The Inevitable Tax Solution
ONE TAX FOR ALL – SALES AND TRANSACTION TAX SYSTEM
© 2020 Stephen D. Redden
To be clear no one will dispute the need to pay taxes to fund the states' and the nation's infrastructure and essential services.
"One Tax For All" will initiate the ultimate pro-growth environment for all citizens to prosper.
The need for more tax revenue is undeniable to keep up with the needs of our citizens and future success. The United States to keep growing the greatest economy in the world needs a modern, efficient, simple tax system that benefits our economy.
250 years ago, Ben Franklin said, "There is nothing certain but death and taxes."
In the future economist will say, “It is certain, the United States needs just "One Tax For All" to unleash the wealth of the Nation.”
Today with ever-larger demands for infrastructure and government services, the United States needs a tax system that will collect enough taxes to balance the budget, pay down the debt, while benefiting the economy.
Almost every economist will agree it is inevitable that a Sales and Transaction Tax System (STT) will be the final solution. It would be "One Tax for All" that is:
The sole and only tax collection system for all; no other taxes
The lowest tax rate possible
The easiest tax to administer and collect, with the least number of rules, laws, and regulations
A tax that spreads the tax burden evenly across all citizens, non-citizens, businesses, enterprises, and organizations; all segments of the economy (ASOE)
A tax that creates maximum cash flow for the economy
A tax that will collect enough funds to maintain a balanced budget
A tax that will start to pay down our national debt
A tax that will unleash the wealth of the United States to be the most competitive economy in the world
(This is not a VAT tax, a VAT tax which traditionally is added and piled onto other existing taxes! This is just “One Tax For All” – No other taxes!)
Sole and only tax collection system for all – no other taxes
"Everything should be made as simple as possible, but not simpler." Einstein
Today federal and state governments use a variety of taxes to try to keep up with the growing demands of the nation's infrastructure and government services. Look at the current list of taxes:
Federal and State Income Tax
State Consumer Sales Tax
Capital Gains Tax
Why are taxes so complicated? Why are there so many tax systems?
So, the obvious question, is it possible to have just one simple tax system?
The answer is yes!
A simple, logical solution, take all the tax collection systems and combine them into just "One Tax For All". Brilliant!
Tried and true, there are nine states that have no income tax (but still have property taxes). In these states, most taxes are collected from a simple consumer sales tax. Proof that sales tax work, the states that have switched to a consumer sales tax vs. income taxes are booming and citizens are flocking to them.
The problem with a consumer sales tax system is citizens are paying almost all of the state taxes, while other segments of the state economy pay relatively none. State sales tax rates are usually under 10%.
If you add state property taxes and excise taxes, the citizens will pay 12-15% in taxes.
Sounds like a good idea, right? So what if the nation adopted a national consumer sales tax system? The rate would have to be 20-24% of their income. This would hamper consumer sales and again, citizens are paying practically all the taxes.
A national consumer sales tax added to state sales tax would be on average 30% consumer sales tax. That will just not work. So what is the missing element?
A good analogy, the citizens being like landlords are paying most of the rent for tenants (businesses, organizations, enterprises, and government). Businesses, organizations, enterprises, and governments use a large portion of the infrastructure and services, but only pay 8-10% of the tax bill.
The missing element, "All Citizens And All Segments Of The Economy Have To Have A Little Skin In The Game!"
Think of the economy as a "super-highway toll road." Every time a citizen, business, organization, or enterprise (ASOE) uses it, they pay a small toll (tax). This "Pay-As-You-Go" system would create a nominal tax low tax. Every citizen, business, organization, and enterprise will have a little skin in the game.
Just think the next time you buy a Coke and candy bar, get a haircut or perm, buy ink cartridges and paper, you've paid all your taxes! Just "Pay-As-You-Go"!
The "One Tax for All" National Sale and Transaction Tax (NSTT) system combines all tax systems into one.
2. The lowest tax rate possible
All economists agree a thriving free-enterprise society has to have the lowest tax rate possible that will have the least impact on its economy.
The only way to get the lowest rate is by spreading the "One Tax for All" (NSTT) across all segments of our economy.
How many dollars in sales and transactions are in the United States each year?
What is the Total Economy of Sales and Transactions (TEST) of our nation?
There is a wide-ranging estimation of all our annual TEST could be as high as $1,200 trillion ($1.2 Quadrillion), and as low as $500 trillion.
For Example, Wall Street estimates $5 trillion of trades and transactions each day!
So if you divide the governments' budgets by the TEST it is feasible to reach the nominal tax federal rate as low as 1%.
Add another 1% the NSTT could start to pay down our national debt.
The power of multiples is the secret to NSTT; the more sales and transactions, the lower the rate of the tax.
TEST – Total Economy of Sales and Transaction is a true economic indicator that tracks daily all economic activity of the states and nation. TEST is the most accurate and actual measurement of the economy, which augment GDP for rating our economy.
3. The easiest tax to administer and collect, with the least number of rules, laws, and regulations
Let's repeat a quote from the previous segment, "Just think, the next time you buy a Coke and candy bar, get a haircut or perm, buy ink cartridges and paper, you've paid all your taxes! Just pay as you go!"
Can it be that simple? Yes.
Upon any or all sales and transactions by any or all segments (ASOE) the provider will add the STT rate to the sale or transaction, for example, 1%.
The provider makes their deposits to the bank; the bank then automatically deducts the 1% STT. At the end of every business day, the bank sends it to the Federal Reserve. There is no paperwork, no forms, no withholdings for ASOE; it is automatic.
The STT will only need four basic rules or regulations:
All segments of the economy (ASOE) must have a checking account
ASOE must make all income deposits into the bank
All governments must have a fixed government budget, with an emergency funding clause for war, disasters, etc.
The STT rate will never go over 5%.
4. A tax that spreads the tax burden evenly across all citizens, non-citizens, businesses, enterprises, and organizations - All the segments of the economy (ASOE)
Sharing the tax burden across ASOE is the fairest system of all. "One Tax For All" draws a distinct correlation of how taxes could be allocated. It is everyone's responsibility to create an economic environment that gives everyone an equal opportunity to be successful. Ultimately the all citizens will benefit.
The stronger the economy and more growth in GDP and TEST the lower the rate will be.
Some experts will argue that NSTT will create tax pyramiding-"A Tax-on-a-Tax". It should be looked at as compounding, getting "more bang for your buck", to collect the exact amount of taxes needed to fund infrastructure and government services.
Additionally, NSTT limits pyramiding or compounding as the law will include fixed governments' budgets. Governments will only be allowed to collect just enough taxes to pay the budget. If a tax surplus is created, then the rate will be adjusted lower each quarter. If not enough taxes are collected, governments will be limited by the provision of the rate to never go above 5%.
5. A tax that benefits our economy with the maximum cash flow, and has a little negative effect on our economy
Taxes are usually thought of as a "necessary evil." Actually, the right tax system will benefit and secure the welfare of citizens.
The right tax system will allow for more investment into the infrastructure
The right tax system will fund government services that benefit citizens
The right tax system is the NSTT and is a cash system that will create mass cash flow for citizens and ASOE.
Spreading the tax burden over ASOE would be like citizens getting a raise. The structure of NSTT is different from an income tax as you only pay taxes when you make a purchase or receive a service. The NSTT in the first year of use would create more cash flow for the citizens and have the effect of the GDP to increase 10-15%.
Businesses will also benefit:
No more withholding and complex tax filings. Estimated savings of $500 billion a year in administrative costs
The additional cash flow will create increased consumer spending or savings
There will be no Corporate Income Tax
The STT will stimulate more investment into U.S. businesses
More foreign investment and businesses will open in the U.S.
The NSTT tax system will make the United States super-competitive in the world economy.
6. A tax that will collect enough funds to maintain a balanced budget
Currently, our income tax system, estate tax system, capital gains tax system, and federal excise taxes fall short of paying our annual federal budget.
Each year, we fall short by $500 billion to $1 trillion, causing the national debt to keep going up. Plus, with COVID 19 and natural disasters, we have accumulated $4-$5 trillion in additional debt in 2020.
The only solution is to find a way to increase taxes without crippling our economy. There is only one system that can achieve this, "One Tax for All" National Sales and Transaction Tax System.
7. A tax that will start to pay down our national debt
Now, with the unforeseen expenses caused by COVID-19 and natural disasters, the United States has an estimated additional $4 trillion or more in new debt in 2020. How will we ever pay down the national debt?
Under the current tax systems, never!
This is a potential economic crisis in the making; this kind of debt is guaranteed to cause the value of our currency to go down causing inflation.
The only solution is the "One Tax for All" National Sales and Transaction Tax System with a temporary Emergency Rate Increased (ERI). The U.S. can start to manage the pay down of current and unforeseen debt.
8. A tax that will unleash the wealth of the United States to be the most competitive economy in the world
By eliminating high taxes and lowering taxes to the lowest rate possible all segments of the economy (ASOE) can focus on their core mission. The shifting the tax responsibilities to ASOE is like adding in cash flow of $3.5 trillion to the growth of our economy.
One Tax For All – NSST will initiate the ultimate pro-business, pro-growth environment for all citizens to prosper. ASOE will thrive and millions of new jobs will be created. The United States will be the most attractive economy in the world for foreign investments. New investments in factories and technology will boom.
So, 250 years ago Ben Franklin should have said, “It is certain we all need just One Tax For All”.
The success of our Nation, our citizens, our economy will rely on citizens demand the political leadership to unleash the wealth of America.
It is everyone’s responsibility to pay for infrastructure, government services, and national debt. By putting off our responsibility it will only delay the unavoidable; more debt that will jeopardize the Nation's future.
The old tax collection systems are like a “suit of clothes we have finally grown out of”, it’s time to be dressed for success!
The need for more tax revenue is undeniable to keep up with the needs of our citizens and future success. The United States to keep growing the greatest economy in the world needs a modern, efficient, simple tax system that benefits all citizens and segments of our economy.
Just “One Tax For All”... it’s inevitable.