Description of AutomaticTAX
Who will collect this tax
The AutomaticTAX will replace all forms of taxation at all levels of government (Federal, State, County, City) with a single 5% tax rate on money transfer transactions. This tax will be collected by the electronic banking system. Just a few years ago this automatic tax would not have been possible because the electronic banking facilities were not as yet capable of the task. Today the banking system has all the database facilities in place and with additional special software it is ready for immediate implementation of the AutomaticTAX . The banks will get generously paid for performing the tax collection and that will give banks a significant source of income. Yet banks will perform tax collection at a fraction of the cost from current methods. Banks should be in favor of AutomaticTax.
How is the tax collected
When a payment is made for any product or service, money will move from the bank account of the payer into the bank account of the recipient. The bank of the recipient will deposit 95% of the payment amount into the recipient's bank account and will receive from the payer's bank 97.5% of the face amount of the payment. This results in each of the banks having collected 2.5% tax from the money transfer. If the payer and the recipient have their accounts at the same bank, then that bank winds up with both of the 2.5% tax deductions or a total of 5%.
How are various governments funded
Each bank account is coded with information indicating which government jurisdictions the bank account holder is subject to or elects to be subject to. This way it is determined how the tax funds raised from each account should be disbursed to the various levels of government and in what percentages of the total. The tax collected by the banks is electronically remitted to a central tax disbursement facility operated by each State. The States in turn disburse the amounts remitted by the banks to the several revenue departments of the several levels of government that have nexus to the tax revenue. The amounts remitted by the State are according to the specified coding on each bank account from which the tax has been originally collected.
How is the system controlled?
Governments at the State level have audit jurisdiction with additional audit oversight by the Federal Government. Banks will be generously rewarded for the tax collection service they render and for the audit process they are subject to. The banks are at the present time subject to Federal audits already so that only the State audits will constitute an additional administrative expense. Each tax payer (bank account holder) gets a record of monthly or running totals of the taxes withheld from the account and what amount was disbursed to the various levels of government.
What must each taxpayer do?
Absolutely nothing at all. No record keeping or accounting is required from any taxpayer (bank account holder), be it an individual or small business or large corporation. No tax forms need to be prepared by any taxpayer. No taxpayer will ever be subject to an audit except the banks that do the tax collecting (and the odd exception of a large corporation that violates some of the special provisions of the AutomaticTAX law and regulations).
Is 5% enough to cover all taxes?
The tax base for AutomaticTax is so enormously broad that this small 5% (or lesser) tax rate satisfies the total budget requirements of governments at all levels and then has additional revenue left to retire the National Debt and to overcome temporary financial problems with Social Security during its various stages of transformation into a better and more comprehensible system.
What about cash transactions?
There will be only a very small percentage of money transactions without the involvement of banks and those payments avoid the tax. The incentives for avoiding the tax are small, in fact they are far smaller than the incentives in current conventional tax systems where tax avoidance in many countries has become almost a "national sport" and very large percentages of the economy are "underground". With AutomaticTAX the majority of the currently vast underground economy will surface and pay tax, including all the illicit and criminal segments of the economy will pay tax because the tax is minimal as compared to the cost of trying to get around the tax. Most merchants that accept credit card payments are subject to between 2% and 3% credit card fees (like a tax) and the advantages of paying the credit card percentage far outweigh the costs. Cash money has an average circulation "life" of less than 3 payment transactions before it hits a bank, where it will be subject to the 5% tax deduction. Cash withdrawal from a bank or cashing checks are also subject to the 5% tax deduction. This means that 2 of the average 3 cash circulations are already covered with the 5% tax. The estimated cash flow amount that will avoid this tax will be less than 1% of all money movement and will escape the AutomaticTAX.
Self-reporting of cash receipts.
The likelihood of AutomaticTAX evasion and tax avoidance is very much smaller than with current forms of taxation because the tax-base is so very broad and therefore the tax is low and therefore far less interesting to evade or avoid. AutomaticTAX law provides that within 7 days of having received cash, that there is a compliance requirement to report cash receipts on forms available at every branch of every bank and that tax payments of 5% for cash transactions will be made together with such forms at such bank branch. The federal audit authority in charge of auditing banks (and their tax collection activities) will have the authority to prosecute violators of this cash reporting requirement. The practical outcome is that it is not practical to prosecute for small amounts of unreported cash receipts and that only individuals and companies that receive large amounts of cash will self-report because they place themselves in jeopardy when not self-reporting and paying the 5% tax, There is always the odd disgruntled employee that might report them.
Other forms of AutomaticTAX evasion
AutomaticTAX law provides that all fund transfer transactions must be reported and 5% must be paid by on all transaction. Funds that go through the national banking system are considered as having been reported. Large multi-national corporations could settle their accounts in foreign countries through foreign banks not subject to AutomaticTAX. Some creative minds may dream up other forms of tax evasion. All these transactions on which the 5% tax is not automatically collected by the national banking system must be self-reported. Failure to self-report is a punishable offense and it is hardly worth the effort for the small 5% tax.
Exclusions from tax
Excluded from this tax collection system are the 85% or so transactions that involve financial paper transactions without any underlying service other than turning one type of financial instrument into another type of financial instrument deemed of equal or similar value at the time of the transaction. These are all the money transactions that take place in such financial trading as stocks and bond trading and foreign currency transactions. Most of these trades are arbitrage trading and they work on razor thin margins. It variously has been discussed that some of this arbitrage trading should be tempered to a volume of trading that still maintains fluid market conditions but limits the possibility of market manipulation to an acceptable level. This tax system would allow the laying of an extremely small tax on these transactions to achieve the desired tempering result. Most likely a total hands off policy would be best.
Transfer of money to self
The transfer of money between accounts owned by the same party are also exempt from AutomaticTAX. Such accounts can be specially coded with instructions that will give instruction for not deducting tax for transfers between the accounts. AutomaticTAX also has a provision for refund procedures where deemed appropriate by the tax jurisdiction in charge of making such determinations.
The total tax base
The total tax base for AutomaticTax would be comprised of the about 15% of total money movement that takes place excluding the 85% financial paper transactions identified above. Transactions from one account to another account of the same person or company are not subject to the 5% tax. There are additional special exclusions and there are smaller tax rates for very large value transactions. all of these exceptions and exclusions are explained in the, 92 page and 4 flow-charts, full disclosure of this tax on the following webpage link:
Two types of taxes not included
Real estate property taxes and energy taxes will not be included in the AutomaticTAX and will be collected as separate taxes. The reason for these exclusions is so that governments can curb real estate property monopolies and will also be able to legislate energy use optimization, production and conservation.
What is the possibility for this tax system to be implemented in the United States?
There is a realistic chance because this idea is head and shoulders above several other tax systems that have received a lot of media attention. The only hope is a very strong grass roots tax reform movement and gradually winning over the news media to give their serious attention to AutomaticTAX.
Why was it named AutomaticTAX?
This tax is proposed to replace the very labor intensive methods of taxation at all levels of government. It was named AutomaticTAX because it is a truly fully automatic system that requires no human interface at any point during the tax collection process up to the ultimate funding of the various governments. A totally automatic tax that takes fully advantage of the current modern state of human technology.
For more AutomaticTAX information
Stay tuned for additional developments on this website. In the near future this site will be transformed into a self-sustaining grassroots tax reform campaign. I am looking for area wide volunteer leaders and campaign workers. I also am hoping for and requesting contributions to promote this tax so that it will be ultimately enacted into law by several countries around the Globe. This tax was first disclosed by me in early April of this year (2005) and it has a long promotion process ahead of it. I need help with that. So far I have committed about $65,000 in magazine print advertising to it. There are many financially powerful people around the country that would hopefully commit on a independent basis or in conjunction with me some funds, or time and effort toward AutomaticTAX. There are many very influential people who could give AutomaticTAX a powerful boast by their endorsement of it. And the largest and most powerful group of people who will ultimately put AutomaticTAX over the top are all the voters in this country. Click on TakeActionand become an AutomaticTAX volunteer or contributor.
A word to the Special Interests
Hopefully the special interests in the United States can be persuaded to refrain from their selfish objectives of maintaining the Status-Quo. Maybe their leaders could even be persuaded to give AutomaticTAX the generous boost that would unburden everyone including themselves, their children and their grandchildren from the 17,000 page monstrosity we call our income tax code. There are many other tax reform proposals, but none are as excellent as this AutomaticTAX.