It was on October 17, 1931, that Al Capone was sentenced to 11 years in prison. His conviction was not for the many murders he committed or ordered; not for ordering the St. Valentine’s Day massacre; not for bribing public officials; and it was not for violation of the Volstead Act prohibiting the sale of alcohol. In the 1920’s he was making millions of dollars and not filing income tax returns.
Capone on his way to prison.
Because it was felt that Capone had bribed and intimidated all of the local courts, he was indicted for the only federal crime it was felt could be proven, violation of the income tax laws.
Frank Wilson, pictured above, was the chief Treasury investigator and built the income tax evasion case against Capone. On October 5, 1931, the trial began. Capone had obtained the names of the prospective jurors and had already bribed and/or intimidated them so he was not worried. However, the presiding judge learned of this and immediately before the trial began, substituted his corrupted jury panel with a jury panel for another case who had not been “reached” by Capone.
Because Capone never signed checks or received any payments in his name, the government was forced to prove its case by showing how Capone lived and the money spent on his behalf, and from this have the jury conclude that he was making money that was not declared.
The jury agreed and Capone was convicted. Fans of the income tax have long pointed out that this conviction and that other criminals who have been charged with income tax evasion means that the income tax system is actually necessary to help fight crime.
Capone Would Have Been Required to Show Income From Illegal Activities
But these were illegal goods and to admit that they were being sold would admit guilt and subject him to prosecution for the illegal activities. In 1927, a unanimous U.S. Supreme Court issued United States v. Sullivan 274 US 259 (1927) which dismissed this defense. The Supreme Court upheld the conviction of a bootlegger for failing to file an income tax return. The bootlegger had argued that filing an income tax return would admit that he was making profits illegally. The bootlegger asserted that forcing the return violated the Fifth Amendment prohibition against being forced to answer incriminating questions. Justice Oliver Wendell Holmes said:
“We see no reason…why the fact that a business is unlawful should exempt it from paying the taxes that, if lawful, it would have to pay."
Evasion of the Income Tax is Very Hard
Having personally been a government witness against the perpetrators of a massive tax fraud, it was distressing to watch the jury decide to acquit even though the guilt was obvious and hundreds of innocent people lost hundreds of thousands of dollars in civil actions brought by the IRS. Remember, in a civil IRS audit, the burden of proof is on the taxpayer and intent of the taxpayer is largely irrelevant. You are guilty and owe taxes unless you can prove the IRS is wrong—often a very hard and expensive task.
Why did they acquit these criminals? Because the prosecutor’s burden in a criminal case is to prove intent to violate the law. If the person didn’t have the intent to violate the law, then that person will be acquitted. The income tax law is so complex that when people say they thought they were doing the right thing and had no intent to violate the tax laws, it is very often that they are acquitted by juries that are also convinced that no one understands the income tax law.
This may be the reason that less than 1,500 people a year are actually convicted of tax fraud—even though all of us are probably aware of some percentage of that number who are evading income taxes—illegally.
Aside from the problem of proving intent to violate the income tax law, under the income tax it only takes one party to cheat. Cash is legal tender. If someone pays a person, it is the person’s responsibility to report the income. An individual can decide to inflate or even create deductions that reduce taxable income improperly and thus allow a person to evade taxes.
This complexity and difficulty to criminally prosecute IRS evaders explains why the current level of evasion is at least $600 billion and growing.
Why Sales Taxes Are Harder To Evade
The FAIRtax taxes the sale of all new retail goods and retail services—not just legal sales. Under the FAIRtax, if someone purchases a new retail good or service and is not charged the FAIRtax by the seller, he knows that there is evasion happening. Both parties are breaking the law.
If a drug dealer sells drugs to a person and does not collect and remit the FAIRtax, they have broken the law. It is simple. It does not require proving intent or the drug dealer arguing that there was no intent to evade the tax. The sales tax was either collected and remitted to the collection agency or it was not. This also flows back to the drug dealer’s source, they either collected the FAIRtax when they sold the dealer the drugs or have a resale permit. If they don’t, they are in violation.
When a store purchases goods for resale, it either must pay the FAIRtax or supply a form showing that the purchases were for resale and not taxable. Now there is a clear paper trail of the purchases and an audit is much simpler. You either have the purchased goods in inventory, lost them by theft or spoilage, or you sold them. These permits are easily tracked by computers and state agencies have models that show what people who purchase a certain amount of goods should be paying.
We also know that over 90% of U.S. retail sales are made by less than 10% of the merchants, and these merchants keep very good records. Just try getting Walmart to not charge you sales tax on your next purchase.
Conclusion
Had the FAIRtax been in effect in 1931, it would have been much easier to convict Capone. Instead of having to get the jury to agree that Capone could not live like he did without income which was not reported, all the government would have had to do is show that Capone’s businesses were not paying the FAIRtax on their purchases and sales.
Surprisingly, some of the D.C. people with whom I have met have actually criticized the FAIRtax as too simple. They revel in complexity for which they can be paid large amounts of money to interpret.
Issac Newton, the 18th century scientist said, “Truth is ever to be found in simplicity, and not in the multiplicity and confusion of things.”
It is time to adapt a simple tax system that all of us understand, that reduces evasion and shows all of us the actual cost of our government.
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
October BOGO TIME
PLUS 25% discount on all event banners
Now is the time to get the FAIRtax℠ word and logo in public’s eye. Therefore, we will be offering numerous BOGO’s ( buy one get one free ) for the month of October. Also, we will continue to offer all FAIRtax℠ banners at a 25% discount during the month of October.
Presently, BOGO’s are available on the following promo items:
Palm Cards, Business Cards, Adhesive Bumper Stickers, Magnetic Bumper Stickers,
Event Stickers, Scrolling Banners, Pens, Notepads, Pocket Calendars
EVENT BANNERS
We currently offer four event banner designs and all are available at a 25% discount, a super deal.
Your FAIRtax℠ Store is ready for the October national election time period with GREAT DEALS so you can present the FAIRtax℠ concept and logo at all Presidential campaign stops, at elected representative town halls/events, and all other political meetings plus your own FAIRtax℠ educational meetings.
WWW.FAIRTAXLOGOSTORE.ORG
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
“I have been a supporter of the FairTax since about 2000 and I try to continually educate myself on the strengths of the FairTax as well as the arguments that people use against it. Your podcast is perfect for me to add to my studies.” This is an excerpt from an email The FAIRtax Guys received from Bryan of Tennessee recently and accurately expresses the purpose of FAIRtax Power Radio.
Bob Paxton, the creator of FAIRtax Power Radio, is a Florida volunteer with previous radio experience and someone who is devoted to getting the FAIRtax passed into law as soon as possible. He invited Ron Maiellaro, another Florida volunteer, to join him. Together they are “The FAIRtax Guys” and they have created a series of podcasts that not only introduce the listeners to the FAIRtax but also discuss the many different aspects of the FAIRtax as it relates to the economy, our Constitutional rights, politics, business and anything else that comes to mind. After all, the FAIRtax will affect every aspect of American life.
The free 30 minute podcasts cover all aspects of the FAIRtax including an entertaining introduction, how the FAIRtax increases purchasing power for everyone, how the FAIRtax promotes business, an interview with a Congressman, a comparison of the FAIRtax to the current income tax and the flat tax and even several visits from Thomas Jefferson. The FAIRtax Guys take current events, such as the national elections and discuss how the FAIRtax will help create jobs and improve the economy.
You can listen to FAIRtax Power Radio online or download the podcasts on Spreaker.com or on iTunes. You can also find FTPR on YouTube and SoundCloud.com. All of these platforms have free apps for smartphones so you can listen at any time.
The listenership for FAIRtax Power Radio is expanding but in order to reach out to enough Americans to create a groundswell of support, we need your help. After enjoying FTPR, please let others know about it by sharing the links and websites in the previous paragraph.
Please introduce everyone you know to FAIRtax Power Radio. As The FAIRtax Guys say in every episode, “The FAIRtax: 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.
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Thank you for staying FAIRtax strong!
