Chairman’s Report - March 13, 2020

At first glance, the above title doesn’t make any sense.  The FAIRtax is the fantastic plan to replace all Federal-income and payroll-taxes with a 23% sales-tax on new retail goods and services.  The coronavirus is a viral strain challenging our health, creating havoc in the stock market and materially affecting business production in many countries around the world.

Many companies in China are affected, and aren’t able to supply companies in the U.S. and other parts of the world with products made or assembled in China.  A growing number of schools and colleges are closing their campuses and moving to online delivery, even for first and second graders.  Many sporting events are not allowing fans to attend but playing their games in front of empty bleachers.

Many companies are facing the tough choice of either keeping their offices open and requiring employees to come to work, or sending them home with many of them having no income from paid leave.  If the business stays open and someone becomes infected and infects others, is the business liable?  If the business sends valuable employees home, should they pay them?  What if the business can't afford to pay them if they’re not working?
 
The overwhelming percentage of deaths from the coronavirus appear to be the most elderly and people with other medical problems.  However, there are some deaths of younger people who didn't have other medical problems but apparently had a weakened immune system.

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Democrats and Republicans are rushing to find ways to help Americans who are going to be negatively affected by the coronavirus.  This includes not only providing medical help when they can, but also trying to soften the economic impact on our citizens.

The President is proposing a “holiday” where the 14.4% Social Security payroll-tax would be suspended.  This would give workers an immediate 7.2% raise, and allow businesses to keep 7.2% of the workers’ wages in their business.

The President is also looking at making this suspension permanent and funding Social Security from the general fund.  The problem is The President isn’t talking about raising other taxes to offset the loss of revenue.  Therefore the President’s plan would rapidly accelerate the impending insolvency of Social Security.

Others are proposing the federal government provide sick pay to workers who don’t have a sick pay plan with their employers.  Others want to combine this with increased amounts of unemployment insurance.

All of these measures may be necessary to prevent an economic meltdown, but where is the money going to come from to fund these plans?  Using past history, the government will just print more money and further increase the national debt.

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Under The FAIRtax, if you want to provide money to people in an emergency like we are facing now, the government could easily increase the prebate amount sent monthly to each household or reduce The FAIRtax rate.
 
Once the crisis has passed, returning to normalcy is quite simple.  Just change the prebate amount back to what it was and/or change The FAIRtax rate back to what it was.  That was easy!

Will this increase the deficit?  Yes, but each of you will know exactly how much.  We can easily look at the national debt and calculate on a napkin how much of a FAIRtax change would be needed to pay for any temporary stimulus after the crisis has passed.  We can easily calculate how much of an increase would be needed to balance the budget and pay off the national debt.

Would The FAIRtax solution help some wealthy people who don’t need the help?  Yes, but if it helps 10% of the population who don’t need the help, and 90% who do, 90-10 is a really good ratio.
 
If you want to provide money to Americans today, then The FAIRtax would be a lot easier, more efficient and more effective than any of the current proposals.

This is easy with The FAIRtax, but impossible with the present corrupt income-payroll-tax system