The Bank Deposit Tax Again!

I read this Today, and worked through its links. All the material involved distorted the reality, in one way or another. Here are the points which are distorted:

1) Everyone expects a elimination of Payroll taxation—Wrong! Social Security contributions, Unemployment Insurance contributions, and various assorted mandatory contributions will be maintained. This means that it will be an increase of taxation for approximately One-Half of the Taxpaying population. It also means that Those currently absolved from Taxation, will have to pay a Mean taxation equal to that imposed upon the Poor.

2) Everyone plays with the numbers, and blandly asserts that some set Percentage of Sales tax will replace the lost Income from elimination of Income taxes. Unadjusted Tax revenues volume to replace Income tax revenues equals a 47% tax rate, and adjusted Tax revenue volume would require a Sales tax rate almost 62%. The adjustment above is concerned with Collection Costs, Verification Costs, Transfer Costs, and Averaging Costs of variable Spending.

Poor people will find a definite bite in the new taxation, but the Wealthy also possess oversize expectations of the Windfall they will attain. The new form of Taxation will bring on a Intermediate Term increase of Minimum Wage to about $14/hour, and an effective Wage for common labor of around $17/hour, simply to gain the employ of desultory labor; you can imagine what the Costs of Expertise labor will be. You insist that the Poor must pay taxes, they will insist you pay them a Living Wage. Effective Income status will lop off 20% of the High Side, and slide it to the Low Side of Incomes.

It is time to bring my idea: the infamous Bank Deposit Tax! It is not Revenue-neutral, as it will raise a lot more Revenue than presently, if set at the sensible 2% of Deposit, and yearly repetition tax of stationary funds from Date of Deposit. It is much more sensible than a Sales tax; here, what We want is what you put in the bank, or pay to some Credit facility. We want it every time you put it there, the reason why it is much lower than an Income or Capital Gains tax. It impacts Everyone, even Those who operate in the Cash economy must eventually deposit almost all funds to obtain certain types of acceptable Payments. The rapidity of Business transactions ensure that the Tax revenues would be high and relatively Constant, and the Tax on amounts going in possess the least impact upon the Poor, who could be granted some sensible Rebate system which need be paid only periodically. I would personally keep Capital Gains taxation, but set it as a steady 20% rate of taxation, without any Tax Discounts; this to provide the progressivity of the tax system. I think I have the most brilliant tax system; and will inform the business community that this will probably be the cheapest long-term tax system. lgl