Financial transaction tax could actually ease our national debt

The Hill ^ | November 1, 2018 | Patrick Colabella

[Nifster]

No just freeze all transfers and keep that money

[Nifster]

The proper answer is. CUT spending

[upchuck]

... introduction of a financial transaction tax dedicated to all economic security payments (that is Social Security, Medicare and Medicaid, Unemployment Insurance and other forms of public assistance)

I assume "other forms of public assistance" would include Food Stamps, TANF, SSI, Section 8, et al.

All those forms of public assistance are horribly abused. Fraud is rampant.

[dirtymac]

The answer to any problem is to impose some kind of tax! Any tax. It has worked so well in the past. Look at Venezuela, Pre Trump America

[BTerclinger]

Take 10 percent and pay for the wall....
.just saying...

And oh yeah, they need to cut spending, this deficit BS is ridiculous...

RYAN IS THE PROBLEM.

[Captain Peter Blood]

Basically what is needed is a Sinking Fund to pay down/off the Debt.

I am reading Ron Cernow’s Bio of Alexander Hamilton and at the beginning Hamilton had such a plan and put it in place.

Haven’t gotten to what happened. I suspect his plan worked too well and Congress looked at it like the did Social Security and wanted to spend it.

[freeandfreezing]

This is a tax only on transaction related to welfare.

No it isn't. Try reading the article again, carefully. The author proposes a new tax to finance welfare expenses, not a tax on welfare payments.

" Financial transaction tax could actually ease our national debt © Getty Images The news from the Treasury Department that the federal deficit has hit a six-year high of $779 billion should give President Trump added incentive to reset his agenda for 2019, regardless of whether or not the anticipated Democratic blue wave in the midterm elections materializes next week. "A key element of that agenda should be the introduction of a financial transaction tax dedicated to all economic security payments (that is Social Security, Medicare and Medicaid, Unemployment Insurance and other forms of public assistance)."

The author is proposing that the revenue from the new tax be "dedicated to" welfare payments.

"Programs such as Social Security, Medicare and Medicaid, SNAP (commonly known as food stamps) and Unemployment Insurance eat up about 60 percent of the total federal budget. They are funded by an arcane 19th century income tax system that politically pulls us away from any real hope of finding a solution to the debt issue. There is just not enough available income to service the debt. Something has to change."

"Among the many possible approaches to this issue could be a separate dedicated tax to directly fund all economic security payments that would effectively depoliticize the broad spectrum of entitlements."

The author then goes on to propose the new, separate, "dedicated tax".

"This solution is actually rather simple. It is much the same as interstate highway maintenance, which is funded with the gasoline tax. So, a separate dedicated “transaction tax” may work well. Examples of these taxes have been tried with success in Brazil, India, Pakistan and Australia. In America, a bank withdrawals tax of two to three percent of all bank withdrawals paid by individuals and businesses alike and collected electronically, across the board could raise enough revenue annually to pay for all economic security."

The author's plan is to create a new "transaction tax" which would apply to everyone (except presumably the government itself) that would result in everyone, including Social Security and welfare recipients, paying "two to three percent" as a tax when they withdraw money from the bank.

One effect of course is that the tax instantly reduces all Social Security and welfare expenses by "two to three percent" since the government takes back that amount when the recipient withdraws the money from their bank.

Another effect is that even already taxed income is now taxed an additional "two to three percent".

[Lazamataz]

Two to three percent drag would significantly reduce the velocity of money and cause a recession that might qualify as a full depression.

[freeandfreezing]

Correct. It is an insane idea. It is worse even than a value added tax, since at least for a value added tax the transaction has to have some net gain to be taxed. In this case every expense you have is increased by 2 to 3%. And really even just an account to account transfer would end up costing you 2 to 3%.

After all, if loans or transfers between accounts were not taxed the government would never be able to enforce or collect the tax.

[Lazamataz]

You know how, in 2008, there was a threat of a vapor-lock in the financial system? And there was a panic around that?

The velocity of money is a very important concept to a functioning economy. Money must change hands, often and regularly.

This would directly prevent that. Even a 0.00001% tax on monetary exchanges would cause a vapor lock.

[freeandfreezing]

Correct - and why this liberal academic’s tax scheme is crazy!

[Svartalfiar]

Eliminate base line budgeting and force the Govt to actually budget for spending need, not spending wants, problem solved.

Or, you can keep your baseline budgeting, just make it 90% of last year's. Everything would automatically decrease, unless there was a legitimate need to for Congress to give them more $$. Or at least, they'd be forced to have a reason for doing so.

In five years, most outlays would be at 60%. In ten years, we're almost at 1/3 of where we started!