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Chairman’s Report - March 20, 2020

Manufacturing,
The Coronavirus &
Occam’s Razor

Manufacturing can be defined as any mechanical, chemical or physical process in which materials are made into new products.  Its accomplished in huge factories, plants and of course quite nicely in small businesses.

In an excellent article posted on The Balance website, Kimberly Amadeo looked at the state of manufacturing in the U.S.  Among some of her well-documented statistics are:
  • In 1970, American manufacturing accounted for 24.3% of GDP, more than double the 2018 level of 11.6% of GDP
  • In 1970, China was the world‘s 5th-largest manufacturer, but in 2010, it was the largest with the U.S. in 2nd place
  • In 2011, 19% of manufacturers wanted to locate in the U.S.  Now it’s up to 37%
  • After President Trump’s tax and regulatory changes, U.S. manufacturing production is increasing at the highest rate in a long time

As explained in a monologue by Tucker Carlson on Fox News, the U.S. manufacturing problem isn’t limited to just getting many of our kids’ toys and clothes from other countries.  Mr. Carlson points out 95% of the antibiotics people in the U.S. use are imported from China.  If China either intentionally or unintentionally cuts off the export of antibiotics, the result would be a significant health crisis in the United States.
Coronavirus

The coronavirus is a viral strain creating havoc in the stock market and materially affecting manufacturing production in many countries around the world.  Because the U.S. continues to discourage U.S. based manufacturing with its reliance on the income-payroll-tax, the manufacturing slowdown in other countries is having a direct impact on the ability of many U.S. employers to keep their doors open and continue to pay their employees.

Many of these companies and their employees have almost no cash reserves, a problem due in large part to the income-payroll-tax-system which penalizes everything.  Because many of these companies will have to close and send workers home, there is widespread panic both businesses and individuals will be driven into bankruptcy.
Occam’s Razor

William of Ockham was a 14th century Franciscan friar-philosopher who asserted when you have competing theories which try to provide the answer to a problem, you shouldn't reject a solution just because it’s the simpler one.  In fact, the simplest solution is often the best answer.

How Do The Three Above Tie Together?

With the coronavirus causing manufacturing slowdowns all over the world, many companies in China and in other parts of the world aren’t able to supply companies in the U.S. with products made or assembled offshore.  This means many of the supplies needed by U.S. companies to either produce or deliver products to U.S. stores aren’t available or, in many cases, are only available at higher prices.

If American companies can’t sell products, many will have to close their doors and send their employees home, even if the coronavirus didn’t directly affect their employees or their customers.  Employees who have no pay and no savings can’t spend money, so many of the other stores in town who depend on these purchases may have to close as well.

Closing is one thing but rent, insurance and outstanding payments to suppliers continue, and if these payments can’t be made, the economic impact widens.  Many of these suppliers will have to close, leaving their employees without the income they need to pay their bills.

The downward spiral continues, creating more and more effects like a pebble thrown into a pond.

One major component of this crisis is U.S. manufacturing has been decimated, and even though it’s currently increasing, it will be many years,  even if the tax cuts and regulatory reform remain in place, before it even comes close to previous levels.

One question we must ask is why our
U.S. based manufacturing has disappeared?
Obviously, what has helped it start to rebound is part of the answer,
lower income-taxes and less regulation.

Some pundits correctly point out the service sector of our economy is growing.  That is true but does that explain why the manufacturing sector has been decimated?  No it hasn't!

We need to apply the principle of Occam’s Razor to find the answer.  The answer is a simple one.
 
The major reason for the disappearance of U.S. manufacturing is our un-American, anti-Individual, anti-Business, income-payroll-tax-system.


Here are some facts:
  • The U.S. is the only major industrialized country whose tax system does not rebate back its manufacturers a portion of the taxes included in the price of their exports.  This makes the prices of U.S. goods higher than prices for comparable foreign goods on the global market
  • The U.S. is the only major industrialized country whose tax system financially rewards the imported products which compete against its own domestic products
  • The U.S. income-payroll-tax-system punishes companies and workers who want to save money by taxing their money when they earn it, and then taxing it again when they invest it
The FAIRtax Solution

When The FAIRtax becomes law:
  • Not 37%, but probably over 70% of the world’s manufacturers will want to move to the U.S. to produce their goods
  • U.S. exports will be 10%-20% cheaper in foreign countries thereby making them much more competitive and increasing demand for American products.  Higher demand means more American businesses and more American jobs
  • American consumers will have to pay the same 23% sales tax on imported goods as they will on domestic  goods.  Foreign produced products will no longer have a competitive advantage in the U.S. market
  • Earnings for both U.S. manufacturers and American workers will increase rapidly
  • U.S. manufacturers will be able to keep 100% of their earnings.  This will allow them to significantly increase their investment in expanding their businesses, improving current products and developing new products
  • The more manufacturing taking place in the U.S., the less adverse impact overseas disruptions can have on U.S. markets.  This will greatly reduce the level of layoffs and shortages in the U.S.
  • U.S. workers will be taxed not when they earn money but only when they spend it on new retail goods and services
  • No one will waste countless hours and money trying to comply with the federal income tax
  • The more savings companies and people have, the more likely it will be they can weather temporary economic disruptions, like the one the coronavirus is causing
  • Companies and people will be rewarded, not punished for producing more.  What you reward you get more of
 
Conclusion


The principles of good taxation were formulated many years ago in "The Wealth of Nations" written in 1776 by economist Adam Smith.  He made some observations which are still true now.  Smith said it was really simple.  An effective tax system should have 4 guiding principles:
  1.  Fairness
  2.  Certainty
  3.  Convenience 
  4.  Efficiency

Not even the most effective mouthpieces for The Ruling Class can make the argument the present income-payroll-tax-system meets even one of the above criteria.  All they can do is spread confusion and tell us we should ignore the principle of Occam’s Razor.  They want us to believe taxation and its effect on the economy is much too difficult an issue for us simple people to understand.  Such a complicated issue requires their superior intelligence to deal with it, and it’s in our best interests to just do what we’re told.

However, even simple people can understand why The FAIRtax fits all 4 of the criteria set out by Adam Smith.  It’s fair, certain, convenient and efficient.
 
The Ruling Class has long profited from the unfairness, uncertainty, inconvenience and inefficiency of the income-payroll-tax-system.  That’s why they’re fighting so hard to keep it in place even though they know it hurts everyone but themselves and their allies.

Do you want to see more manufacturing in the United States?
Replace the corrupt income-payroll-tax-system with The FAIRtax and get out of the way.
Demand Congress to pass The FAIRtax—the only “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
 
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Read Evasion Study Summary
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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.  

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Digital TV are available on The FAIRtax Guys

This week's Episode #204 - "Income Tax = Bad Policy"

People vote with their feet and a lot of votes are leaving the income tax states and heading to the consumption tax states.  Texas is gaining about 1,000 people every day!  Florida is gaining 640 people per day.  Why?  They are fleeing high income-tax states for consumption tax states.

This migration has political consequences too.  The consumption tax states are gaining seats in the House of Representatives while the income-tax states are loosing seats.  California is expected to loose a seat for the first time in its history.

People aren’t the only ones on the move.  Extrapolate this concept to major corporations and you get corporate inversion, formerly American companies who find it more profitable and easier to do business when their corporate headquarters moves out of the United States.

It’s a serious problem but the politicians would rather demagogue the situation instead of fixing the problem.  And the problem, of course, is the income-tax.

The real solution to these problems?  The FAIRtax of course.

Join us for another information packed episode of FAIRtax Power Radio and you’ll be on your way to becoming a FAIRtax expert.

As always, the AFFT is looking for Volunteers to help their efforts.  Watch or listen to see if there is some small way you can help.

There’s always more in FAIRtax Power Radio such as a reminder of the promotional items available now at Click here to visit 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!   Yours In Freedom!

Steve Hayes
Chairman, Americans For Fair Taxation

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