow the logic of that great detective, Sherlock Holmes. In The Beryl Coronet, Holmes stated, "It is an old maxim of mine that when you have excluded the impossible, whatever remains, however improbable, must be the truth."
It may seem improbable to some that the FAIRtax can make such a huge difference but it is impossible to expect the present tax system to suddenly have less evasion. Unlike the FAIRtax, the present system will require prisons and bayonets to stop evasion.
If Congress doesn’t act to regain the confidence of the people, evasion will grow but more importantly unrest is likely to manifest itself in even more disturbing ways. Science fiction author Robert Heinlein felt victimized by the IRS and said, "Be wary of strong drink. It can make you shoot at tax collectors... and miss." Congress should remember that many times in history people rebelled against governments not with the ballot but with weapons—for example our own rebellion from Britain.
Giving people back their personal freedoms and showing them the true cost of government will be a big step toward regaining the trust of the American people.
1040 Club and Contributions
Thanks to all of you who are joining and/or remaining members of the 1040 Club. AFFT's 1040 Club members contribute $10.40 per month to AFFT. This provides a steady funding platform and allows us to ensure that we keep the pressure on the elites to prevent them from “putting lipstick on a pig” and not doing real tax reform.
If you are not yet a member of the 1040 Club, or if you are a member but want to join for someone else, please go to this link and sign up.
If you believe that all you can contribute to our efforts is $10, please go to FAIRtax.org and donate. We have our best chance now and need your help. Many of us prefer to make one donation as opposed to monthly donations and this greatly helps.
FAIRtax Power Radio
There are many ways in which people can help us educate more Americans about the FAIRtax. In Programs 29 & 30, the FAIRtax Guys (Bob Paxton and Ron Maiellaro) describe how listeners can support and promote our efforts. Program 29 concentrates on simple but effective things for people with busy schedules, whereas Program 30 suggests some activities that might take a little more time. The programs are free to the listeners. Please share these links with your friends and relatives.
We're pleased to announce that FAIRtax Power Radio is now available on iTunes and Spreaker. A new episode will be posted every Friday morning but you can listen at any time by going to one of these sites. There is no cost to listen. By this time next week, we expect to be on iHeart Radio too.
Recently Bob and Ron decided to start from scratch discussing the many problems with the current income tax system and the reason why REAL tax reform is so desperately needed in our country. In episode 3, Thomas Jefferson paid them a visit and gave his opinion of our federal income tax. As you might guess, he wasn’t very happy with what he saw. Then we searched for “the perfect tax system”.
In future episodes, you will hear from Bob “Paxworthy” famous for his “You Might Be A FAIRtax Fan!” routine. The FAIRtax Guys are always open to your thoughts and opinions. You can contact them at thefairtaxguys@gmail.com.
Episodes are still available on SoundCloud and YouTube but Spreaker is the site that lets up branch out to other, more popular sites that cater to podcasting.
The FAIRtax Guys will continue with FAIRtax Power Radio until HR 25 becomes the law of the land in 2017. After that, I’m sure the episodes will go into the Radio Hall of Fame! Please share this information with your constituents and anyone else you care to. The more people we educate about the FAIRtax, the better the chances are that it will become a reality next year.
To listen to FTPR on SoundCloud (free and audio only) go to these links:
FTPR Program 29 on SoundCloud
FTPR Program 30 on SoundCloud
FTPR Program 29 on YouTube
FTPR Program 30 on YouTube
AFFT National LOGO Store
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When visiting the Store, don’t forget to order a supply of FAIRtax Palm Cards. Besides handing out palm cards at meeting and events, whenever you send mail through the post office, consider including at least one FAIRtax informational palm card in the envelope - keep spreading the word.
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