I myself dislike the concept of a Transaction tax, simply in and of itself. The idea of a gradualist tax does titillate, though, due to my belief that most of the growth in Consumer Credit originally comes from the need to aggregate funds for the disastrous Personal Income Tax. It is the Tax which insists that Taxpayers periodically find overlarge amounts of Cash to satisfy a Debt which they did not incur in the first place. I think it is Time to again break out my old idea of a Bank Transaction tax of 2% per transaction of the total amount. First, it will tax all economic activities–even the Cash markets–as Retailers have to turn to other services not provided by Cash markets; a real Critique of the program which I have heard before. Second, it will raise a huge amount of tax revenues, so much so that it can eliminate the Personal Income Tax, and possibly Property taxes with a justifiable split of Tax receipts. Third, such a Tax would be cheaper for the average American, especially with the removal of Accounting Costs, and automatic notation by the Bank of the funds removed; this allowing Americans to keep track of their Tax Costs while the Government can clear the amounts of Tax owed.
I could make the Argument that such a Bank Transaction Tax would actually tax higher volatility Trading naturally, because of the frequency of the applied Tax. I could fill in the blanks with the Concept that retaining Business taxes at the same time not only suppresses bad economic production, but acts as a Suppressant of inflationary Consumer pricing. I could bring forth the idea that such a Tax would contain low Profit trading, while not affecting low-Gain trading because of natural growth factors. I could apply the belief that such a Tax will cancel excess Consumer Credit extension as the Tax would fall on such extensions; leading both Lender and Consumer to reevaluate their positions carefully, in light of the fact that each has paid a 2% tax on the Transaction. The creation of financial instruments will shrink with greater stability in those elements, as Everyone realizes they must take a 2% loss up-front. The final Concept is the realization that the Tax is immutable, and has no relationship to the viability of the transaction, literally making all Participants study their potential Profit margins with great care.
There is, of course, the hazard that organized Lobbyists will immediately push for elimination of Business taxes in the presence of this new Tax. It is an idea which should be solidly resisted. Business taxes possess many advantages: they hold down Consumer price increases, they lessen the resistance to Wage increases for employees, they impact paid Stock dividends little if any, and (my belief) actually induce better business performance with control of Production Costs with active control of Management. It is far greater security of economic performance, when Business managers do not see immense wealth in individual deals; the Tax insisting on long-term, continuous performance for construction of wealth for managers. Critics of my program will call for precise data to prove the Above, but there is little material which can be found; all because no one has tried to alter the Tax structure in this way. I think it is Time that We tried. lgl