Good stuff, thanks for answering :) Although now I have another question because of this statement.
"Simply put, business cannot absorb the federal tax, it must pass those taxes along to the customer or go bankrupt."
Why wouldn't a business consider this following comparison?
taxes paid now (compared to) (income + expenses) * APT tax rate
That is what transactions really are, right? You are either paying someone or someone is paying you. So a person would simply have to look at what they currently paid in federal taxes (call it "now"), and compare that to what they would have paid if the only federal tax was the APT tax (call it "APT". In this comparison, prices will be the same.
If "now" > "APT" then an APT tax would be beneficial to the person/business. There was no change in the prices and yet people save more money. Then it's merely a matter of market forces to keep the prices right where they are. So they are more profitable under an APT system, and if they want to maintain their old profitability level they could in fact reduce their prices a little and still achieve it.
Now if "APT" > "now" then yeah, APT is horrible for the person and they'll be forced to increase their prices because they simply owe more in taxes.
So we would need to see how everyone is affected by removing all federal taxes and putting in this APT tax. If I was offered the option of paying $5 to save $10, I'd take it. So it's a cost/savings issue that needs to be looked at on an individual level, rather than a definite rule that applies to everyone.
That is what transactions really are, right? You are either paying someone or someone is paying you.
Basically you are correct, however what is not pointed out by the author of this APT sales pitch is that every financial transaction that business or individual may execute is going to induce the tax on both sides of every transaction (even when there is neither buyer nor seller involved).
Just moving capital from one account to another or trading one stock pr bond for another in fund & retirement portfolio management, moving dollars in and out of the country in response to maintaining balances, every thing is taxed on both sides of the transaction, both buyer an seller get hit. The more transactions involved in making creating the final result to be achieved the greater the tax bill.
GDP is the effective single count sum result of all transactions, it counts only dollars at the retail level as everything must of necessity accumulate to that end, intermediate tansactions at the distribution, marketing, wholesale, manufacturing, and raw materials production all sum to GDP, counting them separately is just multiple counting of the capital flow as as opposed to final product purchased by the individual.
The transactions being counted to compute the APT tax rate are all the circular movement of capital that are necessary to providing final product to the consumer. There are roughly 35*2 transactions (buy side & sell side taken together) more than the final retail transaction taxed under the APT, everything a business does involving the movement of its capital is taxed.
So a person would simply have to look at what they currently paid in federal taxes (call it "now"), and compare that to what they would have paid if the only federal tax was the APT tax (call it "APT". In this comparison, prices will be the same.
Net National ProductI\(NNP) is the number you need to look at for your effective tax base, it represents the spendable dollars you put into the economy (consumption and investment as taxed by the APT) that finances the entire ball of wax including what is paid to government. The percentage of tax revenues received by government vs NNP reflects the compounded effective rate of taxation that the American people finances.
That effective tax rate percentage for the APT is the Total Rate in the following chart, as APT must be implemented at all levels of government to work properly according to its author.
from Tax Freedom Day 2004 PDF http://www.taxfoundation.org/sr129.pdf
|
Total Effective Tax Rates by Level of Government |
|||
| Year | Federal | State | Total |
| 1998 | 22.4% | 10.4% | 32.8% |
| 1999 | 22.5% | 10.4% | 32.9% |
| 2000 | 23.1% | 10.4% | 33.5% |
| 2001 | 22.2% | 10.5% | 32.7% |
| 2002 1 | 19.7% | 10.2% | 29.2% |
| 2003 2 | 18.5% | 10.1% | 28.6% |
| 2004 3 | 17.9% | 10.0% | 27.9% |
| Notes: Leap day is omitted to make dates comparable over time. Positive and negative percentages in parentheses after legislation indicate the first-year fiscal impact of the bill,measured as a percentage of NNP. Since depreciation is not available to pay taxes, GDP is an overstatement of spendable income for the purpose of measuring tax burdens. Depreciation is netted out of NNP. 1 Economic Growth and Tax Reform Reconciliation Act of 2001 Sources: Office of Management and Budget; Internal Revenue Service; Congressional Research Service; National Bureau of Economic Research; Treasury Department; and Tax Foundation calculations. |
|||
So we would need to see how everyone is affected by removing all federal taxes and putting in this APT tax. See above.
If I was offered the option of paying $5 to save $10, I'd take it. So it's a cost/savings issue that needs to be looked at on an individual level, rather than a definite rule that applies to everyone.
How do you accomplish the task of determining how much of the total federal (+ state & local) APT is embedded into the price of goods, services, and savings/investment dollars (and losses thereon do to extractions on capital by the APT) that you pay for.
No matter how you slice it, businesses do not pay taxes, they can only pass such on to individual's purchases of investment and consumption products. That my friend is the sum total of your paycheck that is getting whacked as you spend it, behind the camoflaging veil of prices, and lower income.
All the APT does is slice the pie into itty-bitty crumbs and taxes each crumb at is full capital value after it has the numerous individual components ingredients as they were involved transaction their multiple transactions, as well as the financial capital flows involved in business and venture capital financing required to create and maintain the manufacturing and service infra-structure.
The sum is the chart above, in regards to the tax alone that you finance under a revenue neutral tax system regardless of its overt design, it does not even begin to consider the effect of the compliance enforcement requirement will have on the costs of the businesses and transactions involved which when seen in aggregate are multiplied right along with that APT.
The APT operates much like the interest rate on a compound interest loan with no truth in lending law.
Truth in lending is there to assure the individual is appraised of the full effective simple rate he actually pays. Consider a loan in which interest is repetitively charged against the principle of the loan adding to the principal you owe under the control of the lender just moving his ledger from one desk drawer to another. That is what the APT does to the nation's capital assets and how a 0.5% compound rate of taxation becomes a 30%+ annual rate on capital dollars. That rate of taxation on capital dollars must be extracted from the final consumer of products, financial or goods & services. It makes no difference or the capital is totally wiped out in very short order.
Your 0.5% tax rate that you are allowed to perceive, becomes something much greater when you start looking at it through the lens of the economy and how it must operate. You see, there is no truth in taxing law to make sure you are aware of the real simple rate burden of the APT tax burden.
The APT tax taxes the seed corn my friend, out of sight hidden behind individual expenditure pricing. When the seed corn is eaten with out replacement from the final crop, guess what your family rapidly starves with declining harvests. The fruit of the economic harvest are consumer products you pay for. The seedcorn must be replenished from that crop.