Short Introduction

The 5% AutomaticTax :

In order to appreciate the simplicity and the practical utility of AutomaticTax, it would be well worth it to read "SoundTaxPrinciples"  first.

Banks will collect the AutomaticTax by deducting 5% from transfers of funds between two different parties. Transfer of funds between different accounts held by the same party are exempt from the tax.

When money is paid by one party to a second party, money will leave the account of the first party (payer) and will transfer to the account of the second party (payee). The bank of the payee will credit the account of payee with 95% of the payment, effectively collecting 5% tax. The bank of the payer will pay the bank of the payee 97.5% of the payment, effectively retaining 2.5% of the tax withheld from the payee and leaving each bank with 2.5% collected tax funds.

Individuals and businesses that make use of the country's currency in some form or another must "report" each single money transfer/receipt. Transfers made with nexus to the Government-authorized, -regulated and -supervised banking system are deemed to have been "reported". These transfer receipts that are deemed "reported"  are all funds that are submitted to banks for handling, including cash, checks, wire transfers, money orders and cashiers checks.

CASH
Cashing a check is subject to 5% tax, 95% of the face value of the check is paid out in cash. Cash deposited is subject to 5% tax as well. Cash withdrawal from your own bank account is unfortunately subject to 5% tax as well to discourage the cash economy.

LOANS
Loan proceeds are subject to the 5% tax and loan repayments are subject to the 5% tax as well. If it is deemed inappropriate to tax loan proceeds for example, there is a built-in refund provision as part of this tax system, as discussed below. 


DISCUSSING FAIRNESS
In order to have a very clean and simple tax collection system of this nature, it must not be subject to all manner of exceptions and exclusions and it must not be subject to interpretation. The tax must be very anticipated and universally applied. It is a money movement tax of 5% exactly on every money transaction. I have received many comments and questions about how to deal with special situations and concerns about money transfer that is of funds to which the application of a 5% transfer tax would seem "unfair" or inappropriate. In order to derive maximum benefit from this tax system there must be no exceptions for reasons of "fairness" or impropriety, but there are provisions in this tax system to remedy "unfair" and inappropriate instances of taxation. There is a built-in refund mechanism administered by the individual State tax authority that will make refund determinations based upon legislated rulings regards special transfer tax collections. An additional option is the use of grants to remedy injustice from unanticipated taxation on previously untaxed income.

Specially in the transition period from one tax system to the final AutomaticTax there are a lot of reasons to initiate refunds to remedy transitional injustice from unanticipated taxation on certain types of transfers of funds that were not taxed prior to the transition to the new tax.

The reason why there should not be the possibility of creating special provisions for exclusions of the tax on special money transfers is the simple fact that it would open a Pandora's Box of lobbying and Congressional meddling and tweaking to where the value of this very clean and straight forward tax system would rapidly diminish and deteriorate into an incomprehensible mess dreaded by all and unjustly enjoyed only by the few. The tax base would be narrowed incrementally whereby the tax rate would have to increase incrementally to offset the revenue lost from the special interests that paid so generously with their election contributions for the votes they needed in Congress to burden the rest of the population with what amounts to no less than shameful corruption.

The abstention from "fiddling" with the tax itself and only making often local and temporary adjustments through the refund and grant/subsidy avenues of AutomaticTax, will render this tax system sublime for adoption by all the different countries around the Globe to facilitate international trade and cross-border employment. When the tax system is identical and the rules apply to all in the same manner, then an international cross-border integration of taxation is greatly facilitated. We will need these cross-border alignment of tax systems very urgently because literally hundreds or thousands of ever changing international tax related treaties and agreements can be largely eliminated instantly when tax systems are identical in all countries. If the politicians cannot discipline themselves and refrain from "fiddling" and "tweaking", their dark urges can still be satisfied by legislating special refunds and grants to satisfy the "special interest" corruption by the lobbyists that work the hallways of Congress.

A PLEA TO TAX PAYERS
When replacing a 17,000 page tax code with something a lot simpler

SOME OF THE QUESTIONS I HAVE RECEIVED AND MY RESPONSES
Click on Tax Comments