In this unforgettable video saga, we chronicle how the Federal income tax system has eroded the American economy and outline a brilliant, yet simple plan for total tax replacement.

Even President Obama finally acknowledged what everyone knows – the tax code is a destructive mess and it’s hurting the country.

“…so tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years — without adding to our deficit. It can be done.” – President Barack Obama

Here is a copy of the written AFFT testimony submitted to the House Ways and Means Committee, for the 1-20-11 hearing on tax reform.

Phil Hinson comments,
Excellent written testimony – every FairTax supporter should take the time to read this. I especially liked this statement:

“Our failure to counteract these border-adjusted taxes explicitly encourages consumption of foreign, rather than American, goods. And it converts many of our nation’s retailers into what are effectively tax-free trade zones for foreign produced goods”.

This is a very powerful way to make the case for a border adjustment mechanism in our tax system.

Other quotes were brought to mind while reading this testimony:

“If the U. S. truly repealed its corporate income tax and replaced it with what is essentially a border adjustable consumption tax, the U. S. would be one heck of an attractive place to invest. In fact, the U. S. would be the world’s largest tax haven. We would be better than Ireland. Any foreign company could come here and manufacture and there would be no income tax. Remember that I said that 120 countries in the world had VATs? None of them repealed their corporate income tax. This would get rid of the corporate income tax and put in place this consumption tax, so you can imagine that this would make the U. S. a very, very attractive place to invest and it would undoubtedly lead to international repercussions that would be quite interesting. I think other countries would probably copy.”

Dr. Peter R. Merrill
Director, National Economic Consulting Group
PricewaterhouseCoopers
Former Chief Economist, Joint Committee on Taxation

In other news…

• The FairTax bill was introduced into the Senate as S 13. The Senate Sponsor of the FairTax bill, Sen. Saxby Chambliss [GA], was joined by 5 cosponsors.
• AFFT asks us to “Bomb The Tax” – Sure the media will be all over this “angry rhetoric” that would supposedly have crazies attacking the IRS.
• After many years debating online, Hayden and Morphh finally got together in Atlanta for a couple beers and friendly conversation.

Why is the VAT Tax the Worst Possible Kind of Tax?

Here is how a Value-Added Tax works for the politicians and powerful special interests and against American Taxpayers:

• A tax is added to the cost of every product made in America, as it is produced, at every level of production.  So in making a car, the iron ore has a VAT tax added, the steel mill adds a VAT tax. Then the car company adds a VAT tax. And finally the dealer adds a VAT tax and all of this is added to price you pay for your car!
• Now here is the part the politicians really like: you do not see the value added tax! The VAT tax is the perfect politicians tax.  Every time the politicians want to spend, and spend and spend some more, they increase the hidden VAT tax “just a little.” You would never have any idea how much the VAT tax adds to your cost of living!

The first point seems to suggest that the cascading cost of a VAT is bad. However, percentages don’t cascade. A 10% VAT is equal to a 10% FairTax, no matter how many levels of production. How is this exclamation much different than the FairTax?

The second point I believe is incorrect. As I understand it, a VAT is not a hidden tax.  It’s presented on the sales receipt just the same as the FairTax and should contain the full percentage and cost. Any change in the tax rate would be equally reflected on the sales receipt. Again, what’s the difference?

A VAT tax has almost identical economic properties to a sales tax.  We’ve discussed it on this blog in the past – “What’s wrong with a VAT?” A VAT would have a higher administrative cost, and possibly open up more areas for loopholes and exemptions, but on the other side, a VAT could have less evasion (though more collection points). I prefer a sales tax, but is there really a cause to demonize the VAT, an almost identical consumption tax?

So folks… Am I way off or is Hoagland blowing smoke on these points?

Dr Karen Walby has updated the paper on compliance costs.
Some of the points:

- Complying with the federal income tax code amounts to imposing a 22.2-cent tax compliance surcharge for every dollar the income tax system collects.

- The average taxpayer paid $3,112 more in taxes to subsidize the unwillingness or inability of some taxpayers to pay their fair share.

- In other words, if everyone paid the taxes they owed, average individual income taxes paid per taxpayer could have been 38.7% percent less.

- Compliance costs are found to be highly regressive.

- Corporations with assets of $1 million or less (more than 90 percent of all corporations) paid a minimum of $382 in compliance costs for every $100 they paid in income taxes

- Projections show that by 2015 compliance costs will grow to $482.7 billion.

And possibly most sobering:

“A compliance burden of 6 billion hours per year represents a work force of over 2,884,000 people: Larger than the populations of Dallas (1,210,393), Detroit (900,198), and Washington, D.C. (553,523) combined; and more people than work in the auto, computer manufacturing, airline manufacturing, and steel industries combined.”

Read the full paper: “What the federal tax system is costing you besides your taxes“

The FairTax National Victory Campaign is about to take a huge step forward!

Michael Reagan, the late Ronald Reagan’s eldest son, has just agreed to serve as the Honorary Chairman of the FairTax National Victory Campaign!

Dedicated to keeping alive the legacy of his father’s influence on America, Mike strongly believes that his father would have been a strong advocate for the FairTax had it existed then.

He will be doing everything he can to bring the FairTax to passage now.

It makes perfect sense considering President Ronald Reagan had this to say about the income tax system, “Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive, it reeks with injustice and is fundamentally un-American… it has earned a rebellion and it’s time we rebelled…”

Mike has now agreed to help us get the second American tax revolt moving into high gear. That means a lot of Congressional communications, media work, radio, telephone recordings and television. It means a broader base of supporters behind the beloved legacy of Ronald Reagan, one of our greatest Presidents.

We have needed a strong public “face” and voice for the FairTax and it is hard to imagine a better champion for our needed cause.

I’ve written you before that this will become the “Year of the FairTax” and this is a big step forward toward that goal.

Please help me welcome a fine person, still devoted son and newest FairTax leader to our important work!

Ken Hoagland
Chairman, FairTax National Victory Campaign

According to Ken Hoagland, the FairTax National Victory Campaign Fund has reached and exceeded their launch goal of $250,000. They will begin reaching out to all 140,000,000+ voters in every one of the 50 states to sign on for FairTax Victory. He stated that “We will be on the internet, telephones and in voters mailboxes all across the country for sure starting in October. We are even trying to work out a television show, which would be a great step forward for the FairTax, and enable us to reach so many more voters effectively.”

The donation page states that the push will be a crucial step in making the FairTax a reality during this critical time for the American economy.  It also announces the upcoming March release of a new book by Hoagland titled The FairTax Solution.

The Missouri House gave final approval to a proposed constitutional amendment to abolish the state income tax and replace it with a FairTax system.

The proposal would raise the state sales tax from 4.225 percent to 5.11 percent and eliminate the 6 percent personal income tax and 6.25 percent corporate income tax on business earnings.  Accompanying the sales tax rate hike would be a substantially broadened sales tax base that would include all purchases.   Estate taxes would remain on the books.

The proposal would create the distribution of a monthly tax rebate check to cover the cost of any taxes incurred up to the federal poverty level, which is $26,000 for a family of four.

If the Missouri Senate approves it, the measure will be submitted to Missouri voters in November 2010 without need for consideration by the governor. If approved by the voters, the measure would take effect on Jan. 1, 2012, and Missouri would become the first in the United States to test the macro-economic benefits of the fair tax, according to the release.

• News posting at FairTax.org
• Interview on Senate hearing

FairTax.org is asking you to join thousands of your fellow FairTax supporters as they rally for Tax Day 2009. They have two April events planned: Jacksonville, FL (4/11) and Columbia, SC (4/15).

A number of FairTax All-Stars are scheduled for one or both rallies including:	Former Gov. and Presidential Candidate, Mike Huckabee	Syndicated radio host and FairTax book author, Neal Boortz	FairTax bill Lead-Sponsor, Rep. John Linder (GA-7)
FairTax bill co-sponsor, Rep. Steve King (IA-5)	Business entrepreneur and radio host, Herman Cain	Ga. Insurance and Safety Fire Commissioner, John Oxendine	National Communications Director for AFFT, Ken Hoagland

Also, FairTax.org has placed full-page ads promoting the FairTax as a REAL economic stimulus package.

They recently purchased full-page ads in Investor’s Business Daily, the Los Angeles Times, Chicago Tribune and Tulsa World.  They are asking for help to run more ads to reach fellow citizens, policy makers, and elected officials during this critical time for our economy. (See the latest full-page Investor’s Business Daily ad here).

Now he’s back as host of a new show (“Huckabee“) on Fox News and doing commentary for ABC Radio. He is also starting a national tour now to promote his new book, Do the Right Thing: Inside the Movement That’s Bringing Common Sense Back to America. Governor Huckabee’s book covers the FairTax at length, clearly stating that, “It’s been my position that a responsible tax structure should be flat, fair, finite, and family friendly. The FairTax covers all those criteria.”