The Chairman's Report April 9, 2021


In many languages and over hundreds of years, people have agreed that the way to tell if politicians are lying is to see if their lips are moving.

President Biden and his Congressional allies are taking to the airways declaring that the tax changes that they are proposing will not affect any single taxpayer making less than $200,000 or any married taxpayers making $400,000 or less.

As David Burton, Senior Fellow in Economic Policy for The Heritage Foundation pointed out in his paper:
  • Confiscating all income over $1 million would increase federal revenues by about $986 billion annually.
  • Confiscating all remaining after-tax income of those with incomes of $500,000 or more would increase federal revenues by about $1.4 trillion annually. 
  • Confiscating all remaining after-tax incomes of those earning $200,000 or more would increase federal revenues by $2.7 trillion annually.
As David points out, it is ludicrous to believe that people putting in the effort required to earn over $200,000 would continue to put forth that same effort if the government was going to confiscate everything they earned above $200,000.
  • It is equally unreasonable to believe that high income earners will just stand idly by while their wealth is confiscated.  When these people are targeted for tax increases, they’ll hire whatever professional help they need to minimize their tax liability.
How then is the Biden administration going to raise the money it needs to at least begin to pay for all of the proposed new spending?

Corporate Tax Increases

Many corporate tax increases are now being discussed or proposed.  One is a global minimum corporate tax of 21%.  This would mean that if a company had operations in Ireland which has a 12% corporate tax rate, it would still have to pay a minimum of 21%.  There is another proposal to raise the corporate tax rate from the current 21% to 28%.  There are other provisions that would impose a minimum tax on U.S. corporations even if they had tax losses that would otherwise exempt them from the corporate tax.

In short, the Biden administration believes that it is a political winner to demand that corporations shoulder the burden of financing his spending proposals.  They’re counting on us believing that by going after the corporations, they’re sparing us.

Like Bill Clinton famously said to the grand jury during his impeachment investigation, “It depends on what the definition of “is” is.”

One thing that is true is that most of us have to support our families with what we have left over after paying our local, state and federal taxes.  This is our “net-net income”.  From our “net-net income” we then pay for food, shelter, transportation, medical care and the myriad of other things required to live.

It is true that increasing the income tax on corporations will not directly reduce the amount of our take-home pay.  But it’s also true that increasing taxes on corporations will adversely affect our ability to buy the things we need to support ourselves and our families.  Here’s why.

Let’s say a husband and wife decide to start a grocery store.  They incorporate their business, lease a building, purchase the necessary equipment and supplies and hire employees. To stay in business, they must turn a profit.  Simply stated, their income from selling groceries must exceed their expenses.

That means that if expenses increase in any given area, the owners must meet that increase with either more income, or lower expenses in other areas.  They could raise their prices to their customers, try to negotiate lower prices from their suppliers, cut employees’ wages or benefits, lay off employees or reduce their own share of what the store brings in.

If the store’s income tax bill goes up by $5,000, the owners would likely raise prices before they would lay anyone off or cut their own income.

If their gross sales were $500,000 per year, they would need to increase their prices by 1.25% to get the additional $5,000.  It’s 1.25%, not 1% because the extra income is taxable and they’d need to earn an additional $6,200 in order to net the $5,000 they need.

In that scenario, everyone who shops at the grocery store will pay an additional 1.25% for the same groceries they were buying.  Someone who was spending $500 a month for groceries would now have to pay $506.  Now that doesn’t seem like much, but that’s just one store.

Multiply that seemingly small increase by the number of stores that were forced to raise their prices and you soon find that thanks to the increase in the corporate income tax, your money buys a lot less than it used to.  Supporting your family just got harder even if your individual taxes didn’t go up.

The politicians will tell us that it is the greedy corporations that are making our lives more expensive.  If they weren’t so greedy they say, they’d respond to a tax increase by reducing their own massive profits rather than raising prices on the little guy.  The politicians want us to be mad at the corporations for something the politicians are totally responsible for.  The real reason for the higher prices is not corporate greed, but the higher taxes.

Estate Tax Change

Even if the exemption is lowered to $2 million, most of us will not accumulate estates large enough to be subject to the federal estate tax.  However, the Biden administration is proposing a change to the estate tax laws that would increase taxes on those of us fortunate enough to inherit something of value.

For example, assume that Sally purchased some land 30 years ago for $100,000 and it has increased in value to $600,000.  If she sells that land for $600,000, she will owe capital gains tax on her $500,000 profit.  Her tax rate would be 20% plus the 3.8% net investment tax because her income for the year is over $200,000.  This means she will owe $89,327.50.   

The net investment income tax is a tax on money earned from investments.  It starts for Sally when her total income, earned income plus investment income, for the year is at least $200,000.  Since her total income exceeds this, she will owe the additional 3.8% on her gain from the sale of the land.

Sally’s only child is Judy, a schoolteacher who makes $50,000 per year.  Now, assume that Sally doesn’t sell the property.  Instead, she leaves it to Judy in her will.  Sally’s total estate is valued at less than $11,700,000, so upon her death, she will not owe any federal estate tax.

Under the present estate tax rules, if Judy sells the inherited property for $600,000, she will owe no income tax because of what is called “the step-up-in-basis” provision in the federal estate tax.  Under that provision, Judy’s basis on the property is the $600,000 it was worth when she inherited it, not the $100,000 that Sally originally paid for it.  So, under current law, if she sells it for $600,000, she will owe no tax because she did not realize any gain.

Under the Democrats’ proposed estate tax changes, when Judy inherits the property, her basis on it would not step up to its current value of $600,000, but would remain at the original $100,000 that Sally paid for it.  Under that scenario, if Judy sold the property for what it was worth when she inherited it, she would owe the same $89,327.50 that Sally would have owed had she sold it before her death.

While many of us would like to be in Judy’s position even if she had to pay almost $90,000 in federal income taxes, this change will affect everyone who inherits something of value—including those like Judy who make much less than $200,000 per year.


The FAIRtax eliminates the estate tax along with all personal and corporate income taxes.  Under the FAIRtax, if politicians wanted to increase our tax burden and reduce our “net-net income”, they would have to increase the FAIRtax rate—a move that would be readily apparent to everyone.

This scares them because it takes away their ability to hide the real reason that our “net-net income” is going down.  With the FAIRtax, they could no longer fool us into thinking that raising taxes on corporations instead of individuals will not affect our personal bottom lines.

Instead, they will have to plainly reveal to everyone who makes retail purchases of new goods and services just how much of our money they are taking from us.  They could no longer falsely claim that someone else is paying when they know that’s not true.

Their lips are moving.


The politicians are clearly lying when they try to tell us that increasing taxes on corporations and eliminating the step up in basis will only affect the wealthy.  Watch their lips—they are moving.

Their advisors look at computer models and say that if we confiscate this amount of money from the corporations, then we will get this amount of income to the government.  They don’t consider that the additional money the corporations must pay ultimately comes from the pockets of individuals.  Customers pay higher prices.  Employees get fewer hours and/or reduced wages and benefits.  Shareholders and business owners get smaller dividends.

What about companies that can’t increase their prices because of competition from imports that are subsidized by the income/payroll tax system?  They may have to cut their labor costs by either laying off people or not giving any wage increases.

What happens if corporations do what the politicians say they should do and reduce their profits when taxes go up?  For publicly-held corporations, that reduces the value of their stock, again leading to a smaller return on investment for the individuals who own that stock.  But it doesn’t stop there.

A lot of corporate stock is held by pension funds.  Reduce that stock value and you shrink the size of the pension funds that many decidedly non-wealthy retirees depend on.  There’s just no way around it.  Higher corporate taxes lead to less money for all of us.

It is time that Americans take control of our country by eliminating the income/payroll tax system.  No more games that profit only the Ruling Class and their minions the politicians.   ENACT THE FAIRTAX!

If you have friends who don’t know about the FAIRtax, send them to  Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.

Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.

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.”

Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who 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?”