The Internal Revenue Code
& Rent Seeking
& Rent Seeking
Rent seeking is an economic term derived from the work of economist Adam Smith. It simply means obtaining favorable treatment, generally from a government entity.
In D.C. terms, rent seeking has come to mean seeking an advantage from government which is only available to you or to others similarly situated.
For example, many of us have decided to purchase solar panels for our homes. Economically, if you pay $25,000 for a solar panel system and save $2,500 per year in electricity costs, it will take 10 years for you to earn back the initial $25,000 investment through cost savings.
In a clear example of rent seeking, the solar industry, with liberal donations, has persuaded the D.C. ruling class solar is so important that a homeowner purchasing solar panels should be eligible to get $7,500 back as a direct credit against his federal income-tax. [with sarcasm] Of course, this credit has nothing to do with enhancing the solar industry’s ability to sell solar systems, it’s only for the environment. Right.
For example, if a solar purchaser owes $8,000 in federal income-taxes, the solar credit will save him $7,500, thereby lowering his tax bill to just $500. This means other taxpayers have financed 30% of the value of the solar panels for the homeowner.
This is all a tax credit does, transfers costs from one group to another.
This tax credit reduces the cost to the homeowner from $25,000 to $17,500, and reduces the time needed to recoup the initial investment from 10 years to 7 years. Many realtors insist solar panels increase the value of a home by at least the cost of the solar system. Therefore, after 7 years, the homeowner no longer has any electricity costs because electricity to their home is being provided by the solar panels at no additional cost to the homeowner.
The benefit for the homeowner is more than just the shortened time to realize savings equal to their initial investment. For example, if the homeowner invested $17,500 and realized a 5% return, he would receive $875. He would then owe federal income-tax at a rate of say 10%, pay $87.50 in federal taxes and have $787.50 remaining.
Contrast this with the solar investor who saved $2,500 per year on his $17,500 investment, after the tax credit. This is the same as earning $2,500 per year in a bank account but better. This calculates out to a 14.2% return. Since the homeowner is not getting interest but merely saving the $2,500 he would have paid, the 14.2% is not subject to any federal income-tax. In addition, it’s a guaranteed return because the homeowner is paying himself and the investment is not subject to the normal risks of a high-return investment.
Except for the money spent on lobbying and donations to politicians, the solar industry is obtaining a huge benefit to assist its sales. Such benefits are only available to industries who pay the D.C. “Ruling Class” the right amount of money. This is a classic example of rent seeking, getting something from the government not available to other citizens who aren’t purchasing solar panels.
The taxes saved by the homeowner are paid by the rest of us who haven’t purchased solar panels. There are many other examples like this: electric car tax credits, numerous real estate tax deductions and countless benefits to other companies.
Income-Tax-System Complexity
& Rent Seeking
& Rent Seeking
Many of us have spoken to very wealthy people and even to the leaders of major companies and in amazement, have observed only polite interest when we explained the benefits of The FAIRtax. Generally, they sought to end the discussion and move on to other things.
The reason? Most of these individuals and companies believe they have gotten some big advantages over others through the current income-tax-system, and as a way of protecting their positions.
Not only is complexity required in the income-tax-system to create special benefits to be sold to special interests, it’s also useful in another way. Wealthy taxpayers and wealthy companies can afford the best tax specialists who can spend whatever time is needed to decipher the income-tax-system, or at least confuse the IRS enough to accept their interpretation.
Wealthy taxpayers and companies can also challenge any decision made by the IRS regardless of the amount of legal fees.
What about the rest of us? We don’t have the resources to pay for the best tax advice and legal fees if we have to go to court.
Conclusion
Many candidates promise their policies will “level the playing field”. They promise they will take away the advantages groups they disagree with have long used. In most cases, they want to give to their supporters the advantages they seek to take away from the other groups.
Politicians on both sides really don’t want to “level the playing field” for everyone. A level playing field will cost these politicians money and power.
If they sincerely wanted to “level the playing field”, they would as a group endorse and pass The FAIRtax! The FAIRtax means small business owners don’t need expensive tax consultants, and the rest of us would just do what is best for us. If we want solar panels then we purchase them. If we want an electric car, we buy one.
Many justify these special benefits because they say the tax credits help subsidize production of things which have value to our environment. But rather than do something which only benefits some of us, would it not make more sense for these companies needing subsidies to just petition the Congress for money for their industry?
Then all of us could see these expenditures and, what the “Ruling Class” really fears, all of us could calculate the amount of The FAIRtax being collected from each of us for these “necessary” expenditures. This, of course, is not what the “Ruling Class” wants.
“This will level the playing field”, is their system for “Let’s reward my friends”. Of course, if you hear someone say they want to pass The FAIRtax, you know the person really does want to level the playing field.
The D.C. “Ruling Class” and their minions sincerely believe they have superior understanding and knowledge. They are continually surprised some of us question their decisions.
To them, we should emulate the line from Alfred Lord Tennyson’s poem,
"The Charge of the Light Brigade",
“Ours is not to reason why, but to do or die”.
“Let’s level the playing field! Pass The FAIRtax—the only "Fair tax".
Let’s energize the entire United States and show people they will control the amount they pay in tax. Pass The FAIRtax—the only “Fair tax”!
It's time for Congress to have serious discussions about replacing the FAILED income-payroll-tax-system with The FAIRtax, the only truly "Fair tax"!
The author George Bernard Shaw said these words in a play he 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?”
President Trump, “Embrace the FAIRtax, the only Fair Tax the only fair tax and the only real tax reform! Stand up to the Swamp. They will oppose you anyway because they see you as a threat. What have you got to lose?”
The truth is the truth. 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.”
Take Back America Again! Pass The FAIRtax Now!
FAIRtax Online Resources
Americans For Fair Taxation - Home Page
Americans For Fair Taxation - Facebook Page
Americans For Fair Taxation - YouTube Channel (The Chairman's Report is now posted here)
Americans For Fair Taxation - Twitter Page
Americans For Fair Taxation - Chairman's Report Podcast on Spreaker posted Fridays at 6am-ET
Americans For Fair Taxation - Chairman's Report Podcast on Apple
Americans For Fair Taxation - Chairman's Report Podcast on iHeart Radio
Official FAIRtax Logo Store
The FAIRtax Guys - Home Page
The FAIRtax Guys - Facebook Page
The FAIRtax Guys - YouTube Channel
PopVox - The People’s Voice On All Things Legislative
Read Evasion Study Summary
The FAIRtax Guys
Ron Maiellaro & Bob Paxton perform their FAIRtax Power Digital-TV Show & Podcast. When the show streams to Facebook, The FAIRtax Guys plus a few AFFT experts are responding “live” to your comments and questions. A free app is available for iOS and Android.
Digital TV: Tue-8PM-ET Americans For Fair Taxation - Facebook Page
Podcasts: Tue-9PM-ET Posted on Spreaker, Apple Podcasts & iHeart Radio.
Digital TV are available on The FAIRtax Guys
This week's Episode #190 - " What About A VAT?"
In their never ending quest for more of your money, some in Washington have been promoting the idea of a VAT (Value Added Tax) to help fund their long list of un-Constitutional government programs.
So just what is a VAT? How does it work? Could it replace the income-tax and would it be a better solution than The FAIRtax? Or would it just be added to the current income-tax? What other countries are using the VAT and what are the consequences? Inquiring minds want to know!
Using the fairtax.org website and a chart prepared by Dr. Karen Walby, Director Research for Americans For Fair Taxation, The FAIRtax Guys compare and contrast the VAT to The FAIRtax. And what they discover about the VAT is it presents more problems than solutions.
It's important for American citizens to fully understand proposals put forward by Congress so they can be analyzed properly. Proper analysis leads to informed voting.
Enjoy this week’s show as The FAIRtax Guys light up the tax debate with more great information.
There’s always more in FAIRtax Power Radio such as a reminder of the promotional items available now at Our Store and a review of Jim Bennett’s Grassroots Corner Report.
What Can Each Of Us Do?
Call the local and DC offices of your Representative and 2 Senators. Use the following script:
- I am sure Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income-payroll taxes over the next 10 years.
- Since most will say they don’t believe their boss has seen the study, drop off a copy, email a copy or click Read Evasion Study Summary and copy/paste the link into an email.
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion.
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law.
- They probably will say their boss believes simplifying the income tax will handle the problem.
- Explain, when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So, it’s unlikely they are going to pay 30-40% when they were paying 0% because they have already decided it’s okay to cheat.
- Say, the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year.
- Point out Evaders do not self-identify by putting an “E” on their income tax return.
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well.
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws.
- Then explain the way to handle evasion without unleashing the IRS audits is The FAIRtax.
- If you meet with your Representative or attend a town hall and ask these questions, you will be even more effective.
American's Big Solution - The FAIRtax Primer America Needs
Hard to believe but there still are people who have not heard of The FAIRtax. For those people, America’s Big Solution provides a starting point in their study of The FAIRtax and is meant for any age.
America’s Big Solution is an introduction to The FAIRtax written by Terry Tibbetts, author of “A Spartan Game: The Life and Loss of Don Holleder”, with help from Ron Maiellaro, President The Florida FAIRtax Educational Association. You can buy an electronic version for only $2.99 for the Amazon Kindle, the Barnes & Noble Nook and Apple iOS. You can purchase a print copy at the same Amazon link above for $9.25.
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Thank you for staying FAIRtax strong!
Yours In Liberty!
Steve Hayes
Chairman, Americans For Fair Taxation
Help FAIRtax Become The Number One Issue in 2021
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