This is really kind of odd. Fatah is the last person I’d think of as being one to propose such a dramatic tax scheme, but he has been energetic and innovative.
The question is, could it actually work? Its seems to have a bunch of loopholes as stated. But would it be the ruin of all we know? Would it be a saving grace? Would the stock market crash? Or would the IRS lobby for its survival?
I don’t think it makes sense to tax transactions. Some businesses buy and sell a lot of “stuff”. Why should they be taxed every time money changes hands.
I think a better idea is a naitonal value added tax (with some items exempt), where you are taxed on the value added. Supposedly it’s “regressive” meaning the poor pay a larger share of their income, but since the rich can’t enjoy money without spending it, then I would think it would be proportional somewhat.
His idea of taxing stock transactions is idiotic. It would just make many smaller transactions instead of a few large ones.
Still no free lunch, film at 11.
As stated, it’s an odd version of turnover taxation, a staple of pre-EEC economies. This sort of thing has been proposed by various people who don’t know what they’re talking about (e.g. Pauline Hansen’s “Easy Tax” proposals in my country). The transaction limit is either going to eliminate revenue or (if set low enough) be insanely distorting. Either way, it gives firms and individuals a strong incentive to avoid arms-length transactions (for example, a large vertically integrated firm [Walmart] would not have to pay tax on warehousing, a specialist retailer would be taxed along the way). As an idea for tax reform, it’s an incontinent fantasy.
I’m intrigued by the fact that using his system the US would realize tax gains on laundered money from drug operations and other criminal activities.
Other than that it doesn’t seem any crazier than any other tax reform scheme. Heck, just the time savings in paperwork (and the downsizing needed at the IRS) might make the books balance.
A question for someone who understands the banking system better than I do:
Would it be possible (perhaps even easy) to set up your transaction to bypass the US banking system altogether, eg by going thru a foreign bank?