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IRS

86Poke

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Oct 19, 2004
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Just needs to be shut down and replaced with s consumption tax. Then everyone in the country can pay their share.
 
Repealing the 16th would have to be done. If you didn't you'd end up with both income and consumption.
 
86Poke I agree. The Obama Administration has shown that the IRS can be used as a personal mafia and that has no place in a democracy. Unfortunately the IRS won't go anywhere or change unless the corruption is addressed at the top.
 
I'm in favor of the "Transaction Tax" as the a replacement for the current system. It raises vast amounts of revenue since everyone has to pay yet lowers the amount of taxes any one person has to pay.

http://thetransactiontax.org/

http://thetransactiontax.org/overview/

Even liberals like it.

http://www.salon.com/2013/10/18/the_tax_that_could_save_america_from_wall_street_partner/

The Transaction Tax idea was developed by a University of Wisconsin economics professor. Here's a link explaining how it works.

http://www.apttax.com/
 
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Transaction tax is pretty awesome. It would still require us taking away the constitutional authority to tax our income though. Link

Basically, take you entire years spending and multiply it times 0.35%. Or you can take $3.50 off of every $1,000 you spend.This would apply to anyone and everyone.
 
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The downside is that if it happens we'll just end up with a transaction tax and an income tax. There is no way they will ever propose an amendment to repeal the 16th.
 
Interesting. What's the down side?
Wallstreet is heavily against it since it is essentially a new tax on any type of trading activity. It disproportionately affects the most active traders. Wallstreet is really good at getting what they want.

The real problem is that it assumes that volume of transactions will remain the same after the tax is enacted. The volume will go down massively. Revenue will fall far short of projections.

It will also have a massive affect on market liquidity, which research since the 80s has shown to be a critical component of asset prices (Pederson 2013). translation: Plunge in the stock market, and bond market.
 
If you read the Wisconsin's professors discussion of the transaction tax, you will see he based his projected revenue ($4 trillion per year) on only 50% of the economic activity per year.
 
They only used half of all current transactions in their estimate. You think transactions will decrease by more than 50%?
 
They only used half of all current transactions in their estimate. You think transactions will decrease by more than 50%?
Yes. Most of those transactions are done with very thin margins that a .7% round trip tax would completely eat. The overnight repo market would disappear. Market making operations would be severely limited. (not that these are necessarily bad outcomes, just that the revenue will not be there.)

Another way to look at this is to determine what the return is on the average dollar of financial speculation. A good way to estimate this is 20% of GDP (a generous estimate of financial profits) divided by Total transaction dollar value. Roughly 4 trillion divided by 1000 trillion. So the expected return on a random transaction is .4%, and the proposed round trip tax is .7%. I would be shocked if transactions didn't drop 90%.
 
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