By capitalizing on financial data processing technology, it is possible to create a tax code for the 21st century that is astonishingly easy for all citizens to understand and administer because it eliminates the need to file tax or information returns.
The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions. (Wikipedia)
DREAMING OUT LOUD One Tiny Little Tax By Daniel Akst, The New York Times, February 2, 2003
OFF-THE-BOOKS-WORK and a $500 Billion Tax Gap: An Interview with Edgar Feige By Steve Lawrence, The Gail Fosler Group, July 30, 2013.
Ramifications of Implementing the APT
As with any major change what is viewed as positive for one group may be considered a negative for another. These are listed in accord with the expected majority point of view.
Think about the desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction (APT) tax.
In its simplest form, the APT tax consists of a flat tax levied on all transactions. The tax is automatically assessed and collected when transactions are settled through the electronic technology of the banking/ payments system.
The APT tax introduces progressivity through the tax base since the volume of final payments includes exchanges of titles to property and is therefore more highly skewed than the conventional income or consumption tax base.
The wealthy carry out a disproportionate share of total transactions and therefore bear a disproportionate burden of the tax despite its flat rate structure.
The automated recording of all APT tax payments by firms and individuals creates a degree of transparency and perceived fairness that induces greater tax compliance. Also, the tax has lower administrative and compliance cost.
Like all taxes, the APT tax creates new distortions whose costs must be weighted against the benefits obtained by replacing the current tax system.
- Strong dollar due to economic stimulus attracting foreign investment where no income or excise taxes exist.
- Very low interest rates due to extra savings by individuals and attraction of foreign investment capital allowing lower cost capital and infrastructure expansion.
- Budget elasticity for government including the ability to respond to special demands such as war or national emergencies.
- Eliminate budget deficits with minor adjustments in an already extremely low tax rate.
- Eliminate accumulated national debt through same mechanism if desired; further strengthening the currency.
- Multiplier effects of economic stimulus creating greater numbers and value of transactions in an upward spiral reducing rates or allowing more services.
- Incentive to move toward a "cashless" system.
- Public insensitivity to expansion of government budgets and commensurate regulation.
- Very low interest rates for people relying on secure, fixed sources of income.
- Loss of tax incentive for charitable contribution. People will have more wealth to give but must do so without economic advantage.
Implementation of this elegant and simple idea in Canada would allow Canadians to create an original, authentic social organization that would eventually be copied by all other nations. Let's apply the power of the internet to get this Automated Payments Transaction Tax idea into the mainstream and into application. Canadians, write your Member of Parliament." BR