"" means "proportional to".
Work, proportional to transactions, should be the base for tax credits.
Not the same as sales
A company that is supplied does not necessarily do more work than its supplier even if it sells the product of those supplies at more than the cost of the supplies themselves.
Not the same as payroll
The ratio between sales and payroll is not that great, as it usually varies from 3:1 to 5:1. It must be decided whether payroll is work. It turns out that payroll is actually means for employees to spend money that is not related to their business. If one was artificially paid ten times as much as before, that does not mean he or she automatically produces ten times as much. Therefore, it make no sense to give tax credits with income as its base.
Renumerate each "transaction"
Those observing our educational system can easily appreciate the fact that pay is not the same as productivity. In school, students' work, or success, is proportional to awards, diplomas, and passing grades, not how much their teachers are paid. Therefore they are proportional to good deeds, or transactions. Likewise, subsidize transactions, by giving the hardest working teams, businesses with many transactions per employee, a $3 tax credit for each transaction. Decrease tax liability for those willing to make an exchange of service, regardless of their personal gains.
The hardest working Americans are simply those who have the hard time in gaining an edge on economic status, since each transaction (customer relationship) they work for provides them with little. A high ratio of transactions per employee, as is the case in the retail and manufacturing industries, is a theoretical reason as to why they paid so little in the first place, since so many transactions easily justifies having a smaller contribution margin per transaction, so that the same amount of physical labor has smaller effect on covering the fixed costs of these low-paying businesses and that which is beyond (i.e. profit). Therefore, each transaction should be renumerated by a flat amount using public funds.
- Each transaction needs a $3 tax credit. These tax credits will provide for the welfare of businesses' senior and publicily-serving customers, as well as their staff. And, to keep it simple, we must dismantle encrusted and inefficent means of taxation in order to achieve purposeful manipulation of the way government provides supply-side welfare (proportional to transactions) with simple taxes on payrolls and capital gains, not corporate profits. Profits are left untaxed since they can be used for increasing capital stock and total factor productivity, the two things which are fundamental welfare contributors without which a first-world economy would not be attainable. A zeroth-world economy is possible if these reforms are installed.
After reading come back to http://academia.wikia.com/wiki/Transaction_Tax_Credits_Plan for details about transaction tax credits and a possible way of taxation that is only justified when such tax credits are in place.
Steps to take
- Remove the Alternative Minimum Tax (AMT) (An injustice for the middle class.)
- No Federal Retail Sales Tax (An injustice for the working poor.)
- Every payment transaction becomes eligible for a $3 tax credit (A justice for those who rapidly provide goods and services. A justice for the working poor. A justice for being thrifty, whether rich or poor.)
- No graduated income tax (An injustice for those with variable incomes. An injustice for employers who pay each of their workers more. An injustice for the working poor who need good and services staffed by well paid individuals.)
- 25% company-wide payroll taxes (A justice for those with variable incomes. A better justice for employers who pay each of their workers more. A justice for those who do not take advantage itemized tax deductions.)
- Eliminate the Corporate Tax and raise the Capital Gains Tax to 25% while making it witholding. (The net effect is a reduction of tax on corporate profits, but a increase in the tax of capital gains. Witholding prevents the needs for investors to fill out forms, which means fewer forms overall.)
- Establish a transparent but non-intrusive means of tax collection and government spending.
The aim is supply-side welfare via a financial intermediary (the US Government) directly rewarding businesses for transactions.
The non-minimal problems with the Alternative Minimum Tax
5 good reasons to get rid of it
- The alternative minimum tax does not automatically adjust to inflation or changes in tax brackets.
- The alternative minimum tax is increasing the tax burden on the middle class.
- The alternative minimum tax is increasing the tax burden on families with dependents as well those living in high-tax states.
- Those who do have not done AMT but are required by the IRS to do so are shocked when they realize that the IRS does require them to do it.
- The alternative minimum tax involves much paperwork and mental labor leading to an uncreative transfer of wealth from the middle class.
Why there should be no federal retail sales tax
4 good reasons to avoid it
- A federal retail sales tax, whatever its rate, tax base, or revenue, squeezes the retail industry tight which is already underfunded and calling for welfare reform (e.g. labor unions in the retail industry).
- It is often supported as a means to simplify the tax code, but it requires unilateral changes to how taxes are collected on sales floors everywhere in the United States, a proposal that has met a lot of political resistance.
- The federal retail sales tax does not account for the variation of embedded tax rates among different industries.
- A federal retail sales tax replacing payroll taxes would, in many cases, move the tax outside of payroll costs but do nothing to increase the financial wealth of most employees as it is often implied.
A simple, easy to administer tax
4 reasons to come up with one
- If one is to come up with a tax to replace others, it should be mathematically simple and easy to administer.
- Inventing a tax proposal and then having legislation pass it, is very rewarding for the person who creates it.
- Depending on how simple and easy it really is, it can save the country much paperwork and mental labor, which is healthier for the environment.
- Suicide is committed due to the pessimism that surrounds complex tax codes such as the Alternative Minimum Tax.
$3 tax credit on each payment transaction
7 good reasons on why this is helpful
- Giving a tax credit for each payment transaction encourages transactions themselves.
- Unlike a subsidy as a percent of sales, it does not necessarily support the act of spending too much for a given product or utility.
- By being a fixed amount for all transactions, it is a higher percent of the value of small-value transactions, such at those associated with the services of the working poor.
- There is an opportunity with $3 tax credits on payment transactions to provide the generally low-paying jobs to advance to the middle class. Stores with more than 20,000 transactions a week (e.g. the average grocery store from a nation-wide chain) and 100 employees will have at least $600 in tax credits per employee weekly, or $30,000 a year per employee.
- If a large enough tax credit is given to each payment transaction, retail services can incorporate an array of services that go beyond retail, such as creating a botanical garden, a mini-mall, a physical training and rehabilitation facility, celebration of birthdays, restaurants that use food from the supermarket itself, hosting of charitable or community-college related organizations, even city orientation sessions.
- Given the $3 tax credits per payment transaction, some people who specialize in health-related services, such as pharmacists, would receive tax credits to an amount more than $100,000 per year, since each may have 100 transactions per day. With tax credits such as these, services could be provided virtually at minimum wage as far as cost to the employer is concerned.
- This kind of tax credit will outperform past welfare reform such as minimum wage, Medicaid, and Medicare. Among the 600 billion to 700 billion payment transactions in the economy, the Consumer Goods and Services industry (28.5% of all transactions and about 17% of GDP) in combination with the Manufacturing industry (25.5% of transactions and about 17% of GDP), would account for over $1.1 trillion in tax credits ($3 / transaction * 54% of 700 billion transactions) for retail and manufacturing.
Why there should not be a graduated income tax when there are per transaction tax credits
4 good reasons
- It is an injustice to farmers and other people who have variable incomes.
- It makes goods and services by highly paid individuals to become more expensive to everyone, especially the working-class.
- It leads to a complicated income tax bracket system, or some other complex mathematical function, while creating a need to justify them.
- In the context of having a $3 tax credit for each payment transaction, as is proposed in this document, a graduated income tax is not needed in order to achieve progressivity.
25% company-wide payroll tax
3 good reasons
- It is simpler to just tax the entire payroll using one percentage, than many portions of the payroll with a tax bracket system.
- The tax does not have to appear offensively on a person’s paycheck, much like how the other half of Social Security taxes currently do not appear on them.
- It is acceptable for it to be flat, on the grounds that a $3 tax credit per payment transaction allows for progressivity on money spent per transaction.
Eliminate the Corporate Tax and raise the Capital Gains Tax to 25% while making it witholding
- Having both a corporate tax and capital gains tax amounts to double taxation on investment.
- Having a flat rate on capital gains means that the same percentage can be applied once on all capital gains associated with a business, which makes witholding easy.
- Corporate profits are not taxed at any percent, since they can be used for increasing capital stock and total factor productivity, however, capital gains tax is 25% since, like taxing income from work, it amounts to a prepaid consumption tax.
Establishing a transparent but non-intrusive means of tax collection and government spending
2 good reasons
- The system’s transparency lies in its mathematical simplicity which is easy to comprehend. Federal taxes of the proposed system are simply 25% payroll taxes with no deductions. The proposed government spending of $3 tax credit per transaction of a value equal to two-thirds of the FY 2007 Federal budget of $2.8 trillion. A means to provide service to seniors under this system is by assisting the retail industry, whose worth has been underestimated by how much is invested in it. With its extra $20,000 of tax credits per employee annually, the retail industry can provide discounted and free goods and services to seniors. Since these tax credits are only a function of the number of payment transactions, it is matter of watching a customer leave the checkout with goods to know that the store or its chain will consequently be eligible for a $3 tax credit.
- It is non-intrusive since the payroll tax does not have to be seen by the employee and the per transaction tax credit does not necessarily appear on a customer’s receipt. It also interferes less with our lives and the lives of accountants since it easy to calculate the net transfer to the government once one knows: 1) the size of the non-tax portion of the payroll, and 2) the number transactions in which the company is involved with a customer. To reduce deadweight loss, the actual transfer to or from the government can be set to the net transfer because of the simplicity of calculating the transaction tax credits and 25% taxes on income, including payroll and capital gains.
Computing tax liability for each business
I hope you or others can enjoy read this proposal as well as I did. If you like this proposal, please send me an email at firstname.lastname@example.org, so I can add you to a mailing list and communicate with you and others about this plan.