As the deadline to file federal income tax returns approaches, multiple protests are planned, and while some critics of President Trump will take to the streets to demand he release his tax returns, another demonstration will urge him to drastically reform the tax system.
On Saturday, Americans for Fair Taxation will rally outside Trump Tower in New York City Saturday between 11 a.m.-1 p.m. ET, with a very simple message.
“The message is it’s time to actually do real tax reform,” said Americans for Fair Taxation President Steve Hayes.
The Fair Tax would scrap federal income taxes for individuals and businesses, along with payroll taxes and state sales taxes and replace it with a 23 percent national retail sales tax.
Hayes says there are multiple reasons for pursuing a simpler system like the Fair tax, starting with the need to curb deficits. He says paying taxes with each purchase makes tax evasion virtually impossible, which is not the case with the more traditional reforms currently being discussed in Congress.
“You’re going to continue to have legal evasion which, according to the study just released by Professor (Richard) Cebula using IRS and government numbers, (there will be) nine trillion dollars dollars of evasion over the next ten years,” said Hayes.
He says the alternative to the Fair Tax is a lot more audits.
“There’s less than 0.7 percent audits of which three-quarters are no longer face to face audits but through the mail. They’re going to have to do 10-15 times more actual audits than they are now to even start to put a dent in evasion,” said Hayes.
“The 80 percent who obey the law are going to get harassed, just like the 20 percent that are not following the law,” said Hayes.
Hayes says politicians and special interests benefit from the perpetuation of the current system, but the American people do not. He says a Fair tax would also help people see how big government is.
“Everything is funded through a retail sales tax. People, when they make purchases, will see the real cost of government at the time of a retail good or a retail service,” said Hayes.
He says that makes politicians nervous.
“If there’s anything that’s going to help reduce the urge of these guys to reduce the urge to spend and look for ways to cut, it’s going to be everybody watching them closely, because every time we make a purchase we see the cost of government,” said Hayes.
One of the most common arguments against the Fair Tax is that a sales tax is a heavier burden on lower income Americans. Hayes says that’s not true, noting that Americans living under the poverty line would get monthly assistance on top of any income, in essence lowering their effective tax rate from what it is now.
He also notes that the payroll tax system is far more regressive, since it starts taxing the very first dollar earned by an employee.
While getting the Fair Tax to be part of tax reform this year seems like a steep climb, Hayes is encouraged that President Trump seems eager to hear all ideas. And while he says the current framework of reform is an improvement, the Fair tax would make things far better.
“Anything is better than we have now. No question about it. The Brady plan is better than we have now, but it’s all temporary because the lobbyists will start changing it once it’s there. We need to make a fundamental change. We need to give our freedom back and put in a system that works for everybody,” said Hayes.