Dear Mr. President and members of Congress:
In the months that follow Tuesday's midterm elections, and into the New Year, you all face three very significant challenges. You must:
- Find a solution to the Bush-tax-cuts controversy.
- Rein in the huge-and-growing U.S. budget deficit.
- And better police Wall Street, which got us into this mess in the first place.
You can solve all three of these problems with a single, simple proposition. And you can do so without having to ask U.S. taxpayers to dig into their wallets or savings.
Let me explain.
A Single Solution
On Dec.1, just one month after Tuesday's midterm elections, the National Commission on Fiscal Responsibility and Reform will propose spending cuts and tax increases to reduce the nation's dangerous budget deficit.
As taxpayers, we hope that the majority of those recommendations will involve cutbacks in wasteful public spending, which has grown excessively in the last decade and is a dangerous cancer on the national economy.
That's because the other option is for the government to increase taxes.
There's an unfortunate reality here: Most of the tax increases that would help slash the dangerous deficit - including some of the Bush tax cuts (those relating to dividend taxes, for instance) - would also damage the fragile U.S. economic recovery.
But there is an exception.
There is one tax increase that would generate substantial revenue, help knock down the deficit, and even produce major improvements in the operation of the capital markets in both the United States and abroad.
It wouldn't increase taxes to U.S. households or most U.S. businesses, meaning it also wouldn't harm the U.S. recovery.
I'm talking about a "Tobin tax" on financial-market transactions.
Tobin Tax Basics
The Tobin tax, proposed by Nobel laureate James Tobin in 1974, would tax transactions, whether on the stock market, in foreign exchanges, in the derivatives market, or potentially in the ordinary transfers we always use to make an income and pay our bills.
We do not propose instituting a broad-based Tobin tax at a high rate such as 1%. A tax at that rate would be hugely damaging to economic life in general, as it would suck appreciable amounts of money out of every transaction we undertake (at that rate, we'd be talking about taking $3 out of a $300 grocery bill, for example). It would drive everybody back to using untraceable cash, a huge boost for the illegal "black economy" and a major loss in efficiency and security. On Wall Street, it would force the derivatives and other businesses offshore, or close them down entirely.
That's certainly not our goal.
However, a Tobin tax at a low rate - perhaps 0.01% or 0.02% per transaction - is a different matter, entirely. Even if that tax were extended to all transactions in the economy, it would have only a small effect on day-to-day transactions.
For instance, someone with an after-tax income of $70,000, receiving pay-slips net of tax, would have total annual transactions - including credit card spending, withdrawals of cash and other expected transactions - of less than $100,000. With a Tobin tax, a person in that financial situation would incur an annual tax of no more than $10 to $20, which could be painlessly extracted by computer. It would also be possible to exempt "retail" banking and credit-card transactions from the tax.
A More-Tightly Controlled Wall Street
The Tobin tax would play out very differently for Wall Street, however. Most affected would be the "high-speed trading" business (also known as "high-frequency trading"), in which investment banks set up powerful computers in the same building as the stock exchange. This enables these institutions to get the "tape" of trades more quickly than their competitors, and then use this information via computerized "algorithms" to execute very fast trades, profiting from the result.
The margins on this business are very slim - perhaps as little as 1 cent to 2 cents per share on a $20-per-share trade. So even a 0.01% tax, costing 0.2 cents per share, would reduce those margins substantially. At the same time, this business is very profitable, making Wall Street more than $20 billion in 2009, with the leading firm, Goldman Sachs Group Inc. (NYSE: GS), reaping perhaps $5 billion of this profit. Thus, the Tobin tax at even 0.01% would tax 10% to 20% of this profit, producing $2 billion to $4 billion in revenue from this tax alone.
However, a Tobin tax would also have a similar effect on the massive derivatives market. The total current nominal value of derivatives contracts outstanding was $542 trillion as of December, the most recent figures available. Since most of these are short-term in nature, we can assume that annual trading volume totals at least this amount, with netting of contracts between the major houses probably increasing it further.
A 0.01% Tobin tax, which would have to be imposed in all the major financial centers to catch the full flow, would thus yield about $54 billion per annum in tax revenue, of which perhaps $15 billion to $20 billion would accrue to the U.S. government.
The most beneficial effect of a Tobin tax - beyond the revenue it raises - would be its effectiveness in cutting down on the so-called "rent-seeking" activities of Wall Street.
Both high-speed trading and derivatives operations are insider markets, in which the majority of profits are derived from knowledge of the trade flow of transactions in the market. That knowledge is not available to ordinary investors; indeed, in the case of high-speed trading, it is not even available to those with marginally slower or more-distant computer systems. High-speed trading and most derivatives operations are distortions of the free market, artificially enabled by modern computer technology.
While the derivatives market can provide a useful hedging function, only a small proportion of the $542 trillion of derivatives outstanding can possibly contribute to that function; there simply isn't that much risk exposure to hedge.
As for high-speed trading, the liquidity it provides is of very poor quality. Indeed, systems such as this frequently produce "flash crashes" - like the one that hit the U.S. stock market back in May - as well as other pricing anomalies. And they are generally shut down in a one-way market, when liquidity is most critical.
Removing Wall Street's "rent" profits from these sources is thus pure gain for the rest of the economy - and for the general public.
If a Tobin tax cut down derivatives and high-speed trading activities by two-thirds, it would contribute maybe $10 billion in government revenue, or $20 billion if a 0.02% tax was imposed. And that isn't the whole story. By cutting down these counterproductive activities, this new levy would release several times this amount in profits from Wall Street to the rest of the economy, generating jobs and productive economic activity at a time when the country needs it most.
We hate taxes. But the reality is that a "Tobin tax" - in addition to producing needed federal revenue - will level the playing field between Wall Street and the U.S. general public. And for the reasons we just mentioned, it will also pave the way for healthy economic growth - and productivity enhancements that will restore the United States to its rightful place as one of the most competitive economies in the world.
Given those projected bullish outcomes, this is a tax we can live with.
Sincerely,
Martin Hutchinson
Contributing Editor
Money Morning
If you wish to do so, we urge you to contact your elected representative in Congress right away. Here's what you need to do.
Step 1: To find out who your congressional representative is, and how to contact them, please click here (Website address is: https://writerep.house.gov/ ).
Step 2: You can either write them your own letter, or feel free to cut and paste the model e-mail note that we've displayed just below.
In either case, we suggest using the following subject line (by using a consistent subject line, Congress will understand that a true taxpayer campaign is underway).
Subject Line: Support a Tobin Tax on Wall Street
Step 3: Make sure to include a link to today's "open letter" in Money Morning.
Step 4: Lastly, drop us a note to let us know that you've joined us in taking steps to fix this country's budgetary and economic problems. Write to us at mailbag@moneymappress.com.
Feel free to use this letter:
Dear [Decision Maker],
I am writing to urge you to support the introduction of a Tobin tax to curb excessive "high-speed" trading on Wall Street, to attack the ruinous federal deficit and to reimburse the American people for the bailouts of those financial institutions deemed "too big to fail" by the government.
I do not support additional taxes on an already beleaguered American public. Instead, I believe it is the responsibility of the big investment banks to pay us back for the financial mess they helped get our economy into. That is why I support the introduction of small Tobin tax on transactions in the stock and derivatives markets.
A Tobin tax of around 0.01% or 0.02% would barely impact taxpayers, but it would impact the big investment banks that got us into this mess. It would minimize the "high-speed trading" that creates market instability and "flash crashes." This small tax could potentially generate $2 billion to $4 billion in revenue from the investment banks - instead of saddling the American people with a higher tax burden.
Most importantly, it would curb Wall Street's "rent-seeking" profits - a net gain for the rest of the economy and for the general public.
As a member of your constituency, I urge you to support this tax to level the playing field between Wall Street and the public you are representing in Congress.
For more information on how the Tobin tax would help the American public, please read this recent commentary published by Money Morning: http://moneymorning.com/2010/10/28/deficit-debate-tobin-tax-cuts/
Sincerely,
{name}
{address}
[Editor's Note: If you have any doubts at all about Martin Hutchinson's market calls, take a moment to consider this story.
Three years ago - late October 2007, to be exact - Hutchinson told Money Morning readers to buy gold. At the time, it was trading at less than $770 an ounce. Gold zoomed up to $1,000 an ounce - creating a nice little profit for readers who heeded the columnist's advice.
But Hutchinson wasn't done.
Just a few months later - it's now April 2008 - with gold having dropped back to the $900 level, he reiterated his call. Those who already owned gold should hold on, or buy more, he said. And those who failed to listen to him the first time around should take this opportunity to remedy their oversight, he urged.
Well, we all know where gold is trading at today - in the neighborhood of $1,370 an ounce.
For investors who heeded Hutchinson's advice, that's a pretty nice neighborhood.
Investors who bought in after his first market call are sitting on a profit of as much as 78%. Even those who waited, and bought in at the $900 level, have a gain of as much as 52%.
And let's face it, with the U.S. Federal Reserve getting ready to launch "QE2" (and, by that, we're not referring to a luxury ocean liner - but rather a new round of "quantitative easing" that many of us fear will be highly inflationary), gold and other precious metals are likely headed much higher.
But perhaps you don't want just "one" recommendation. Indeed, smart investors will want an ongoing access to Hutchinson's expertise. If that's the case, then The Merchant Banker Alert, Hutchinson's private advisory service, is worth your consideration.
For more information on The Merchant Banker Alert, please click here. For information about Hutchinson's new book, "Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System," including how to purchase the book at a 34% discount, please click here.]
News and Related Story Links:
- National Commission on Fiscal Responsibility and Reform:
Official Website. - Money Morning Special Report:
The Tobin Tax: The Fix-It Plan Wall Street Hates ... But Can't Seem to Kill - Money Morning Commentary:
The Tobin Tax: The Deficit-Busting Levy Wall Street Hates. - Money Morning News Archive:
Midterm Elections. - Money Morning News Analysis:
How Washington Should Handle the Bush Tax Cuts. - Money Morning News Archives:
Tobin Tax News Stories. - Amazon.com Special Discount:
Alchemists of Loss. - Money Morning Book Review:
Author Chat: Money Morning's Martin Hutchinson Talks About "Alchemists of Loss." - Wikipedia:
Tobin Tax. - Wikipedia:
James Tobin. - BusinessDictionary.com:
Black Economy - Money Morning News Commentary:
High Frequency Trading: Wall Street's New Rent-Seeking Trick. - The Wall Street Journal:
What's Behind High-Frequency Trading. - Money Morning News Analysis:
Thursday's Wild Stock Market Ride Spotlights 'High-Frequency Trading' as the Latest Worry For Investors. - Money Morning News Analysis:
What Really Caused the Stock Market 'Flash Crash.' - Amazon.com Special Discount:
Alchemists of Loss. - Money Morning Special Report:
Credit Default Swaps: A $50 Trillion Problem. - Money Morning Commentary:
When it Comes to Naming Wall Street's Worst Invention Ever, Credit Default Swaps Continue to Fill the Bill. - Money Morning News:
Money Morning Expert Makes Noise with Market Call. - Investopedia:
Rent Seeking.
Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter
Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…
who ever come up with this open letter is a freaking IDIOT….! ANY QUESTIONS ?
Do you have any ideas? There is your question. If you don't have any answers— then cut your useless head off.
Thanks for chiming in on this, John. It's greatly appreciated. And your point is an excellent one.
Several days ago, I posted a note here stating that the debate that Martin's "Open Letter" has sparked is just terrific. Whether the reader agrees or disagrees doesn't matter …. it's the fact that folks care enough to think about the topic, have an opinion, take a stand, one way or the other, and post those thoughts so that others can see and share.
As you correctly point out, John, the folks who have done that here have contributed something of value.
As you also correctly point out, the note that precedes yours does none of that.
John…..Thanks, again, for taking the time to intercede.
Respectfully;
William Patalon III
Executive Editor
Money Morning
James Tobin said his Tobin tax would not work. Simply ask or find the Austan Goolsbee video. Goolsbee is serving under President Barack Obama as the Chair of the Council of Economic Advisers. Transaction taxes have a severe cascading effect because each dollar makes multitudes of transactions, with each transaction increasing the price of goods and services and lowering the yields of investments. That little 0.01% will cost each of us multitudes more and simply move even more business to other countries that do not have such a tax. Bad for the economy, bad for jobs.
And then the money taken in will just be wasted by the government. Not to balance anything and THAT is the issue.
This sounds like a very good alternative to doing what Congress will probably do. Convincing Congress and the President is strictly another matter.
The only problem with your suggestion is that once this tax goes into effect there is NOTHING (and I mean NOTHING) that will stop them from raising that % amount in the future when they feel they need more money for their OUT OF CONTROL SPENDING!!!!! Someone sent me a list of taxes that didn't exist 100 years ago and that were supposed to be temporary when instituted. It ran 6 pages long! I don't trust them to NOT spend outrageously and thus try to monkey with the percentage you suggested at some future date – and there is NO WAY to stop them except to throw them out of office which is not as easy as it seems. If we could make it criminal for them to touch this Tobin tax and they knew they would GO TO JAIL for changing it, then fine but otherwise I see this problem I have presented as a looming threat.
The solution is already here in the form of HR25, The Fair Tax Act. It completely abolishes taxes of the form you are proposing and replaces the income, dividend, capital gains corporate, etc. and the IRS, with a simple consumption tax. The hidden tax of around 23 cents on the dollar we now pay is replaced with a visible consumption tax of 23 cents. Without the crippling 2nd highest corporate tax in the world companies would flock back to the US; the economy would boom by an estimated 10.5% the first year; unemployment would be history. Why have our politicians ignored this amazing change in our tax code for 10 years? Power, they don't want to give up their power to control the population. The Fair Tax will be the greatest transfer of power from the government to the people since the Declaration of Independence.
This "Tobin Tax" certainly has merit. The only question is how can you spin it so that our representatives, who were mostly bought by big money like the banks doing the computerized trading and dealing in derivities would pass it? Will certainly try letting congress know my feelings however to date they either ignore letters I write or answer with a letter, the gist of which is "I don't care what you think I know what is good for you". Good luck!
the tobin tax is an interesting idea provided it can make a sfficient dent in the US FISCAL DEFICIT WHICH CAUSES GLOBAL CONCERN. wITH ALL ITS WHIMSICALITIES THE US IS A BETTER FRIEND TO HAVE THAN most other major countries.It can be made to learn from its mistakes than most others. My only objection is that the tobin tax is not progressive but regressive. It does not cast the heviest burden on the broadest back. It does not redistribute incomes.More money in the hands of the poor will improve demand. More money in the pockets of the rich will improve supply; there needs to be a balance. Yet there is smething to recommend the tobin tax, its simplicity shankar Sharan from gurgaon ,India
Dear Martin,
I'm truly sorry, but you're off your trolley. If – IF – there is virtue in the Tobin or any tax, it must be productive, it must result in public gains that exceed the costs. Almost be definition, a low-fractional-percent tax involves more administrative hassle, at both national and individual levels, than is ever worthwhile.
More generally, only the most utter idiot offers your or any government another way to bleed us white. You're not that imbecilic. So what are you, an establishment stooge?
A Tobin tax could be a significant component of an effective solution. Another part of the solution would be to shift funding from "defense" to infrastructure and energy independence. Limiting US military spending to no more than 2 or 3 times the per capita average of the rest of the world world likely free up hundreds of billions of dollars annually for debt reduction, trade deficit reduction as energy independence takes hold, and development of infrastructure including public transportation (e.g. high speed rail).
I sent the Tobin Tax request to my representative, Randy Forbes, who is an idiot & probably won't do anything about it & I am not going to vote for him Tuesday. Hopefully I can then sent this request to a new congressman.
I don't know if the "fair tax" on consumption only would work.Many rich,high income individuals are cheap and don't spend much.I think a flat 15% tax for all income levels with the choice of anyone to pay above this amount.This would allow individuals to pay a reasonable amount for govt and use the rest for whatever they choose.They could give more to efficient charities instead of being forced to give to ineffiicient govt.They could choose to pay more than 15% income tax if they really believe that 15% is too low(such as Warren Buffett says).Any amounts above 15% would be applied to lower the lowest income individuals tax rate.A flat % tax would still be "progressive" as Democrats like since someone earning a high income would get much less back in govt services than taxes paid while someone in a low income would get much more.
Hmmmmm. Let's see. MASSIVE TARP money for the financial institutions to lend money to stimulate the economy…..Oh right. They are using the majority of that money that they got from me and you and you and you and you to..wait for it, NOT lend. No, they are buying our debt at a set 2%, 3%, or 4% with the money we gave them. Brilliant on their part!!! They get free money and buy Federal Securities at ANY interest rate, and WE have to pay them AGAIN. But this time WITH interest!!! Now seriously, if I were a financial institution, WHY would I make a loan at ANY interest rate for ANY term, ESPECIALLY a 30 year mortgage that could default at ANY time, when I could buy guaranteed securities….and do it SHORT term with FREE money?? Heck, even if I had to borrow from the Fed at..what…0.25%, if I could get a mere 2%, I make 8 times my money back. TAKE THAT VEGAS BOOKIES!!!
How about this….THE SYSTEM IS RIGGED!!!!! PERIOD!!!! I am QUITE tired of paying in ANY way, for the gambling habits of others. If YOU want a Tobin Tax Mr. Hutchinson, let it be imposed on THOSE THAT GOT US IN THIS MESS IN THE FIRST PLACE and NOT on me and my family.
Impose a 48% tax on these transactions like the tax on my commissions and THEY WILL SLOW TO A CRAWL. Make these behaviors UNPROFITABLE and like magic, THEY WILL STOP. But DO NOT continue to penalize ME for something I have NEVER, nor ever WILL have a hand in. THIS is CRIMINAL wrongdoing, NOT CIVIL wrongdoing. The people at the HEART of these matters need to be hauled away in chains and sentenced to DECADES in prison. ONLY when the PUNISHMENTS fit the CRIMES, and the wrongdoers FEAR those they do wrong to will they STOP doing wrong.
LET'S STOP BEATING AROUND THE BUSH AND GO AFTER THE ACTUAL CRIMINALS FOR ONCE!!!
@Tim Glowacki
Tim – Amen to that. What you say.
Personally, I have less vitriol than you about a Tobin tax – but then I'm English like Martin Hutchinson, so I do not have to pay it…..
From the outside, the US looks completely insane. Staying with the rap style rhyme – everyone knows no PAIN no GAIN yet all the while cuddly Barack, little Timmy and baffled of Basingstoke – sorry, Baffled Benny!!!! Are saying there is no crisis, everything is getting better (shades of Sergeant Pepper) and yet this is a jobless recovery where the pricks on Wall Street run the market up on POMO funds whilst Main Street starves.
If anyone thinks this is unfair – just check the DJIA action on release of bad to awful unemployment figures – 10 minutes later the market does not give a damn.
ATB
Dave
in France
Pros and Cons / dollar effects are distributed throughout article like flecks of dark pepper in a bowl of grits. Proposal would be more persuaive to me with two slight revisions at the end of the article: first, summarize estimated dollar gains from sources: high speed traders, detail others for a total amount to be gained by Tobin Tax. Second, compare that total to the total fed. deficit to reflect benefit to nation.
A Tobin tax would be a financial disaster–exactly what our socialist governemnt desires. Only the fair tax with the abolition of the 16th Amendment and all excise taxes would help our present situation. Also essential is cutting all spending, especially foreign aid, welfare, social programs, and foreign military bases.
Hi folks:
These are great responses — both pro and con — to Martin's proposal. They are the product of thoughtful reflection and careful analysis from Money Morning's well-informed readership. Frankly, brisk debates make our day, which is why we're always heartened to see these these comment strings grow — especially when they grow so fast and so large that they almost seem to come to life.
Let me close with a comment of my own. Whether you agree or disagree with what we've written, we here at Money Morning have great respect for those who not only took the time to read and consider our commentaries, but also took the time to ACT by posting thoughtful, articulate responses to our work.
Let's face it — debate is good, even healthy — especially when it leads to action.
The more of you there are, the brighter our future will be.
Thank you all;
William Patalon III
Executive Editor
Money Morning
A Tobin Tax sounds like a plausible solution at first glance. Unfortunately, it's letting the camel get its nose in the tent. The character of those in the federal government don't warrant them to be in charge of this approach. More importantly, it still goes down the same path of confiscating private property which, is out of control in the country, and violates basic constitutional principles. Lower taxes, remove regulatory burdens, cut government spending, and get the government out of those activities not specifically enumerated to it in the Constitution, and we will see prosperity take a huge leap in this country and enable us to pay down our debt and wind down entitlements such as social security and medicare.
The ideas presented maybe helpful to some extent. If your lawmakers can impose the Tobin tax and earmark the same for the payments of short term loans for the first 2 years, and for the payment of maturing loans for the next 3 years, it would be very helpful. I do not have the full knowledge of the extent of your government deficit nor the sources to be taxed, so I cannot give a rough estimate of how long the Tobin tax should exist. You have a good government, and your people should strive to make it work. I still believe in the goodness of human heart, and I hope that when this becomes a law, somebody strong enough (one who will not drown in the system) will handle the same for the good of everybody.
As outlined the Tobin tax would only be on financial transactions so it would not flow through the economy as a VAT would. I have been trading for nearly fourty years and have been front run, gouged and otherwise misdelt in the market by brokers. Electronic trading through the discount houses helped level the field until flash trading. This is no different than the fund traders using the time difference to swipe a few dollars off the top on mutual funds after closing, now an individual cannot re buy a fund for 60 days after making a sell. We must insist that it only applies to trading in any form I will pay the 1% and deduct it from my income tax bill.
Thank You Martin Hutchinson. I too believe a Tobin Tax can and will be very effective in bolstering our economy and helping it once again gain respect and position in the world, but only if it is coupled with a complete elimination of unnecessary spending, and the QE-2. Our wasteful national spending (pork barrel) and ridicules proposals for another stimulus are NOT going to help the majority of us and will just aggravate the currently existing economic conditions, create inflation, and worsen our national debt and reputation. Another increase in the national deficit is totally unacceptable. Your proposal will help considerably to moving our country forward. I am very fortunately a person that the tax will hinder, but am able and willing to pay the price. I sincerely hope that your recommendation is heeded, and I unequivocally support your position.
We/the US got ourselves into a tight corner, and the Tobin Tax as described by Mr Hutchinson at least, appeals to me, as I hardly see much of other potential solutions, with as little disruption potential.
The problem seems to be the name TAX, no matter how it is proposed TAX just calls out the inner "Tea Party" of citizens,. Why not call it Profit Sharing or Income Sharing instead. Everyone one profiting from living in the best country in the world should share some it so the administration and security of the country's economic, civil, humanitarian and infra-struction systems are maintained for the benefit of it's citizens. Government is what citizens need to make a healthy society. Churches have admin., capital improvements, maintenance and benevolence costs to take care of and citizens share some of their profits or income with a church or gun club or social club or well the list can go on and on. How the profits we share are spent is never perfect for everyone, that is what we use politicians for. A good profit sharing plan which can help everyone in the long run is good and necessary. I'd vote for the "Tobin profit sharing plan"
best solution is reducing spending by 25% and reducing taxxes by same,,kiss,,dont need any new tax schemes,,i would then institute a 15% flat tax,,economy would take off,,
This idea sucks about as much as Bush#1's idea to add a 10% penalty to the early withdrawal of a retirement account in order to fund the first Iraq war. The penalty never went away and it now hurts the suffering unemployed who would like to use this "saved" money to hold them over until they can find a job.
Speaking of the Iraq war, do you remember that before the war there was talk that we could not afford Social Security and Medicare and that we would need to reduce benefits and/or raise taxes? Isn't it funny that we somehow found the trillions to fight this illegal war?
The main purpose of taxes is for government to control your life. The government needs to be drastically reduced and we need to bring all American troops home and close all of our foreign bases. Government spending is always presented as helping when in fact it is the absolute worst use of our money and it always has negative unintended (or intended) consequences.
i love to listen to idiots like you!! there is always a solution!!! the first prioblem is unemployment, fix that and suddenly a lot of spending dissappears and the government gets more tax money. now you can decide what is wastefull spending. for myself i think we have the wrong approach to al keida or whom ever our enemies are. we waste young lives and enormous resources that we could use at home. sincerely
I DON'T BELIEVE ANOTHER TAX WOULD HELP. THEY DON'T USE THEM WISELY. THEY NEED TO REGULATE THE ACTIONS OF THE TRADERS AND ANYONE ELSE WHO ABUSES THE MARKET. THE GOVERMENT IS ALLOWING SOME TO GET RICH ON THE BACKS OF OTHERS. LETS LEVEL THE PLAYING FIELD
How bout this, NO TAXES LADY. Are you kidding me, give them an inch they will take a mile, this is nothing more than a Stealth VAT tax that will increase – thats a guarentee with Politicians. How bout PAY cuts for all the overpaid Government workers, Pay cuts for welfare mooches, Freeze on all governemetn hiring, Enforce a budget cut of 10% on all Federal Agencies , sell the Post Office to fedex, Freeze and Cut all Obamacare funding, buildings and personell. And Last, Pay cut for Congress, and cut their retirement and force them onto Social Security like everyone else.
I don't believe more and/or higher taxes is the answer. Spending cuts and freezes should be implemented, of course. However, there is a very simple solution to most of our present economic problems that can be immediately implemented that won't cost a cent and will actually accomplish much of the spending cuts required.
That solution is to aggressively enforce our employment laws and impose massive penalties upon employers that hire any illegal aliens and impose severe punishment upon any illegal that uses false documents and/or SS number to obtain employment and/or social benefits.
According to the census, there are roughly 16 to 18 million illegals in the US. That represents somewhere between 12 and 16 million jobs.
When the jobs dry up, the illegals will head back to their home country. Jobs will be freed up for legal citizens and residents. Unemployment will drop quickly. The economy will recover very quickly. Spending for social and medical benefits for the illegals will drop drastically.
Why let the country suffer for the benefit of the illegals and the Democrats in their attempts to capture more votes from the illegals? It really is that simple, folks.
The solution is easier than this. Enact the Fair Tax, abolish the IRS, and keep all of your money until you buy something new( does not apply to anything used….Boat,Car,Business Machines,etc..). American people would have money, business would rush back to America, and the gov. would get more than there fair share! Think I'm an idiot? Do the research like you would an equity you were about to purchase, then decide if I am an idiot!
Great trading to all.
Just when did another tax solve any problems when we can't control the spending habits of government? If you can come up to a workable solution to cut spending and reduce te deficit, then by all means come back and talk a tax to help reduce it further. In the meantime, readmy lips! NO NEW TAXES!
As a non-American reading these responses, I am astounded by the negativity which the Tobin tax receives. WAKE UP AMERICA! You are living beyond your means and your economy is in ruin. ANY policy to reign in the banks that did this to you and attempt to rescue your ridiculous national debt has to be worth a try.
Income tax was originally enacted as:
By 1913, 36 States had ratified the 16th Amendment to the Constitution. In October, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid income tax at the time. Form 1040 was introduced as the standard tax reporting form and, though changed in many ways over the years, remains in use today.
Okay, look here is the issue. I hate the progressive tax structure. The reason for this is simple I believe that its institution allows Americans to duck out of their obligation to pay for the Federal Government. Everyone points to the fact that the wealthy are not paying their fair share, this is bullocks as they pay more than anyone else and in point of fact almost 50% of Americans pay NOTHING in Federal Taxes. I say institute a flat or Vat tax with no method for reducing that tax period. If you want a progressive VAT tax I am fine with that as well, you purchase food there is no tax and it is 22% on everything else. I know many people will say this 'warfare on the poor' it is not, they derive a great deal of benefit from the system as is and to be honest that will not change, heck it may well be that you need a flat tax of 20% or 30% to cover everything but at least at that point everyone is participating in funding the government.
Second, there are two problems that are occurring in Government. 1) the rate of Government Growth is greater than the tax revenue that exists to cover it. Before the great crash of 2008 Government growth had again finally slowed in relation to the growth of the economy. The shortfall of the Government ( despite fighting a war ) had almost come back to a surplus situation – heck one more year and Bush with lower taxes would have accomplished what happened under Clinton with higher tax rates. Of course then things hit the fan and that went out the window ( you know sort of what happened in 2001 when the tax cuts were implemented ) The reason you have deficits is because you spend money faster than you generate revenue to create it. Historically Government has been growing at 8% per year ( over the last 100 years ) while GDP has grown at the rate of 6% per year, this means that government as a part of the economy has been ever increasing. Many think that it was the tax increases that Caused Clinton to pay off the debt, this is a fallacy because if it was an increase in taxation then during the first year of his presidency he should have had a surplus and it took until the end of his term before any showed up. The real reason for the increase in tax revenue was that he kept the rate of government growth at 3% per year while GDP grew at 6% per year. Yes the increase in taxes helped get to a balanced budget faster but if Government simply performed the same thing now it does not MATTER what the tax rate is as the government as a percentage of GDP would ultimately go down.
It is sad how people are fixated on either 1) Class warfare tax the rich which unless you control the rate of government growth is in the end a fallacious argument. Or 2 ) cut taxes to increase GDP growth, which does in fact occur but the rate of increase is not in the same proportion to the loss of revenue and can only occur for the funds spent in hard assets such as guns and ammo or buildings or man power ( things that actually use assets for which there is a true economic competition )
In the end I disagree with the solutions outlined in this letter. I agree something must be done but rather than seek to make everyone responsible it attempts once again to redistribute the tax burden rather than institute a method of shared responsibility toward each other. I find the progressive tax system morally reprehensible as it institutes a method of entitlement rather than one of responsibility of each member of society. If you want to talk about Charity I do not believe it is governments responsibility to institute charity as they invariably create entitlement rather than charity. This of course is a moral position rather than a fact based one. I have been both poor and well off ( never rich yet though maybe someday ) and can say being poor was not so bad, and being well off was slightly better :-)