Patriot Change: The UniTax

Coins
A long-time shibboleth of Conservative philosophy has been the
institution of a flat tax. Every Conservative ideologue worth his salt
has seriously toyed with idea. One of the most offensive things to
Conservatives about our current income tax system is its progressivity;
it takes a larger percentage bite as your income rises. Many
Republicans just shake like outraged Chihuahuas at the thought of
having to pay a larger percentage than a Wal-Mart employee. Wouldn’t it
be ironic if the tax haters got a flat tax rate and it still gave them
indigestion because it was even more progressive than the current
system?

Well, that’s exactly what the UniTax does. It is a flat
tax, not on income, as so many Conservatives dream of, but on ALL
financial transactions. That’s right; from groceries to corporate
arbitrage and foreign exchange, every financial transaction is taxed.
Seems like a nightmare, right? But with the increasing use of
electronic transactions, especially for large transactions, the cost of
compliance and administration shrinks to nearly nothing. The IRS would
practically whither away and you wouldn’t have to file an income tax
return ever again.

At the same time, the tax base, which is
now mainly personal and corporate income, would explode 100 fold, and
most of that new tax base is heavily skewed to the wealthy. That means
the UniTax takes its progressivity from economic distribution, not rate
change. As wealth becomes more evenly distributed, so would the tax
burden. The much greater tax base also means the UniTax rate could be
100 times lower and still preserve revenue neutrality. Economists
estimate the new UniTax rate would be just 0.30%, or 30 cents on $100.
The average person would pay pennies on the dollar of their current tax
burden, but the super-wealthy, who are responsible for the vast
majority of financial transactions, would pay a much greater proportion
of overall taxes than they do now; though unless they spend more than
their net worth every year, they would still pay less than 1% per
annum. Would you want to argue that your freedom and the American dream
weren’t worth less than 1% of your net worth? Didn’t think so.

The
ideologues would get the flat tax that they are always mooning about
(and they can’t complain about it from a principled position without
revealing that they just wanted lower taxes on the rich all along) and
the rich would pay more of the nation’s taxes, resulting in a more
progressive, more efficient, and politically more difficult to subvert
tax code, and the poor and middle class would get well-deserved tax
relief. And everybody is shut of the IRS. The UniTax is a one of those
rare beasts, a gift that gives everyone what they say they wanted, as
well as everything they so richly deserve.

For more information on the UniTax, AKA the Automated Payment Transaction (APT) tax, visit the web site of the idea’s creator. Congressman Fattah of PA introduced a bill in 2005 to institute a transaction tax. If you are a blogger, please blog about this taxation system, too, and help bring awareness to this great idea.

0 responses to “Patriot Change: The UniTax

  1. a great idea,
    has anyone read the fairtax book? a newyork times #1 best seller

  2. a great idea,
    has anyone read the fairtax book? a newyork times #1 best seller

  3. a great idea,
    has anyone read the fairtax book? a newyork times #1 best seller

  4. I linked this to my blog! You have discovered a system that is everything I’ve been looking for in a tax.

  5. Not a single one. However, considering the rather extreme legal fictions and structural dodges that modern corporations have resorted to in order to avoid corporate income tax, a little vertical integration seems a very mild reaction, by comparison.

    Capital investment is a fuction of the long-term growth potential of an economy. I think that most would see the institution of an essentially frictionless and non-distorting tax code as a competetive advantage. Thus any decrease in the churn rate of newly disadvantaged short-term capital investments would be offset at least in part by additional volume created by the most efficient, and lowest rate, tax code in the world.

  6. Do we have an example of a similar economy where this has been implemented successfully? I would be concerned about the rate of capital investment decreasing, and the siloing of business supply chains.