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Jul 28 08 3:29 PM
Aug 2 08 12:55 PM
Your comments regarding the dialogue here are right on point. Even though I'm sure that I am not one of the targets of your comments, I hope those others
pay attention. Oh ok; My used car salesman comments may be below the belt. Were I inclined to drift into the level of crude, uncivil commentary that you
mention, rest assured that I would never say anything over the internet that I would not say face to face. That is assuming that my opponents are not
6'5", 280 lbs.
It would appear that verbosity is a contagious disease transmittable over the internet. I hope you took a breath somewhere in between.
Though APT seems far favorable to the Fair or Flat tax plans, in and of itself that statement says little since neither of those is gaining much ground either.
Not only would a study of this nature be very expensive and take a long time to complete but one has to remove the peel from the banana before eating it.
Once you begin to expose the frailties and, yes, even inequities of APT it becomes necessary to ascertain whether fixes to some of those would severely effect
the benefits of APT as proposed. You can minimize the questions raised here as 1% issues but they are serious issues because they strike at the heart of many
historic premises of taxation. It would also be preferable from an integrity standpoint to come up with something better than a 1% designation. That is a
rhetorical device designed to minimize the arguments against and render them superfluous. In fact, in toto, they might be closer to 10% or even greater and
all require a close look to examine the full socioeconomic impact.
It would seem to me that it is incumbent on the author to examine the effect to his proposal should many of the concerns be seen to require workarounds in
final legislation. Dr. Feige's proposed handling of cash will not fly politically. It creates a tremendous burden on the poor and in that respect is
terribly regressive. How would he propose to deal with legislation that allowed cash transactions to be subject only to the .3% tax when leaving and entering
the banking system. Minor on its face but leads to abuse in the bigger picture. As his proposal now stands he adds a significant cost to those businesses
dealing in cash, vending machines being the most apparent.
Vertical integration to avoid cascading and barter may be less of an issue from a legislation standpoint if politicians are willing to live with those as
legitimate tax avoidance mechanisms. The tax consequences could be significant but productivity might be enhanced.
There is very likely to be strong disagreement to taxing charitable contributions. The same for deposits to savings accounts. Though a "tiny tax"
it will be viewed by some as a deterrence to savings; not a good thing. The shift from exempting mortgage interest payments from taxation to taxing them will
create a bevy of naysayers. Taxing borrowed funds will be resisted by those who must rely more strongly on credit flows.
Retired fixed income citizens who now pay no tax due to the size of their retirement earnings would be subject to taxes under APT. For many of these a few
hundred dollars in taxes a year could be hardship.
Taxing corporations with losses will create a huge area of disagreement. If APT were currently in place GM would have incurred another $250 million in losses
for the quarter and that's just the P&L side. Balance Sheet taxable transactions would increase that amount, perhaps exponentially. In the current
system they would be getting tax refunds to mitigate the losses. Raises the question of how do we deal with open deferred taxes and pending
carryforward/carryback tax issues at the time of transition. This whole issue goes far beyond tax planning. You can do all sorts of things with journal
entries and a set of books, cash flow is an entirely different matter. Sorry but rebates are not a viable answer because they come after the fact. If a
startup company cannot make payroll this week, knowing that they'll get a rebate at the end of the year doesn't help much.
Rebates and all those other special needs proposed to be handled through spending legislation are going to make a dent in IRS savings. There will need to
be paperwork filed to substantiate valid claims. Some agency is going to have to accumulate and analyze that paperwork to ascertain validity and compliance.
Again the poor, assumedly the recipients of most special payments may find an increase in paperwork rather than a reduction. Auditing of those kinds of claims
will be necessary.
All the various tax avoidance and abuse schemes that have been discussed here will require new legislation with a system to assure compliance and to determine
Investment banks and brokerage houses will mount legions of lobbyists to negate or minimize the effects on their world. Charitable foundations will seek tax
exemption. Do churches stop passing the collection plate every Sunday?
All these questions and many more both mentioned here or unforseen at this point really require planning before we even get to the actual machinations of the
viability of the actual dollar volume of transactions and testing the proposed system of collection.
The APT concept is predicated on being implemented as laid out. That will not happen. It is politically impossible without tweaking and altering similar to
Rep. Fattah's proposed legislation. Once the changes commence the simplicity of the collection process gets encumbered a hundred fold (my own rhetorical
I am not one who believes that companies will move offshore, I agree with your rationale. I have argued and do believe that businesses will seek to do more
financial transactions overseas to bypass APT collection. unless we can get agreement with mainstream foreign banks to supply the necessary information it
will be hard to determine tax liability in those cases.
The tax will be passed through, you can't seem to get your arms around thinking in the aggregate. Sorry, was that crude? For larger
corporations there is just too much money on the table to just take it away from profits. The stockholders will scream. Will market conditions affect a price
increase, possibly, somewhat, but highly unlikely since price inelasticity will expand for products across the board. On a per unit basis the increase
won't be that much anyway for many companies but they will all seek price increases. Take it to the bank. Don't forget your .3 % tax on it though.
It should be clear looking at the oil companies that corporations know no limits when it comes to profits.
Economic theory is based on historic behaviors. You are drastically altering the base of those behaviors. If anything Keynesian theory will be strengthed and
Monetary theory will be minimized. Look at the second quarter effects of the tax rebate. Did the extra cash not flow to increased spending? Give me a little
break here guys. Inflationary pressures will be a problem.
I laid out early on that many accountants won't be affected at all because GAAP acccounting will still be necessary. Those heavily involved in taxation
will suffer and seguing that high earning expertise to similar pay will not be easy for many. It is another huge issue. Whatever advance notice you give you
will have folks in their 40s and 50s that don't have the time left to shift professions and make a comparable living.
Were that life was as simple as an economic formula.
Most of the issues mentioned here can be addressed in another economic paper, with a little objective thought. To add these to a study burdened with the
informational collection problems necessary to completely prove revenue neutrality, is folly. It will add years to the study process with all the to and fro
necessary to settle some of these issues. The upshot will be an alteration to APT as proposed and that opens Pandora's Box.
Aug 13 08 8:47 PM
Nov 13 09 9:06 PM
To address the lasting concerns of Mr. Layman:
1: Higher fee for use of cash--no tax on cash transactions. Fee was pre-paid, you see. Not even charged when it goes back into a bank account. Only when
it is withdrawn.
If it was really going to be a show stopper, it isn't necessary. It is nice to be able to tax the black market for a change, though.
2: Barter--let whoever wishes to barter do so. This fee is for the use of money, and barter doesn't use money, so it has no fee. Perhaps this would
mean a huge explosion in barter. So what. Small potatoes compared to the hundreds of trillions in new tax base.
3: Vertical integration--No worries. No doubt that there would be various shifts in business practices. I'll trade that sort of tax avoidance to the
sort we have today, which you talk about all the time.
4: Charitable contributions--With my taxes going down an incredible amount (as I do not move much money around) I will be much better able to give to
charity, and that would not be largely to domain of those most well off (and usually then as part of a tax-avoidance scheme) If charitable institutions could
demonstrate that the micronic percentage actually made a difference, perhaps Congress could be moved to make an exception, but I think any exception ends up
being a slippery slope. Morally neutral only works if it is really morally neutral.
5: Retired/fixed income, etc.--Right now we don't have the money to continue the way we have been going. Regular workers are taxed upward of 15% to
sustain a system that is entirely broke. This fee would replace those taxes and more. Also, this fee should replace sales taxes, etc. that retired/fixed
income individuals DO pay, so for them it is a net gain.
6: Your GM example--You are saying that the stupidity and failure of the previous system should prevent a new system. Additionally, I doubt that a large
corporation would pass up the opportunity to stop paying the high taxes they incur and must pay to simply HAVE employees. Labor is always a huge cost to
corporations like GM. I think you'd have to dream up some kind of insane cascading example to overcome the savings incurred in the labor part. It is many
of the sorts of contortions that you describe that companies go through for the sake of avoiding taxes that distort the normal functioning of a business, and
cause it to trade what would be simple, with what would cause them to hire more accountants.
7: Interest deductions--I look forward to a largely post-interest world. But until then, this is a red herring. There are no deductions because there is
no filing. No one has to add or subtract anything from any net or gross anything, because there is NO FILING. NO APRIL 15.
8: Rebates, etc.-- I don't think they are necessary, except to appease those (like yourself) that would like to be social engineers and favor some over
9: Legions of lobbyists--They are already there. Financial concerns already have five lobbyists for every member of Congress. Now you know why an idea
like this doesn't get discussed. Because it actually IS much more fair than the current scheme, and those with the lobbyists are only concerned with
keeping their own unfair advantages buried in the tax code somewhere. It's time to burn that sucker and send those crooks packing.
10: Mechanisms--We already have all the mechanisms in place. ATM machines already charge me whatever fee the bank thinks they deserve. Cash registers
figure sales taxes really well. Look at your electric bill, we already have numerous systems in place for the regular economy. The problem is the uncaptured
economy. But I guarantee that somebody is keeping track of every cent. Programmers are paid well to ensure that every digital transaction is executed without
any error. We need to get the IRS and SEC and the like all up in those banksters' business and make sure that all trades, sales, swaps, etc. are counted.
The government doesn't need to know the details, only the amounts, so that the fees may be collected. If US is first and only, and they wish to move their
shady businesses off-shore, then I say good riddance. They can go back to their usurious brethren in London and Switzerland etc. The people are done with the
FIRE economy, whatever the TV-acting press and politicians may say.
11: Corporations--Corporations were once only transient and given charter only by a state legislature upon their judgment that such a corporation was in
the public good. We have come to find out how much ill certain to-big-to-fail corporations can cause the public. They are not the largest employers, nor are
they the primary engine that drives the productive economy. We the people get to decide what sort of legal fictions we will allow to operate in our midst, so
I would say that corporations should get what they have coming to them.
However, I have yet to find any scenario that gives me reason to believe that corporations should be in any way hurt by a small user fee on the money they
are given the right to use by the people. They pay much higher fees for much less productive things, like tax accountants and property taxes.
12: Tax accountants displaced--I'm terribly, terribly sorry about that. If we could only figure out some scheme that could put prison guards (or some
may say lawyers) etc. out of work. I'm sorry, but that is NOT a "huge" issue. It is progress.
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