U.S. taxpayers know that the FAIRtax eliminates the income tax/payroll tax and replaces it with a national retail sales tax. However, many don’t fully comprehend the enormous positive impact the FAIRtax will have on the economy – especially in terms of attracting foreign investment to the United States.
The Tax Justice Network estimates that $21 trillion to $32 trillion in financial assets are sitting offshore in tax havens (estimates can vary due to the secrecy that pervades the tax haven system). They also estimate that $427 billion in tax revenue is lost every year because money is sitting in these offshore accounts.
The Tax Justice Network explains how this is commonly done: one of the most common ways people hide their wealth in tax havens is by setting up a legal vehicle (like a corporation or trust) to hold their wealth or assets without disclosing information about their identity or about wealth or assets held by the legal vehicle. These secretive structures serve as a curtain or firewall between the owner and their wealth, obscuring the owner’s identity and helping them hide the true value of their wealth and, ultimately, pay less tax than they should.
This “secret” money is being invested all around the world. Investment managers are always looking for ways to maximize net returns. Minimizing tax liability is a significant part of maximizing net returns. Consequently, a lot of this “secret” money is invested in countries with the lowest tax rates.
So let’s consider this scenario. The FAIRtax is the law of the land in the United States making the income tax rate zero. Meanwhile, the tax rate in Germany is 30%. That means that an investor could realize a 30% higher return if he makes his investment in the United States rather than in Germany. Under those conditions, where do you think a prudent investor is going to invest his money? It’s a no-brainer.
The influx of foreign capital invested in the United States will mean that more money will be available for businesses to hire more people, raise wages, purchase more equipment and become more productive allowing our economy to soar.
For more information go to FAIRtax.org
