- What is “People for Tax Freedom”?
It is a non-profit tax exempt corporation incorporated in 2014 by the state of North Carolina and recognized by the Internal Revenue Service as a tax exempt non-profit organization under section 501 c(3)of the Internal Revenue Code.
- Who organized it and why?
It was organized by retired judge Stephen F. Franks of Hendersonville, North Carolina, a lawyer admitted to practice in N.C. and California. Judge Franks is also a retired commander from the Navy Judge Advocate General Corps who served 4 years active duty and 16 years in the naval reserve. He has been a prosecuting and defense counsel, was a lobbyist at the state legislature in Sacramento, California, and was a North Carolina district court judge for 14 years. He embarked upon this new endeavor after witnessing many years without meaningful reform of the Internal Revenue Code, which has negatively affected most Americans and U.S. corporations.
- What is wrong with the Internal Revenue code?
The code has extracted trillions of dollars from individuals and corporations since its enactment as the 16th constitutional amendment in 1913. At its inception, the tax rate imposed was one percent. As the rate grew, so was the difficulty in paying taxes owed at the year’s end. Withholding taxes from income was then enacted with employers required, at their expense, to perform the bookkeeping and submit the withheld taxes to the U.S. Treasury. The code has grown in complexity with every so called reform, resulting in more citizens seeking professional help to file their taxes. Corporations have engaged tax experts to help them minimize their federal taxes, which has resulted in some large corporations paying very little in taxes. Some corporations have moved their headquarters and manufacturing overseas to avoid corporate taxes. Some individuals have opened and maintained off shore bank accounts to avoid paying taxes.
- What has been the effect of these actions?
Free enterprise is stifled in the U.S. as individuals and companies spend resources in efforts to avoid or minimize federal taxation. Incentives to start or expand commercial activity in the U.S are hampered when foreign countries compete to lure individuals and companies to their countries where labor costs and taxes are much lower.
- What then is your proposal to reform the Internal Revenue Code?
It is to start by repealing the code as it pertains to individual and corporate income taxes.
- Then what, since the Federal Government needs revenue to operate?
It would be replaced by a transaction fee of 2 per cent on the value of each share of stock traded each stock market trading day.
- How would imposition of this fee raise enough revenue to replace the revenue lost by abolishing the current individual and corporate tax law?
The average total value of all stocks traded each trading day is $250 billion. Two per cent of that amount is $5 billion. With the number of stock trading days each year being 250, $5 billion times 250 equals 1.25 trillion dollars.
- How does that figure equate with the amount raised by the present income tax law on individuals and corporations?
It is identical. The continuing resolution passed by Congress last year was estimated to raise 1.25 trillion dollars from individual and corporate taxes.
- How would the 2 per cent fee be collected?
It would be programmed into the method by which the stock is traded, most likely by computer. Two percent of the value of each share is added to the trading price and that amount would then be transmitted to the U.S. Treasury.
- Would the trader and the tradee be required to file tax returns?
No, as the fees levied would be transmitted automatically to the U.S. Treasury. If the stock is traded manually, the trader would be required to transmit the fee personally, but in all likelihood it would be transmitted automatically by computer.
- What is the motive of the people for tax freedom in proposing this change to raise revenue to operate the Federal Government, and is any person or group behind this proposal?
The motive is to remove the burden of the present tax code from the backs of individuals and corporations which will then stimulate Individual and corporate enterprise and freedom. No group is backing this proposal, special interest or otherwise. Stephen F. Franks, originator and founder of the people for tax freedom, has no political motive such as running for an elective office. He is a registered independent voter and is hoping for bi-partisan support from all political parties and independent voters.
- What do you hope will happen to this proposal?
The hope is that individuals will contact their elected representatives and candidates for office to urge their support. This is a grass roots proposal and its success depends on widespread support from individuals.
- What is the basis for the figure $250 billion given as the average total value of stocks traded each trading day?
The figure of $225 billion is used by an in-depth article in the New York Times Magazine of April 6, 2014, entitled “The Wolf Hunters Of Wall Street,” by Michael Lewis, at page 31. in 2013, the last full year for compiling information for the 2014 article, the Dow Jones average and trading volume was lower than in April, 2015. The 250 billion figure reflects the change in volume from 2013 to 2015. In addition, figures from the New York Stock Exchange for 2013 confirm an average daily dollar of approximately $180 billion but this figure does not take into account the dollar value of stocks traded in other exchanges.
- What opposition do you expect?
It can be expected from any special interest group that sees this proposal as a threat to their existence. This can include tax return preparation firms, tax law firms, groups specializing in finding ways to reduce or eliminate taxes by shifting manufacturing and profits overseas and other individuals or groups who set up off-shore bank accounts to escape taxation. It can include individuals or firms who represent foreign countries that benefit from U.S. companies shifting headquarters and manufacturing to them. The list could go on and on.
- If this opposition materializes. How can it be overcome?
Only by overwhelming support from citizens and companies who will benefit by relief from the Internal Revenue Code. Citizens by the millions will have their spending power increased by the amounts now being paid in income taxes. Companies will have millions of dollars for expansion, modernization and dividend payments. The burden of tax return preparation will be eliminated.
Companies with foreign manufacturing will bring back jobs to the U.S., resulting in more purchasing power by employees. More spending will produce greater profits for companies, with those profits going for expansion, modernization and/or dividends to individual stockholders, who will then have even more spending power. The stock market itself will benefit as greater profits by companies will result in greater interest in buying stocks, thereby increasing stock prices.
- How can this support result in these changes taking place?
By the grass roots support being conveyed by individuals to their Federal elected officials, meaning the U.S. Congress and the President. Support should also be conveyed to candidates for those offices. Officials must be convinced that their support is vital to having the changes take place.