The idea is that what you're going to do is get your entire paycheck. Because we fund the government differently.
On today's episode of The Brian Nichols Show, we're actually talking about abolishing the IRS! But we're doing it in a roundabout way! Listen as Steve Hayes from the Americans for Fair Taxation joins us to outline how the FAIRtax could actually help us abolish the IRS on our path of eliminating the income tax.
"We started working on this idea of eliminating the income tax, totally eliminating it, and replacing it with an excise tax - effectively what we had in the Constitution, which is a retail sales tax on the federal level.
It would be on new goods and purchases - and emphasize new - not used, but new goods and purchases, and retail services. If you go get your haircut, you get it if you're a lady and you get a manicure, those are retail, those are going to be subject to the fair tax. The fair tax rate is 23%.
The idea is that what you're going to do is get your entire paycheck. Because we fund the government differently. We don't fund it with an income tax and the payroll taxes like now - we fund it by giving you all of your money so that you're in charge of how much tax you pay.
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Brian Nichols 0:09
stead of focusing on winning arguments we're teaching the basic fundamentals of sales and marketing and how we can use them to win in the world of politics teaching you how to meet people where they're at on the issues they care about. Welcome to The Brian Nichols Show. Happy Thursday there, folks, Brian Nichols here on The Brian Nichols Show. And thank you for joining us on of course, another fun filled episode. I am as always your humble host. And today we're gonna be talking about taxation. Now, if you're in the Liberty world, we often say taxation is theft, but let's talk about some middle ground and we're gonna talk about fair taxation. But first we want to go ahead and give a special shout out to today's sponsor the expat money forum 2022 Head to Brian Nichols show.com forward slash expat you can grab your free Yes, I said free tickets to our virtual summit November 7 through November 11. Five days 30 expert speakers watch for a week reap benefits for generations join us and it's hosted by Miguel thorup, founder of expat money and host of the expat money podcast and summit again, grab your free tickets at Brian Nichols show.com. Forward slash expat folks, I am so excited for today's episode, because when we talk about bringing the ideas of liberty to as we always say your average person, sometimes it requires us to take things in an incrementalist approach. And with that, yeah, the Libertarian taxation is theft mantra sometimes gets a little old. So let's talk about taking that middle ground step. And with that we are joined today by the head of the Americans for fair taxation. And we're talking about the fair tax Steve Hayes. Welcome to The Brian Nichols Show.
Steve Hayes 1:50
Ryan, it's great to be with you. I'm looking forward to this, as am
Brian Nichols 1:53
I see. Thank you for joining us on today's episode. And thank you for bringing a different approach to the audience. We haven't had the chance yet to talk about the fair tax fair taxation. So let's do this. Before we dig into all the good stuff, let's give you a chance to introduce yourself to the audience. And then yeah, let's dig into what is this idea of a FairTax.
Steve Hayes 2:13
Got it? Well, I appreciate that. I am one of those people that has been a registered libertarian for a long time, but have also been part of the enemy in the sense that for a number of years, I was a tax attorney, I made a lot of money doing tax shelters and working on ways to help people avoid taxes. And I quit that because I began to see that it what it was doing was actually nothing positive except for my bank account. And it was actually making a lot of problems. Because every time there was a bill that allowed or a provision that allowed some of my clients to pay less taxes, Congress would come back and not only would they cut that off, but they would take another huge bite out of our ability to actually live and they would create a much more complex system. And finally, I just said, you know, I'm not going to do it anymore. And so in the mid 80s, I switched my practice, I became more of a corporate business attorney, you can't ever get away with the tax system until you get rid of it. So that's why I call myself a recovering tax attorney. You know, I'm like a recovering addict. We started working on this idea of eliminating the income tax, totally eliminating it, and replacing it with an excise tax effectively what we had in the Constitution, which is a retail sales tax on the federal level, it would be on new goods and purchases and emphasize new not used but new goods and purchases, and retail services. If you go get your haircut, you get it if you're a lady and you get a manicure, those are retail, those are going to be subject to the fair tax. The fair tax rate is 23%. The idea is that what you're going to do is get your entire paycheck. Because we fund the government differently. We don't fund it with an income tax and the payroll taxes like now, we fund it by giving you all of your money so that you're in charge of how much tax you pay. And then as you go out and you buy things if you go to Walmart and you spend $100 You're going to pay the fair tax. If you go out to a garage sale and like for my grandkids, my daughter laughs at me if I buy them when they're young new goods of any kind, you know toys. But if I buy them used, I don't pay the fair tax because we only tax things once. So we're talking about a shift, radical shift in the way that we tax Americans. And we're also talking about a huge transfer of power away from DC, back to you and I, because we really can determine it. A lot of people say, well, sales taxes are very regressive, meaning they actually penalize lower income people who have to spend all of their money on certain basics. So what we have done is we've created a system called a prebate. It's a tax credit. But effectively, what happens is that a family of four can go out and spend $34,000 on new goods and retail services, and not pay the fair tax. That's for every family of four, we're not saying you've got to make, you know, 50, grand or less, or you've got none of that's all that's out the door, you fill out your form every year, how many people in your family, how many people have valid social security numbers, because they're the ones that you get the exemption, if you've got people with you who do not have valid social security numbers, they don't count. So the amount of your tax savings will go down. But instead of having under the present system, they take your money away before you get it unless you're self employed. And then you have to claw it back, if possible, you know, by making investments and doing things that the federal government bureaucrats approve of.
What happens now is that even if you have a $34,000 income for a family of four, they're not going to pay any income tax, not with all the credits and all, well, what are they going to pay, they're going to pay the 7.65% self employment, you know, Social Security and Medicare tax doesn't matter what the size of the family what their earnings are, they're going to pay it. Plus, when you look at the fact that everybody in this business world, and you get a lot of people on your show, they're in business, every one of them will tell you that they have to include the cost of the income tax, the cost of the payroll tax, and the cost of preparing and collecting that and filing tax returns in the price of what they sell. And it will run somewhere between 10 to 12%. Inflation of a price just because of the buried income tax and corporate tax and social security, all the way up to 20 25%. In some cases, if you've got a lot of steps into production, and a lot of labor intensive, so we're talking about a system gives you the freedom to decide. It gives you an ability to spend money, and you can buy new goods and services, up to 34,000 for a family of four. But if you decide not to, you buy a used goods, mostly you buy food, obviously, which is new, but you buy mostly used goods, you're only going to pay that fair tax on the portion of the new good to Dubai and the new services. So we really empower people. And Brian to thing and I think before we started, I told you that Harry Brown, who's in my mind, just an incredible man and libertarian who ran for president and he was very, very good at articulating some basic principles. And one of the things that really resonated with Harry was that by doing the excise tax, every single American who is a consumer will see the cost of government on every retail purchase they make because it'll be on the receipt that is absolutely horrifying to DC. Because from the smallest child to the oldest person who goes out and makes retail or orders online retail purchases, you're going to see the price increased by a significant amount. And you're going to say what's that for? That's the amount required to fund your federal government even though we're not really funding it. We're only funding part of it. We're still running at a deficit. We're borrowing money, but that's it. Plus, I can tell Are you on a napkin how much of my 23% is going to go to pay for defense, for example, how much of it is going to go to pay for? I don't know, a social program. I can actually tell. It's horrifies the bureaucrats, they don't want us to know all of these things. Right now you don't have a clue. I don't know how much I'm paying in tax, because I'm paying it in the price of what I buy. I'm paying Social Security. Now up to 145,000. That's, by the way, the highest level in the world for so security type taxes. And it's gonna go up, as you know, the progressives want to make it unlimited. But what you've got here is a situation where we've got a complex broken system that we can eliminate, with a very easy to follow understand tax system. And that's why we call it the fair tax, because everybody can decide what they want to pay.
Brian Nichols 11:02
Sign me up. I mean, this sounds like at the very least, right, a rational, logical middle ground where we could take a sensible step in trying to rein in the just crazy taxation that has been plaguing our American electorate. Now, for generations, it feels like it's been getting worse and worse and worse. And let me just ask the obvious question, Stephen. That is, well, this sounds so great. So let's hold this up. Why have we seen this move forward yet? Well, and
Steve Hayes 11:33
the reason, and I've been going to DC on this for 30 plus years, I've been going up in meeting. And I cannot tell you how many members of Congress, and we've had 60 co sponsors in the past in the house. But how many members of Congress say Oh, it's a great idea. But they may even co sponsor, but they don't do anything about it. And the reason is that it's a very, very lucrative situation for Congress. For two reasons. It's financially lucrative, because the lobbyists get paid literally billions of dollars, to try to buy special benefits for one group or another. You know, for the entertainment industry, for the cable industry. For the space industry. I mean, all of these people try to carve out benefits to save them money. Of course, those benefits are making you and I pay more, or the government borrow more. Because every time you take away from the gross tax, you have less income. And they really like that, because those lobbyists not only provide them a safe landing after they leave Congress, and they can make 12345 Literally million dollars a year, once they leave Congress working for the lobbyist. But also they get a lot of campaign money that's funneled back to them. Because who do you think contributes to their PACs? Who do you think contributes to the dinner where the tickets are $1,000 a plate? They get the money back. And then the other part of this that makes it very, very difficult, besides all the people that make money off the system, is that look at the amount of control that these people would lose. Because right now, they can say, Brian, we're going to change the way that people who do podcast can deduct things. We're gonna decide it's no longer business, that it's all after tax. In other words, you're gonna get whatever income you get, you pay all the taxes, but you can't take anything as that deduction. Now, how likely is that probably not likely in the same way, but it's something they can do. So whenever you see group just like those conservative groups that tried to get approved in the Lois Lerner days for an exemption, you remember that they got turned down and delayed past the election. So Obama had had no problem getting reelected. All of those people are basically no longer subject to Congress. What a concept, what a concept. We have all of our control back Congress if they want to punish you, Brian. If they want to make it difficult on you, and they're gonna say, your expenses or your sales tax is not 23 it's 30%. They got to show it to everybody.
Brian Nichols 15:02
All right, and then the game is up,
Steve Hayes 15:04
then the game is up, because they people realize, well, wait a minute, why are they picking on Brian? You know, why not using you as an example, but you're a podcaster you're doing libertarian, and you're doing freedom type podcast? Why are they picking up? Well, it's very obvious today, they could hide that in the way that they set up, the amount you can deduct, and what you can do and not do as a business expense. I mean, it's just an incredible club, they have not to mention having the IRS coming on at you. Not to mention all of those things, because, you know, and they're trying to get more data, you saw that hope attempt they made they buried hidden, yeah, page 85 of the 86 page program. But they're trying to get the financial institutions, all of them to report the transactions in and out of all of our bank accounts. Well as to how much money
Brian Nichols 16:10
you're getting that well, there's no Pay Pal, which I remember if I shared this on Facebook last year, you got hit with a missing context, fake news, whatever the the Facebook warning is. And it was that the IRS was going to be looking at any transaction over $600 If it was in Paypal, or Venmo. And that was, that was fake news. And yet, and yet, here we are today, and I just got a notification from my Pay Pal that I had to put my notifications in in order to get my my payments through with the IRS. And it's like, what I thought was I thought that was fake news. I didn't think that was real, Steve.
Steve Hayes 16:47
No, it's all real. And here's the thing, they had the actual and the commissioner, you got it, you got to cut them some slack, because Congress is giving them an impossible job. This is really an impossible job for anybody at the IRS. And that is trying to understand and collect under the prison income tax system, what's Oh, that's why you've got they're admitting over a trillion dollars of income tax and payroll tax that should have been paid being evaded over a trillion dollars. They're admitting that and they're saying, Look, you want us to get in collect this money, you got to give us more power, we have to know how we can catch these people. So we need to get look at their bank accounts, we need to get these Special K ones you're talking about on all the Venmo and PayPal and all those payments, because people are doing that and avoiding paying tax on it. Now they're also doing it when they send their grandchild a Christmas present, right? You have a check, you know, money. But if it's over $600, and hopefully he gets that much more, it's gonna be showing up his income. And he's gonna have to say why he got to $600 show it's a gift. And if you've ever dealt with an iris computer, you have a really good idea of what that's going to be like. And so that's the system, that's the problem they've got is they've got an impossibly complex and actually corrupt system that they're being asked to enforce. And they're really not able to do it. And it's one of the reasons why we're going to go to a different form of taxation, because the present system is literally collapsing.
Brian Nichols 18:42
I mean, it sounds like the answer to that is just to abolish the IRS. But that's a different podcast for a different day, Steve, but I think they'll go ahead, sorry,
Steve Hayes 18:52
no, but what this what our program does is abolish the IRS, because it's collected by the states, who already collect the state sales tax. And because 92% of the retail transactions are now conducted through about 8% of the merchants, and it's going down. It becomes very, very difficult to evade. That's why California was 50 billion I think it was three years ago, they did a study 50 billion of state sales tax. They calculated they may have a 2% evasion. Now on their franchise tax, which is the income tax is probably, you know, between 10 and 15%. Okay, but on the state sales tax, it's very, very difficult because in order to get high evasion, you're going to have to have the other 92% basically say, we're not going to pay anything, right. That's not going to happen now. You know, and so what you have is a much more collectible system. Simple. You don't have to file unless you're doing a retail service. retail goods, you don't have to file a tax return, you pay your taxes, when you go to the store. If you decide not to go to the store, you grow your food. Guess what? No taxes. Under the present system, if you grow your food, guess what, you still got to pay the tax. Because it's an income base tax, payroll tax in the income tax. So we eliminate all of that, we put Brian back, driving the car, as opposed to in the backseat or maybe in the truck to where a lot of us feel. And you're now driving the car. And you can decide if you want to drive it over here to this car dealer and buy a new car, in which case you're going to pay the fair tax on new goods. Or, No, I'm not going to buy a new car, I'm going to buy a used car, you don't pay the fair tax. So it's basically a system that I can't think of any and that's why the founders put it in to the way they were going to collect tax. So we've had excise tax, we had our first revolt over the whiskey excise tax, right. And so what we've got is a system that is self policing. We've got a system that eliminates the IRS eliminates, again, 90 plus percent of taxpayers filing a return, and the ones that do are simply filing in 46 of the states, including District of Columbia, they're filing a similar return that they do for the state tax. So let's talk about some when you make a purchase, they charge state tax. And they hit another button and it calculates the federal.
Brian Nichols 22:06
Well, let's talk about the wins, then because I know we're already getting hard pressed of time here. And I want to make sure we have enough time to focus on where we're heading. And this is the exciting part because we are seeing that despite this being pardon the the phrasing on libertarian wet dream. This is in fact actually happening. And we're seeing more and more states not just start to to take another look at the way they tax but in many cases starting to overtly eliminate the income tax entirely. Steve, can you address that really quick,
Steve Hayes 22:37
really quick, we've got three states, Nebraska, Alabama and Georgia which have bills introduced, which will in fact, eliminate their state income tax, it'll go to a fair tax system at the state level will have they'll have a prebate for progressivity issues. And it will eliminate that we've got a state like Texas, which is actually doing a study of how they can implement an increase in their sales tax, they're going to need to put in some type of a prebate to make it fair, that would bring down or maybe even eliminate their property tax Nebraska's intention, Ryan, is that they will not only eliminate the income tax, but they'll eliminate if not all 80 to 90% of their property tax that's being paid. So there's a lot of attention. It's not just being driven, because you've got legislature that are thinking, Oh, what's good for the people. Now, I don't know that that's true. But what it's being driven by his competition with the surrounding states, where other people are moving, and where all the businesses going, because they are much more pro business. The states like Tennessee have incredible boom, when they got rid of their income tax states like Texas and Florida. Incredible booms, regardless of COVID. We've got more people moving to Florida now, from the north that people are afraid they're going to change the red to a pink, you know, state, because of there may be bringing some of these ideas down. So we do have an opportunity if your listeners are more interested that I'm sorry about running out of time here, but we can go to fairtax.org. And you can get more information about our plan. We would love for you to sign up, contribute $5 $10 1000 Whatever you want to do, but we're all volunteers, but we do need some money to keep this going. But I really believe we've got a very good opportunity in the next few years to see some major changes at the state level. And that's going to make it almost impossible for QA Congress to avoid looking at the scam they've been running and having it exposed and justify it when they've got all of these other alternatives that are much better, that are being demonstrated at the state level.
Brian Nichols 25:16
And Steve in I know, I'm already saying we're hard pressed for time. But we're very, very quick. Also, there is a bill right now, that is before Congress, it hasn't actually been brought up yet. HR 25 talks about that. And the importance of that?
Steve Hayes 25:30
Well, it's very important, because since 1998, we've had a bill in Congress. That has been hr 25. And it's a bill that will enact the FairTax. As I've described it, a little setup for the income tax to be eliminated. The 16th amendment, which authorized the income tax is to be repealed within seven years. And, actually, I think it could be a lot sooner, because once the FairTax starts to work, and we start to see all the economic benefits, because it'll grow the economy faster, we're no longer going to reward imports over our own goods, we could go into that it's a lot of information economically be good. But we're also going to have people get a real taste of liberty again, and they're not going to give that away. And the way to eliminate another Congress taking it back is to get rid of the 16th Amendment, which I think we'll be able to do it much sooner than seven years.
Brian Nichols 26:33
That's what we'd like to hear. All right, Steven, don't worry for running out of time, because this is just part one of the conversation. I'm sure we're going to be continuing this conversation very soon. Because yeah, this is something that I think a lot of folks are gonna be reaching out to you. And I know, I'm gonna be getting asked all sorts of questions about this. So we're gonna have to have a part to answer some questions. Specifically, dig deep. And of course, we'll make it easy for folks who want to go ahead and continue the conversation for our audio listener. All you got to do click the artwork in your podcast catcher, it'll bring you right to Brian Nichols, show.com, where you can find yesterday's episode, the entire transcript of today's episode, plus all the links and we'll go ahead and make sure we include the link so you can support the amazing folks there at the Americans for fair taxation and supporting the fair tax. And, folks, by the way, did you know that we have a YouTube version of the program if you're on the audio version, you're missing out entirely. So if you are here on the YouTube, well, please make sure you hit subscribe, so you're sticking around for the long haul. And while you're here, make sure you hit that little bell so you're not missing out a single time. We go live here on The Brian Nichols Show five days a week. With that being said, Folks, did you miss our last episode here on the YouTubes? If so, I'll include it right here below. It was Richard Blanc. He's an old school retro gamer who's bringing some really cool different approaches to sales and enhancing their sales experience. I'll include that link, as I said, right here below. But otherwise, folks, thank you for joining us on today's episode. If you enjoy the episode, please give it a share. When you do, please give yours truly a tag at being Nichols liberty. But with that being said, it's Brian Nichols signing off. You're on The Brian Nichols Show for Steve Hayes. We'll see you tomorrow. Thanks for listening to The Brian Nichols Show. Find more episodes at the Brian Nichols show.com
Transcribed by https://otter.ai
Chairman & President
Steven L. Hayes graduated with honors from the University of Arkansas and the University of San Francisco Law School. As a self-described “recovering” tax attorney he spent considerable time and resources investigating alternatives to the income tax. Based on his research, including interviewing tax practitioners, business owners, employees and economists, he determined the best solution was to eliminate the income tax and the IRS and replace them with a national retail sales tax collected by the states. In 1990, Mr. Hayes joined and became President of Citizens For An Alternative Tax System (CATS), a non-profit 501(c)(4) lobbying organization, which was the 1st organization dedicated to the idea of replacing the federal income tax with a national sales tax. He was also instrumental in forming the Florida FairTax® Educational Association, Inc., (FFETA) and currently serves on the FFETA board of directors. Hayes has appeared on hundreds of radio and television shows, had numerous articles published in newspapers and magazines, and regularly speaks to groups of citizens around the country about why we must eliminate the income tax and the IRS and replace them with a national retail sales tax. Mr. Hayes has testified before the House Ways & Means Committee and former Congressman Jack Kemp’s Tax Reform Committee. He is widely sought after as a subject matter expert on tax reform panels and forums.