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Questions from a Lawyer

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CaliforniaLawyer	Questions from a Lawyer	Lead	[-]
Posts: 3 (01/30/08 21:10:28) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Tags : None Hello. I am lawyer who is currently practicing at a big firm, which limits my ability to participate in certain political activites. I will be going solo in about a year, and I am interested in learning more about this tax. The California Constitution, as you are probably aware, can be amended by ballot initiative. This has the appeal of alllowing one to draft an amendment that will not be mucked up by special interests during the legislative process. It may not be possible, however, under Federal law or international treaty for California to collect such a tax. I'm not a tax lawyer, and it's not something I've researched (...yet). So, let's start at the beginning: 1. Are there any groups, PACs, etc. currently working towards implementation of the APT tax in California? 2. Has anyone studied the issue of implementing the tax in California? If so, is there a paper available anywhere? 3. According to the first paper I've read on the site, the goal is to have the tax implemented on a Federal level. Is there a particular economic reason that the tax couldn't be implemented on a state level first? That is, when I say economic, would implementing the tax on the state level disrupt transactions in California to the point where it would cause more problems than it solves? Thanks for your answers. (Also, I didn't bother to proof this post, so if you see a typo, it's not (I hope) a reflection of my competence.)
rubicon	Welcome.	#1	[-]
Posts: 128 (01/30/08 21:35:30) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	California Lawyer: Hello and welcome: I'm nobody special, just someone who's been posting here for a while. Dr. William Hermann, MD is the creator of this site. He has a personal relationship with Dr. Edgar Feige, PhD., the author of APT. I'll shoot him an e-mail to let him know you're here and seeking some answers. The constitutional question has been discussed here at various times. The consensus seems to be no amendment is needed to implement APT federally. Of course, none of this is authoritative. It seems the federal amendment process is so cumbersome that ingenious ways are often found to avoid the necessity to resort to it. I won't comment on whether or not this is a good thing. Once again, welcome... Rubicon.
CaliforniaLawyer	Re: Welcome.	#2	[-]
Posts: 3 (01/30/08 22:17:12) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Thanks for the response, Rubicon. While I agree that a Federal constitutional amendment is not necessary for the Federal government to levy the tax, a Federal constitutional amendment would be necessary to prevent a State or local authority from collecting excise, sales, or income taxes. Further, I think a constitutional amendment is desireable, since a constitutional amendment is the only way to prevent Congress from creating loopholes or special breaks in the tax. Implementing the tax on a state level, first, though, presents different issues. It is uncertain to me (because I haven't looked into it) whether the Federal government could prevent a state from collecting the tax on its own (before the Federal government acts). Off the top of my head, I don't think Feds could stop a state from implementing the tax, but since I haven't researched this specific issue, it's not something I could speak to with any certainty. It would be interesting if a state such as California could successfully implement the tax, since California has the largest economy in the US, and if it worked here, that would create enormous pressure for Congress to act. However, getting a constitutional amendment on the California ballot and getting it passed requires money and organization. It's something that I think would be a neat challenge, but if other people have already started the process, I thought maybe I could offer my services to them. Thanks again for the response.
wjhermann	Re: Welcome.	#3	[-]
Posts: 147 (02/02/08 21:28:03) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Well, I certainly also welcome your inquiry and questions. Lots of information and lots of opportunity to convey. First, I am an MD and NOT a political activist. My interest in APT is solely because it is a great concept, simple yet very elegant. I have debated it on blogs and in person usually with dogmatic misguided yet fervent (un)Fair taxers, for nearly three years. I know this in much detail so when I say I have not encountered any serious negative arguments that cannot be easily defended with simple answers to questions and explanations. Of course, early in the process I needed to consult with Dr. Feige frequently and found his help very straightforward and consistent. Once mastered it is very defensible. Why haven't you heard of it? Why isn't there a big well funded national organization? Why isn't there really anyone in California actively promoting APT? One answer - My fault! I am really not that good as a promoter. I honestly thought giving this great, bi-partisan idea exposure on the web would light a fire in the grassroots. The person that did the design of this website is now Glenn Beck's producer and co-author of An Inconvienent Book for Glenn. That is a valued relationship and we are waiting for the right time to unleash that resource. The toughest problem we face is the rabid, dogmatic. absolutely wrong (un)Fair Tax people. The national scene it really tough to work because of them -- and this IS a national. So to answer your question -California is wide open and begging for an APT solution. Specifically, I have oriented my state rep here in Texas to APT and she thinks it is a wonderful solution. She introduced a bill last spring in the three month long legislative sesson to sanction a formal study of the application of APT to the State of Texas including the size of the state tax base and the what changes in law would be required to "capture" 99% of it (just because someone can think of an avoidance scheme cannot negate the other 99%). We achieved a 20 minute hearing before the full Texas House Ways and Means committee. I was introduced as having an idea that would completely replace ALL state taxes including the school portion of the property tax. The room was full since they were hearing testimony on several bills. I turned snickering into serious interest. The bill was not reported out of committee but I am told that was pretty good to achieve a hearing on the first try. the Chairman and ranking member were not able to find effective arguments against the concept that were obvious prior to study. We will try again next session. The problem at the state level is to determine whether the transactional tax base is large enough to support the state's budget at a rate less than (1.3% - 0.65% per side). That is considered max it order not to interfere with the economy or create reason for tax avoidance schemes to proliferate. Dr. Feige is willing to cooperate with such a study at the state level but has considerable reservations as to whether the tax base would be adequate and whether avoidance woudl be too easy. The central point in my Texas consideration was to have any bank or other qualified under law financial institution to tax accounts with residence addreses in the State. Two parts of the tax base would be lessened at the State level -- the security trading transactions and the foreign exchange transactions. Of course, money of resident people, trusts, and busineses domciled in the State would be taxed as the aggregate amounts moved. It still may be possible to capture the security transactions in the accounts. Basically, if a financial company wanted to be licensed to register accounts from say CA they would need to cooperate with the collection sftware. Federal aqmendment would not be necessary to authorize the State in any way -- if considered for the national level, it would be advisable to abolish the current income tax amendmenr Got to go for now.
CaliforniaLawyer	Re: Welcome.	#4	[-]
Posts: 3 (02/14/08 01:56:50) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Thanks for the response. Sorry I haven't posted more recently, it's been a zoo at work. I'm glad to hear you had some success with your state legislator. Although I think steps like that are important, if you really want a hope of getting this implemented on a national scale, you (or someone) is going to need to build up an activist infrastructure. That means PACs, think thanks, publications (books), publicity/talk shows, etc., etc. It's not an easy task, by any means. I don't consider myself a political activist, but I do know quite a few politicians, and my own personal experience is that a surprising number of them are really not at all aware of issues. It's their staff that really controls what's going on, and those are the people you have to get at. Politicians are also incentivized in ways that will make implementing the APT tax difficult (but not impossible). Obviously, lobbyists influence politicians, but there are other social pressures that politicians succumb to as well (such as fear of being embarrassed). But, now that I know that there isn't really anything going on in California, let's put aside the political organizing for a moment, so that I can understand the economics of the tax better. 1) You've stated that there is a concern tax base for a state may not be big enough. This is going to be a problem in any i mplementation of the tax. In the US, each state has its own taxing power, and I can't imagine any state is going to want to give that up. And (barring a Federal constitutional amendment), a state is only going to be able to tax transactions that are in its jurisdiction. That raises a question of what transactions are in a particular jurisdiction, but I think that's something that has to be flushed out anyway. Let's say I live in Los Angeles, but I'm working for a Delaware company that deposits my check into a NY based bank. Which state gets to tax that transaction? Are there answers to this? 2) I saw in one of the papers an implication that title transfers would be taxed as a transaction. Is this correct?
wjhermann	Answers?	#5	[-]
Posts: 109 (02/21/08 20:50:17) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	I think we work at the same zoo. The idea of the state level transaction tax will truly requirement considerable thought -- though some believe the return would be very good if the kinks could be worked out. It is clearly complex but not,I submit, impossible. The idea of which state would collect would be where the owner of the account was resident. Avoidance might be considered easy but quantitatively and alternatively (since other places have higher taxes with their narrower tax bases) may not make sense -- since everyone has to be somewhere. Simple title transfer without remuneration of any sort should not constitute a transaction but a one-way "gift". This gets into bartering to avoid the tax. Of course this is an avoidance scheme BUT for small potatoes it doesn't matter and for big Idaho potatoes there will still be laws required (so the tax lawyers have a little something left) to govern really meaningful transactions for which I envision the IRS is still around to police the process of large and foreign and scheme transactions. But it will be out of the lives of the little folk and no returns will be required -- just the need to put the ol' transactions through a recognizable channel in real time. I hope I have answered your questions -- the APT system is first and best understood as a strictly Federal system with the states retaining their current taxing authority within their borders. Please consider taking up this really productive idea - I need the help.

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