Posted on 12/05/2004 9:03:22 PM PST by APT Project Director
AUTOMATED PAYMENT TRANSACTION (APT) TAX Taxation technology for the 21st century
Dr. Edgar L. Feige, Professor Emeritus of Economics from the University of Wisconsin-Madison and the originator of the APT Tax concept, has just produced new estimates suggesting that a broad-based transaction tax as low as six tenths of one percent could replace the entire Federal and State 2005 budget revenue requirements of the United States of America.
The APT concept is elegant in its simplicity - potentially replacing the entire federal and state tax system - including income, corporate profits, excise and estate taxes - in favor of a tiny tax on all transactions. The tax would be automatically deducted from special taxpayer accounts, linked by software to all accounts at financial institutions capable of making final payments to the government seamlessly in real-time. The APT tax therefore eliminates the need for individuals and firms to file income and information tax returns. This is estimated to save citizens and the government roughly $200 billion per year in administration, enforcement, evasion and compliance costs, roughly seven times the amount currently being spent on homeland security.
The APT tax seeks to maximize the goals of both the government and the people - collecting necessary revenue with the lowest possible tax rate. The difference between the APT tax and our current income tax, as well as the proposed consumption taxes, is simplicity, progressivity, and breadth-the APT tax allows for significantly lower rates spread more equally throughout the world of economic activity. The APT is a transaction tax, and as such, taxes every single transaction that occurs in the economy including fund transfers between accounts and transactions involving the exchange of bonds, securities and foreign exchange. Because the wealthy conduct a disproportionate share of these financial transactions, the tax is highly progressive despite its flat rate. Progressivity is achieved through the skewness of tax base itself rather than through the progressive income tax rate structure of the current system. The very small tax is "sliced" off each side of every transaction as it moves electronically through banks and all other qualifying financial institutions. The tax collection is orderly and transparent, the rules are simple and universal and apolitical. The APT system eliminates the entire present tax code. No more exemptions, no more deductions, no more special interest loopholes and no more tax returns.
Feige's 2005 projections of total debits of $881 Tril., and total transactions of $832 Tril. (based on the most recent 2002 Bank for International Settlements data) update the figures he used in his original paper, published in Economic Policy in 2000. Taking the average of these two estimates ($856 Tril.), he conservatively assumes that the replacement of the current tax system with a revenue neutral APT tax will reduce total transactions by 50%. The projected potential APT tax base for 2005 would then be $428 Tril., permitting a revenue neutral flat tax of .57 percent on all transactions or .28 percent on each (buyer and seller) transactor to replace projected 2005 Federal and State tax revenues.
The tax rates required for a "revenue neutral" tax are divided into three phases which are the result of a suggested implementation plan that would gradually replace virtually all Federal and State taxes. The projected tax rates are calculated conservatively, assuming that only 50% of the potential 2005 APT tax base is available, since the volume of total transactions is expected to fall with the introduction of the APT tax. To the extent that transactions decline less than is assumed in the current calculations, an even lower tax rate would be able to raise the requisite revenues. As individuals and businesses use their new found economic freedom, transactions naturally grow over time, suggesting that future tax rates could be even lower.
Utilizing 50% of the projected APT tax base for 2005 of $856 Tril., that is, $428 Tril, the estimated tax rates required to raise the revenues projected for 2005 budgets are as follows:
Phase I (Eliminate all Federal taxes other than SS and Medicare) Required revenue neutral target=$1.242 Tril: Required tax rate = 0.29% per transaction or 0.15% per transactor.
Phase II (Eliminate all Federal taxes including Social Security and Medicare "payroll" taxes) Required revenue neutral target = $2.036 Tril. Required tax rate = 0.48 % per transaction or 0.24% per transactor.
Phase III (Eliminate all Federal taxes including Social Security and Medicare "payroll" taxes and all State personal income; corporate profits and sales taxes) Required revenue neutral target = $2.436 Tril. Required tax rate = 0.57% per transaction or 0.28% per transactor.
The estimates above are based on 2005 revenue and transaction projections. Implementing the three phases will require several years and careful government management, especially the third phase. However, Dr. Feige has built in a safeguard for the APT Tax by calculating the required tax rate based on only half of the transactions that are actually observed.
Examples: Assuming full implementation of Phase three: 1. $100 restaurant bill would have a tax to the customer estimated to be 28 cents and the restaurant would pay 28 cents. 2. $50,000 family income deposited and spent or moved to savings results in $100,000 of transactions paying a total tax of $280 distributed over all the individual transactions as they occurred through the year. These amounts would be doubled if businesses fully shifted their tax burden to the consumer, but nowhere near the $15,000 to $20,000 the family would pay under the current federal and state systems.
It is now important to begin the process of planning the economic, legal, technical and administrative requirements necessary for a smooth and transparent transition from the current tax system to an APT system. The proposed, new collection system will be tested by computer simulation to capture all potential errors and omissions (new job for the IRS). Then, it will take several years to rollout, especially Phase III involving central collection and distribution to the States. A national commitment to this revolutionary, fair, automatic and lowest cost tax system is needed NOW!
For more details, please visit www.apttax.com
William J Hermann, Jr. MD, Director APT Tax Project Contact: administrator@apttax.com , 713-932-3773
You just click on poster's screen name, next to their post and it takes you to their home page, where right at the top you can see how long they have been there. I think if you hold the cursor over it, sometimes you can see it, but that doesn't always work.
These "four newbies" have been just too obvious.
"The downside of APT is very low, especially considering the benefits to the economy and to peoples' lives."
Do you have any economic studies to back up that assertion?
"The advantage of APT is the tax isn't incurred at the point of production, either for business or the individual."
It isn't? I thought that all transactions were taxed. When an automobile company buys tires to put on their vehicles, isn't that transaction taxed? When a farmer buys seed, isn't that taxed? When a manufacturer pays payroll, isn't that taxed?
What am I missing here?
The revenue comes from the tax base being expanded approx.70 Times and therefore rates can decrease a similiar factor while remaining revenue neutral for the gov't.
"If APT works as advertised, US production costs will be so low, other countries will be forced to adopt APT themselves just to compete. Stop to think about all the accummulated taxes in the production supply chain now. Reducing each of these to a mere fraction of a percent will be a tremendous reduction in the cost of production. Let's suspend our skepticism and give APT fair consideration."
PT, listen to what you are saying. Individuals will be paying far less (directly) in taxes, businesses will be paying far less, also. However, the federal government is taking in the same amount (revenue neutral). Can you not see how illogical that is?
Your safeguarding of the public trust is admirable, but misplaced. I think we all know taxation is a necessary evil. Making it an intolerable one will not negate this fact.
ROTFLMAO!! so speaks the man who would have us totally enthralled by the tolerable fiction of 0.5% taxes.
Sorry don't buy your theatrics. Hiding taxation and the cost of ever growing government from the view of the electorate only serves the purposes of the politician and the growth of government.
Ostriches are well known for the ability to hide their heads in the sand at the approach of danger. Apparently it serves to make them look like a bush instead of a meal.
Unfortunately, that does not prevent their being sh't upon by the buzzards roosting on their back.
The data series is wrong.
LOL, is that the best you can do? Obviously your personal opinion outways the evidence of an actual measurment.
By the way your economist uses that same data series for his estimates and analysis.
That does leave much for you to hang on.
How is this good for the American worker you ask? When the extra purchasing power is released slaes of everything will soar. Do you think 25 cents per $100 difference between an American good and foreign good will really matter. By the way the foreign good sold here WILL pay the tax on the purchase and again when they exchange their dollars back to whatever. With APT you MUST talk quantitatively and not in generalities. Another very important quantitative point is that the 25 cent per $100 increase in price ONE TIME will cover the tax but inflation is TE TIMES that amount and happens EVERY YEAR. Furthermore, the NST's addition of $23.00 per $100 happens every time the item is purchased. IS that even close to equivalent.
Do you pay federal taxes??? Did you pay fed taxes for 2004??
Yep.
Most people opposed to reform don't pay anything.
Advocating the National Retail Sales Tax is hardly one who is opposed to reform.
Your data series includes fed tax in goods and services.
Yep just as gross income includes the tax you pay individual income tax from it.
Burden is measured as a percentage of the total resource it is take from.
Why is that so hard for you to understand???
You advocate hoodwinking the electorate into believing they would only be burdened with a 0.5% tax when the truth is there is another 29.5%+ hiding in prices out of there sight.
I have no problems in understanding it at all. You support snookering the electorate into believing that government is a toothfairy.
Furthermore, the NST's addition of $23.00 per $100 happens every time the item is purchased
Wrong, it is collected only on the first purchase of an item for consumption, businesses purchases are exempt.
Taxed once, but only once. Any subsequent sale, the nrst is not collect as it has already been done once.
Read the legislation.
H.R.25Fair Tax Act of 2003 (Introduced in House)
`SECTION 1. PRINCIPLES OF INTERPRETATION.`(a) IN GENERAL- Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction. `(b) PURPOSES- The purposes of this subtitle are as follows:
`(c) SECONDARY AIDS TO STATUTORY CONSTRUCTION- As a secondary aid in statutory construction, any court, the Secretary, and any sales tax administering authority shall consider--
*** Snip ***
Sec. 2.(a)(14) Taxable property or service-
*** Snip ***
Sec. 2.(a)`(16) USED PROPERTY- The term `used property' means--
*** Snip *** `SEC. 101. IMPOSITION OF SALES TAX.`(a) IN GENERAL- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services. `(b) Rate-
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I think we already gave more consideration to this extremely poor idea, than it deserves.
So it seems to me.
Just the Tobin tax warmed over and applied to the US.
Something this country can definitely do without.
"The incidence of APT tax falls lightly on the inividual. If revenue neutral, APT shouldn't increase any "hidden" tax burden."
If you honestly believe that then it is clear that you are ignorant to the business world. All costs of doing business is passed to the consumer, if not the business no longer exists. Taxes are nothing more than a cost of doing business. Tax goes up, price goes up, customers no longer purchase products or services and employees become jobless.
Where does this increase of 70x in the tax base come from?
And the return on my 401K goes down the toilet. Where do you think businesses raise capitol to improve productivity or increase capacity?
Your statement that these "profits" are made tax free is another incorrect statement. The service of trading is taxed in the form of the income tax of the trader, the person performing the service is taxed, therefore the service is taxed. In addition, his employer is taxed, the investor is taxed on their additional income, etc. These dollars are already taxed multiple times.
Why do you think stock exchanges are non-productive? A good trader can make my investments worth more. That is very productive to me. Why should we have to be subjected to any individual definition of "productivity" instead of letting the individual decide where his capitol can be most productive to him?
"The tax on exchange transactions gets passed on like any other tax. Ultimately, the end-use consumer pays. This is true of all taxes. The advantage of APT is the tax isn't incurred at the point of production, either for business or the individual."
So you support keeping taxes hidden from plain view? Why?
"No hoax here. Just a paradigm shift, requiring out of the box thinking. All the taxes paid by GM and their suppliers, including the higher rate of pay to workers to accommodate their personal income taxes, are "hidden", by your reckoning of it. So what's new? There are social costs to society. Those costs come out of the economy somewhere. The only question is how to pay it while doing the least amount of damage."
And the APT would add a lot of tax burden into the cost of each product GM produces, while Toyota's products would not have the same burden. Therefore, the APT just made a US mfg. uncompetitive. What do you suppose would happen to GM, their employees and their stock holders?
The only question is not how to pay, the only question is how to reduce the amount we pay. That will not happen if you plan to keep the American individual ignorant of the cost of government largesse.
What constitutes the expansion. I am asking for specifics, not a general answer. Where does the base expand, what is added to the tax base?
"How is this good for the American worker you ask? When the extra purchasing power is released slaes of everything will soar. Do you think 25 cents per $100 difference between an American good and foreign good will really matter. By the way the foreign good sold here WILL pay the tax on the purchase and again when they exchange their dollars back to whatever. With APT you MUST talk quantitatively and not in generalities. Another very important quantitative point is that the 25 cent per $100 increase in price ONE TIME will cover the tax but inflation is TE TIMES that amount and happens EVERY YEAR. Furthermore, the NST's addition of $23.00 per $100 happens every time the item is purchased. IS that even close to equivalent."
What is the weather like in bizarro world? ;-)
Seriesly tho, you do have the scenarios reversed. The american product pays a transaction tax at several points of making transactions, therefore you have multiple double taxation situations that occur. The foriegn good has one tax built into their price. As a result the foriegn good will have lower costs in the price, making the US good less competitive in the market place.
A consumption tax taxes both goods 1 time, equally, therefore the competition ends up being won by the most efficient producer. In fact, the foriegn good would be subject to both the sales tax and their own government's tax. The result would be more producers coming to the US to eliminate their own government's tax restrictions on their competitiveness.
I will ask again, how does burying the cost of our government in the price of goods (resulting from transactions) make the US mfg. more competitive and how does that attract new business to the US?
Yeah, but it's a nice change of pace to tackle a different set of disinformation once in a while... keeps the brain sharp.
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