Bank transaction tax

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A bank transaction tax is a tax levied on debit (and/or credit) entries on bank accounts. In 1989, at the Buenos Aires meetings of the International Institute of Public Finance, University of Wisconsin–Madison Professor of Economics Edgar L. Feige proposed extending the tax reform ideas of John Maynard Keynes,^[1] James Tobin^[2] and Lawrence Summers,^[3] to their logical conclusion, namely to tax all transactions.^[4] Feige's Automated Payment Transaction tax (APT tax) proposed taxing the broadest possible tax base at the lowest possible tax rate.^[5][6] Since all transactions must ultimately be paid for by a final means of payment, namely via a transfer from a bank account or by settlement with currency, Feige proposed collecting his tax by levying the tax automatically on the debit and credit entries to bank accounts, thereby splitting the tax between the buyer and seller of every transaction. The APT tax is a uniform flat-rate tax on all transactions, assessed and collected automatically whenever there is a debit or credit entry to a bank account. As such, it can be viewed as a bank transaction tax. Since financial transactions account for the greatest component of the APT tax base, and since all financial transactions are taxed, the proposal eliminates substitution possibilities for evasion and avoidance. The goal of the APT tax is to significantly improve economic efficiency, enhance stability in financial markets, and reduce to a minimum the costs of tax administration (assessment, collection, and compliance costs).^[7][8] The Automated Payment Transaction tax proposal was presented to the President's Advisory Panel on Federal Tax Reform in 2005.^[9] It can be automatically collected by a central counterparty in the clearing or settlement process.^[10]

Patrick R Colabella and Richard Coppinger, Professors of Accounting and Taxation at St John's University, New York introduced a variant version of the (APT tax) tax called the Withdrawals tax at an International Conference on tax reform at the World Trade Center in 1999. The WTX as it is called, taxes only withdrawals from designated personal and business bank accounts and can raise $9.3 trillion at a rate of 5% of a tax base of $186 trillion. The concept was also submitted to the President's Advisory Panel on Federal Tax Reform in 2005. It was reintroduced in 2016 in the book "How to get Rid of Socialism and Cure the Fiscal Ills of the United States of America." It makes the case for replacing the income tax, sales tax, and estate tax and demonstrates that by eliminating these tax systems it would effectively constrain Socialist redistribution programs that are income tax based. The book also claims the utility of the WTX system of taxation system effectively extends to the control of the shadow economy and cyber currencies and that the WTX can generate enough revenue to electronically fund all economic security obligations of the federal government ( I.e.Social Security and Medicare).