One big problem: if this tax passes, then taxable transactions mostly will vanish. I’d expect a general 90% reduction in taxable transactions. People and especially businesses won’t make non-essential transactions in general. This tax will encourage vertical integration of enterprises (which isn’t necessarily a bad thing) to decrease tax expenses.
People won’t get taxed to put things on their credit cards only to pay a tax to pay off their credit card with money that they paid a tax to deposit in the bank. They’ll just take their cash wages (taxed once) and pay the merchant.
It would 1) force us into a third-world barter economy where people bypass the banking and credit systems and 2) lead to the creation of local and state scrip like happened in the Depression when the money supply dried up.
The author of this bill is astoundingly stupid and ignorant of basic economics and human nature. But he’s a Dem, so I repeat myself.
Maybe I don't fully understand your point, but aren't businesses dependent upon a bunch of transactions? Certainly any kind of manufacturing business is--buying components, then selling to wholesalers and eventually consumers. Even "service-based" industries are dependent upon transactions.
For this reason, such a tax would be horrible for businesses in general, but that's pretty much what I expect from Obama and his merry band of Democrats. Most businesses would come to a screeching halt, and I don't even think you could effectively model how much income such a tax would generate. People that could, would resort to home farming, trading, and bartering for basic goods. We'd be reduced to a third-world economic status.