Chairman’s Report - October 25, 2019

Saving Social Security
Why All Americans Must Support The FAIRtax

In an excellent article posted on the The Balance website entitled "Will It Run Out", Kimberly Amadeo analyzed the present pending insolvency of Social Security & Medicare.  Ms. Amadeo states:
  • January 2019, 68 million Americans received some Social Security benefit  
  • 90% of workers paid Social Security taxes
  • 3 sources of income fund Social Security
    • Workers contribute 85% through payroll taxes
    • Interest on the excess funds held by Treasury pays 11%
    • Current beneficiaries pay the remaining 3% through taxes on their benefits  
  • Since Social Security started in 1935, the Trust fund has collected $20.9 trillion and paid out $18.0 trillion

A New York Times article by Jeff Sommer summarizes reports on data about the coming crisis for Social Security retirees.  Mr. Sommer points out:
  • Next year the income received from workers will not be enough to fund the benefits for retirees.  When that happens, the program will start using the assets in the trust funds that were accumulated from excess payments from workers over the amount needed to pay benefits  
  • Government studies predict that the trust funds will be gone in 15 years  
  • If nothing is done, benefits to current retirees will be cut by about 20%  
  • About 50% of Americans rely on Social Security for most of their retirement income, and 25% of Americans have almost no retirement savings  
  • Approximately 10,000 baby boomers are retiring each day  
  • By 2035 it is estimated that Americans age 65 or over will increase from 49 million to more than 79 million
Aren’t Social Security Payments Guaranteed?

Because we are told the payments we made to Social Security are in a special account in our names, we assume the payments are guaranteed.  Unfortunately, like many “promises” from government, this is FALSE.

Any question about guaranteed Social Security benefits was answered by the Supreme Court in "Flemming v. Nestor".  In the Social Security Administration’s summary of the court’s findings, they state the following:

“There has been a temptation throughout the program’s history for some people to suppose their FICA payroll taxes entitle them to a benefit in a legal, contractual sense.  That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way depriving a contributor of a promised future benefit.  Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all.  Congress clearly had no such limitation in mind when crafting the law".

In addition, the Social Security Administration puts this info on every statement they send:

“Your estimated benefits are based on current law.  Congress has made changes to the law in the past and can do so at any time".

Since 85% of the payments into the Social Security “trust fund” are made by workers, it's important to note the number of workers supporting each retiree is down to 2.8 and the number will continue to drop.

To make matters worse, the “trust fund” has no actual “money” in it.  Just federal government IOU’s.  Does anyone have any doubt deficits running at $1 trillion per year will eventually make it difficult if not impossible to pay these IOU’s?

Why The FAIRtax Is The Solution

There are many proposed solutions:
  • Raise the amount of payroll tax from 15.3% to 18% or even higher.  Of course, this additional tax will likely increase the rapidly growing evasion rate which Dr. Cebula predicts will be $9 trillion over the next decade.  Even if evasion does not increase, 15.3% of $9 trillion, $1.37 trillion, will not be going into the “trust fund"  
  • Increase the retirement age to 70 or older  
  • Decrease benefits to retirees or reduce the benefits for later retirees

All of these “solutions” ignore the fact the present system of funding Social Security on the backs of working people isn’t sustainable.  As many predict, the increased use of robotics will dramatically reduce the number of workers over the next 15 years.  This means fewer and fewer workers will be contributing as more and more retirees demand their promised benefits.

It’s simple math, the real solution is to fund Social Security through The FAIRtax, the only “Fair tax”.

When you pay The FAIRtax on new goods and retail services, a portion of the money paid is earmarked for the Social Security Administration.  Instead of relying on a decreasing work force to support retirees, you rely on all Americans who make purchases.

If there isn’t enough money received from The FAIRtax to fund Social Security, you can simply increase The FAIRtax percentage or reduce spending in other areas and use the savings to fund Social Security.

The FAIRtax removes the curtain behind which The Swamp and Ruling Class control us through the income-payroll-tax,  something The Swamp & Ruling Class are desperate to avoid.  Letting us see how sausage is made lessens their ability to keep us “under control” and it also eliminates many opportunities for them to profit from the problem they created by selling benefits to special interests.

In speaking with retirees across the country, many of them have expressed concern the money they have saved was taxed when they earned it and will be taxed again.  For most of these people with substantial pre-taxed savings, they also have other income subject to the income-tax and, if they are working, to the payroll-tax.  This income would not be taxed under The FAIRtax.  In many cases, this will mean they pay less tax under The FAIRtax--even if they spend some of their savings and pay The FAIRtax.

When I explain the problems facing the Social Security system, the group becomes quiet as they begin to consider the effect on their lives if Social Security payments are reduced.  I ask the group, “How many have insurance?”  They all raise their hands.

Then I liken The FAIRtax to purchasing insurance to protect the ability of Social Security to meet its obligations to people like them.  I explain how The FAIRtax prevents the coming collapse of the Social Security system.  Most nod and say The FAIRtax makes a lot of sense.

When speaking with young people they sometimes point out The FAIRtax will be easier on older people who have already raised their families who don’t have the demands of a young family.  While I agree these young families will have more required spending, I ask if they plan to purchase a house?

Most say “Yes".  I then explain if they elect to purchase a used house (90% of the houses sold are used), then they will pay no FAIRtax.  If they elect to purchase a used car, no FAIRtax will be owed.  Maybe they will want to defer the purchase of the new house until their family is raised?  There is laughter.

I ask the group if they have any relatives living on Social Security.  All the hands are raised.  I pose the question, “What would happen if the Social Security benefits were reduced by 20% or more?”  The smiles go away and many respond their relatives would likely have to move in with other relatives to survive.

Then I ask if it’s not worth the possibility of paying more tax, if they decide to purchase new goods and services, to ensure a relative is not forced to move in with them and the relative has to rely on them for support.  There is a silence normally followed by nods of agreement.

The Swamp & The Ruling Class like the idea of millions of retirees and soon to be retirees have to be concerned Social Security will be reduced or gone unless our “betters” provide a solution.  The Swamp & The Ruling Class believe this is a good thing because it will give them more control over a large portion of the population.  They want us to believe it’s up to them to save us.

It is like the Reagan quote, “The most terrifying nine words in the English language are: I’m from the government and I’m here to help".

How many people would continue to employ people who consistently promised they were fixing things but the things they supposedly fixed still didn’t work?  Would you take your car to a mechanic to fix a problem and the same problem starts again in a week?  Isn’t it time the rest of us said to The Ruling Class, “You have messed up Social Security and we don’t trust you to fix it"!

It doesn’t require an advanced degree in economics to know spreading the costs of Social Security over the entire population is better than relying on a diminishing number of workers to fund payments to an increasing number of retirees.

Fortunately, there is a simple solution to the Social Security crisis.

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

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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 #183 - "On The Road with the President"

On 10/5/19 The Florida FAIRtax Educational Association set up a booth at an event in Champions Gate, FL called a "Trumpapalooza".  The organizers were kind enough to give us a second booth as no extra charge.  This is where The FAIRtax Guys set up their recording station and interviewed a number of attendees, vendors and two Presidents.

One of the Presidents was a Trump impersonator but the other was our good friend Steve Hayes, President of Americans For Fair Taxation.

Interviewing Americans about The FAIRtax is always enlightening and this was no different.  Watch and listen to the comments of the attendees about The FAIRtax and taxation in general and listen to the encouraging comments by Steve Hayes.

Even though this was a Republican event, The FAIRtax Act of 2019 is an American piece of legislation which will help all Americans.  The FAIRtax Guys were please to be invited to this event and are willing to attend similar events regardless of party affiliation.
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.
Thank You for Opening The FAIRtax Chronicles, Our Sponsored Mailings
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Thank you for staying FAIRtax strong!
Yours In Liberty!
Steve Hayes
Chairman, Americans For Fair Taxation


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Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!