Personal and corporate income taxes would be abolished and replaced by a 2 per cent transaction fee on the value of all stock transfers if a proposal by the non-profit People for Tax Freedom is passed by Congress and enacted into law.
“This approach would raise the same amount of revenue as is now collected by the Internal Revenue Service on personal and corporate income,” spokesman Stephen F .Franks of Hendersonville, N.C., said.
He pointed out that the last continuing resolution passed by Congress was supposed to produce l.25 trillion dollars for that current fiscal year.
“The People for Tax Freedom approach would raise that amount and would eliminate personal and corporate taxes that now burden individuals and corporations every year,” the retired judge and North Carolina-California lawyer stated.
In explanation, Franks said that the 2 percent fee would be levied on the value of each stock transaction, the total value of which averages 250 billion dollars each stock trading day. Two percent of that amount is 5 billion dollars, and with a stock trading year being 250 days, 5 billion times 250 days equals 1.25 trillion dollars.
Franks also said that the 2 percent fee could be recouped by the buyer if he added that amount to the base price of the stock before selling it.
“It’s a win-win proposition since you would pay the small fee and then recover it when you sold the stock,” Franks said.
Opposition to this proposal will certainly rise from those who now profit from the Internal Revenue Code, the former judge said.
“This would include tax preparers and tax firms, special interest groups who specialize in finding ways to avoid or reduce taxes and promoters of off-shore tax havens and foreign manufacturing.”
In examining the history of the present tax structure, People for Tax Freedom found that the initial tax on income was 1 percent after enactment of the 16th amendment to the Constitution in 1913.
“If folks knew then what they know now how fast and intrusive the income tax would grow in 100 years, the 16th amendment would never have been ratified by the states,” Judge Franks said.
“Our forefathers got it right when they did not seek a tax on income to finance the government. The 16th amendment stifles free enterprise, it has turned taxpayers into tax collectors and its regulations by the thousands have produced thousands of different efforts to beat the system, many of which have been successful.
“Our proposal is direct and simple. The 2 percent fee is collected by the stock broker or seller on transfer of stock. It is usually done by computer. The fees would be transmitted to the federal treasury automatically and no tax returns are required.
“Intrusion into the private lives of citizens and corporations has been the hallmark of success for the Internal Revenue Service. When the tax rate was 1 percent of earned income, ability to pay the tax owed at the end of the year was do-able. But as the percentage of tax on income grew, also growing was the difficulty to pay the tax. IRS had the solution: a portion of the tax owed at the end of the year would be deducted from each paycheck, and the employer will be required to perform that task. Thereafter, citizens then became collectors for the IRS.
“IRS requirements are even worse now. If you as an individual pay money to a workman, handyman or independent party more than a certain amount in a year, you have to file a 1099 form with the IRS so that IRS can verify that the payee has declared that amount on his or her tax return. You perform the IRS work to guarantee that the payee is honest and you receive no fee from IRS for that service. If you do not file the necessary 1099’s, you can be fined by IRS.
“The proposal of People for Tax Freedom to abolish the Internal Revenue Code and enact a simple 2 per cent fee on the value of all stock transactions eliminates all of the problems associated with the present personal and corporate income tax structure,” Judge Franks concluded.