"Oh No! Obama and Pelosi wanna tax my welfare check!"
There is a certain kind of tax gaining ground (evidently) in Europe that has received a lot of chatter in the U.S. lately from email panic mongers and Obama haters. The tax is a 'financial transaction fee' and has been rolled out as a 1% fee on deposits (income), withdrawals (payments) and intangible transactions (moving money around to avoid income tax).
Basically, the bill wants 2% of every dollar moved in the U.S. economy, including real estate transfers, stock and precious metal transactions, etc.
The idea was originally proposed in 2005 and has never (including this year) made it out of committee in Congress. Folks, it ain't gonna happen. Neither Obama nor Polesi nor anyone else we've ever heard of has anything to do with it. Any discussion about it's potential advantages or drawbacks is entirely esoteric. People with a lot of money obviously hate the concept, and all they have to do to gain overwhelming popular support is point out that welfare recipients, social security recipients and churches will be taxed and the uproar is deafening.
But let's look a little closer at the concept and see if we can find any redeeming value in it.
First, it is a asset based tax and an income based tax. People with more money will disproportionally pay more taxes. The average paycheck to paycheck guy is going to pay 2% (1% when he deposits his paycheck and 1% when he spends it). That sounds awful until you take into account that the fee replaces individual income taxes a detail always omitted by the hate everything email spammers.
Middle class America would pay a little more because they are taxed on money coming in and money going out just like paycheck to paycheck guy. But they are also taxed 2% on credit card purchases (1% to use the credit card and 1% to pay it), House and car payments would increase by 2% too. Transferring money (the asset based part of the tax) from checking to savings or a brokerage account would also incur the 2% tax (1% for taking money out of checking, 1% for the deposit to savings). Finally, they would pay the 2% tax when buying stocks (1% to buy, 1% to sell).
People with a whole lot of assets that move these assets around a lot will pay through the ass. 2% every time they make a financial move of any kind.
Since business don't pay taxes (customers pay taxes), we would see an instant, automatic 2% price increase on everything across the board (which adds to the 2% tax). But we would get rid of income tax altogether. It would be a good trade.
Personally, I'm in. I think that if the fee was implemented without prejudice, exemption, exception or negotiation across the board, and the fee would replace income tax altogether with no possibility of revival ever, it would be a great way to reorganize taxes. The real losers would be the trust fund brats that don't work for their money anyway and financial services companies that are little more than parasites in my opinion.