May 7, 2007

The FairTax: Don’t Tell the CEO

The one thing members of Congress and corporate CEO’s have in common is that they have to rely on key staff people to keep them knowledgeable about a lot of issues, and to help them set priorities. But sometimes the staffers will go so far as to determine if something is a priority or not, based on their view of the likelihood of congressional passage, or the likelihood of generating a large constituency response.

Most members of Congress and corporate CEO’s do not consider replacing the dysfunctional tax code with the FairTax (a national retail sales tax) as a priority for the same inexcusable reason. Namely, they do not believe it will ever pass. This defeatist attitude is not uncommon in Congress, but it is counter to the culture of most successful business.

I hear this attitude all the time from CEO’s and leaders of some of the best companies in the world. These are the same leaders who built great companies with an idea, passion and determination. Many of these CEO’s are American dream success stories who are being told by their key people and legislative advisors to stay below the radar, because their influence is better used on trying to impact a “line item” in the tax code for their business or industry. 

Maybe no one has told the CEO’s that the FairTax is good for business, their employees, the U.S. economy and their grandchildren. Despite a substantial grassroots movement behind the FairTax, corporate CEO’s and independent business owners are noticeably silent about supporting the FairTax, which has been introduced in both the House and the Senate again.

The CFO (chief financial officer) may not be recommending the FairTax as a priority for the CEO, because it would immediately eliminate the entire corporate tax department and at least half of the rest of the finance department. This could affect the CFO’s job grade and his compensation package might decrease a little bit. 

The company’s Washington lobbyist is most likely not in favor of the FairTax because it would wipe out the entire tax lobbying industry in Washington D.C. Since tax lobbying is over half of all the lobbying that goes on in the halls of Congress, many people would rather protect their profession than doing what’s best for the future of our country.

And even though the thousands of auditing firms and tax lawyers would find more productive things to do with their great education and intellect, they would rather not have to bother changing careers at this point in their lives.

Don’t tell the CEO, but that same phone call, campaign contribution or fundraiser for a Congressman or Senator could influence them to get out in front of the FairTax movement as a co-sponsor, instead of waiting to see if it takes off.

Don’t tell the CEO that he and most of his employees (those making $30,000 a year or more) are part of the 50 percent of taxpayers who pay 97 percent of all income taxes. The 50 percent of taxpayers who pay little or no taxes at all are the ones to whom the politicians pander, even though business people write the biggest campaign checks.

Don’t tell the CEO that the reason his global growth initiatives are not moving as fast as he would like is the economic “sucking” sound of countries with much more favorable tax structures than the U.S. And don’t tell the CEO that replacing our current tax code will supercharge our already vibrant economy and put some distance between the U.S. and the rapidly growing economies of China and India.

There is no doubt that this country faces some serious problems with national security, domestic spending, poison partisan politicians and a lack of leadership, but all solutions go through a strong economy, which is powered by successful U.S. businesses.

This economic environment will not continue unless CEO’s, business owners, their respective business associations, chambers, clubs, federations and roundtables look above the legislative radar, and get vocal about the only legislative proposal that would help and empower everybody and every business in this nation. Period.

While CEO’s and business owners are being silent below the legislative radar on the FairTax, the very vocal class warfare warriors, race hustlers and political pimps are destroying this country little by little and bit by politically deceptive bit.

If we give up on changing Washington, D.C. or replacing the dysfunctional anti-growth tax code, then we are giving up on a better nation for ourselves and our grandchildren. The best estate and tax planning in the world will not be able to insulate them from a coming economic disaster.

Don’t tell the CEO, because he or she might want to do something about it. That’s what they do.