This is the first of a series of diaries attempting to outline a new direction and suggest some policies that are simultaneously: 1) good policy, 2) part of a long-range strategic shift to sustainability, and 3) form a strong platform from which to retake the "red states."
Many of these ideas aren't mine and they aren't necessarily brand-new. But they haven't been connected, as far as I know, together into a coherent whole. I would hope that Dems running in 2006 and 2008 for national and state offices--particularly those running in "red" districts and states--considering trying some of these out.
In Part I (after the break) I discuss one of the centerpiece components--revisioning our tax system so that it changes the usual political alignments utterly and makes truly progressive approaches to social investment much more feasible. BTW, this revisioning actually allows Dems to be in favor of tax relief...
The false choice between "moving to the center" and "moving to the left" has been occupying a great deal of attention recently on dKOS and amongst most political observers who cherish, at least to some degree, the future of the Democratic party. Many progressives wonder loudly why the Dems hesitate to launch a class war, defending the middle and lower classes against the oligarchy of the rich and entrenched. Many "triangulationists" wonder why more progressives can't see that, if class warfare is to be waged, it cannot be successfully waged along the same lines, with the same troop deployments, as a New Deal retrenchment.
Is it just me, or aren't most of us really flopping around somewhere between even these two opposites: the instinctive urge to oppose, to dig our heels in as hard as we can against the neofascist slippery slope we're on and the uneasy awareness that we need a fresh, forward-looking political orientation to regain a winning credibility with the voters.
Blessedly, we see the signs of healthy opposition developing in the party. But, what about that new forward-looking political orientation? Where is it?
It all starts for us progressives it seems to me, with taxes...
Progressive Tax Relief, Part I
Progressive principles of government require a significant investment of public revenues in the physical, social, financial, and legal infrastructures that ensure the health and vitality of our economic system and the people who participate in that system. The problem for progressives is that arguing improvements in public infrastructure has meant arguing for higher taxation--the political rock of Sisyphus. We have a opportunity to change all of that--if we can let go of our need to use the tax code as a tool to micromanage public policy.
Progressive framing on taxation emphasizes that we frame taxes as "user fees" to support the infrastructure of our society--particularly the legal and financial system that guarantees our freedoms. So why not actually have a taxation system, the UNI tax (for Unified Infrastructure tax) that taxes proportionally to the degree to which a taxpayer uses the financial infrastructure of our nation?
The UNI tax is essentially the same taxation approach posited by Dr. Edgar Feige--which he referred to as Automated Payments/Transactions (APT) tax. (You can read his paper or view a website devoted to his idea.) The UNI tax proposal described in this diary only differs with the APT idea at the margins in a few specific implementation differences; in spirit and approach it is the same as Feige's idea and he deserves all credit for it. [Note: There's some debate about what to call the tax--APT tax, UNI tax, minitax, TinyTax all have their supporters. I use UNI tax here, but I'm not wedded to the name (TinyTax kinda appeals too). Perhaps there is a better name than these to frame what the tax intends to do.]
The UNI tax idea in a nutshell:
Replace some (initially) or all (eventually) federal taxes (payroll, income, corporate, excise, estate) with a single tiny percentage tax--the UNI tax--on every financial transaction flowing through our banking and securities system. Technically, the UNI tax obligation is split evenly between both parties to a transaction although it will often be the case that, effectively, one party bears the full cost.
The UNI tax for transactions that involve money flowing in or out of the US financial orbit--such as transactions to or from a foreign bank and transactions that convert to or from US Dollars--is assessed in full to the US (or dollar) half of the transaction (although, once again, costs can be redistributed between the parties as the market requires). Transactions that both moved money to a foreign account AND changed currency would be exposed to two full UNI tax bites.
The revenue-neutral size of such a tax sufficient to entirely replace ALL federal taxes is around 0.3%(split 0.15% to each party of the transaction). If you assume that taxing transactions will lead to behavior reducing the number of taxable transactions, then this percentage will need to be larger. A conservative assumption might be that the value of taxable transactions is cut in half (this seems like too much to me, but we're being conservative here). This leads to a UNI tax rate of 0.6% (0.3% to each side of transaction)--60 cents for each $100, $6 for each $1000, or $6 million for each $billion.
The projected tax base for the UNI tax is nearly a $856 trillion in 2005, so each hundredth of a percent on the UNI rate would generate around ... 86 billion dollars in revenue. (Or if the UNI tax causes a halving of the transaction base, 43 billion dollars).
Look at a hypothetical individual situation. Suppose I make $70,000 a year and spend all $70,000 in some way or other. I will pay 0.3% of $70,000 as I earn the money and pay 0.6% of $70,000 as I spend it (I'm assuming that the sellers of goods and services I buy will pass on their half of the UNI tax to me one way or the other). This amounts to $630 for the year, replacing the over $20,000 I would pay in federal taxes under the current system. I might be inclined to spend more and save more than I do currently. This also would help our economy in both the short-term and long-term. Suppose further that I sold my house for $200,000 and bought a new one for $250,000 during the year. I would pay $600 and $750 as my half of the UNI tax on each of these transactions.
Businesses would have the option to either explicitly charge the UNI tax to its customers, absorb it as a cost of doing business, or incorporate the tax into the sales price. In any case, businesses would be charged the tax when the receipt of the sale enters the electronic financial system (upon deposit in the bank, for example). Of course, businesses would pay the UNI tax (either implicitly or explicitly) when they buy from suppliers or wholesalers as well. But, given that, under our current system, an average of nearly 20% of the cost of a product stems from the payroll and income taxes due, then reducing that burden to 0.6% is a significant savings at every step in the supply chain.
Methinks this might stimulate the economy somewhat...
Other impacts of the UNI tax:
- Foreign money that plays in our market is automatically subject to the UNI tax since the UNI tax really represents a user fee for our financial and legal infrastructure. This, I believe, will both serve as a brake on the expansion of our trade deficit (making imports relatively more expensive and US exports relatively cheaper).
- Under the UNI tax, a company outsourcing services overseas will pay from 2 to 4 times higher tax rate on their money flows than it would if it outsourced within the U.S. This may provide an incentive to keep (or even move) some industries within our borders. Of course, the financial incentive to move offshore may still overwhelm the UNI tax disincentive, but it would raise the break-even threshold significantly.
- The UNI tax will create a financial incentive to hold securities for longer periods since "churning" gets to be more expensive.
- The price of hedging against risk will go up for institutional lenders, and thus the riskier end of the portfolio may find investors more expensive to come by. The fees in the US stock market are low relative to other major financial markets and the cost increase represented by the UNI tax would merely place it at rough parity with the international average .
- The gross margin required by banks and other financial services industries will have to increase to accommodate the UNI tax and maintain their current profits. This in turn will affect the calculus of investment worthiness for some marginal investments. But these changes will get absorbed into the pricing structure after a short period of adjustment and, I believe, find an equilibrium level not too different from the current setting. Also, keep in mind that the financial service industries are also relieved of their payroll and income tax obligations to offset the pressures on their profit margins induced by the UNI tax.
- Tax incentives cannot be used to subsidize or encourage one technology over another within a sector--no more depletion allowances or tax credits for special equipment investments. The free market is a bit freer. If Congress wants to specially treat a segment of the population or marketplace, they will need to do it explicit with line-item funding. Sunshine in the pig trough.
Replacing current federal taxes with the UNI tax will represent a massive tax cut for nearly every taxpayer, even when you consider that all current tax deductions are eliminated, along with the entire tax code (and the IRS and the tax advisor industry as well). Will this play well into a 50-state Dem strategy? You betcha.
So, what a deal! Less taxes for all and a healthier economy and freer market to boot.
What's not to like?
Well, from experience when explaining this idea to friends, colleagues and relatives, everybody immediately reacts to this proposal with a massive dose of skepticism, because it seems too good to be true. Common sense says that something that seems this attractive --that isn't already being done--must have something dreadfully wrong with it.
I've looked for the better part of a year for the deal-breaker, but haven't found it yet. Let me deal with the objections I've heard--and my responses to them--one by one, roughly in the order they usually occur.
Objection 1: Wait a second, if nearly everybody has dramatically lower taxes, where does the revenue come from to make up the difference (keeping it "revenue-neutral")?
The secret: if you expand the tax base by a factor of 100, you can reduce the average tax rate by a factor of 100. That is, instead of 30%, you have 0.3%. The base for a transactions tax is around 100 times that of an income tax. (BTW, the 0.6% quoted above is purposely doubled to allow for the inevitability that businesses and individuals will restructure their transactions to reduce their tax liability. I think it's unlikely that the transaction base will be cut in half, but it represents a reasonably conservative assumption for purposes of discussion). As an apt springtime metaphor: If revenue is like dirt, our current tax system is collecting it from a hole the width of a baseball pitcher's mound that's more than 8 feet deep. The UNI tax system would collect it an inch deep from the entire baseball field (including the outfield). We have the same amount of "dirt" in each scenario, but the impact on the field is not the same.
A different version of this same objection is that, since current government revenues are 30% of NNP (net national product)--a measure of our national income, then any "revenue-neutral" plan must also generate an equal percentage of our national income. If it isn't exacted explicitly as a tax, then it must be hidden implicitly in higher prices and reduced returns on investments. The impression is left that, although you are only paying 0.6% explicitly, you must therefore be paying the remaining 29.4% as some obscure combination of inflated prices and reduced investment returns--and thus would be disastrous for our economy (akin to the effect of 29.4% inflation).
This objection misses the forest for the trees and does so by shifting back to a "income" frame of reference. Sure, as a first approximation, the revenues produced under the UNI tax proposal would, of course, have to generate the same percentage of NNP as the current system. However, the UNI tax is not just collected against our net income (NNP), but against a much larger base that includes huge monetary flows not currently subject to tax. Remember that NET income is income after subtracting expenses--expenses which, though included in the UNI tax base, are not a part of our current tax base.
The shifting of the size of the base is disorienting in the extreme. It takes some getting used to before you can appreciate its full effect. We are just so used to seeing the tax base in much smaller terms that we initially cannot accept the magnitude of the change.
Objection 2: Hold it, wouldn't keeping track of all of these tiny taxes require an unreasonable burden on small business and consumers alike?
To the contrary, it is vastly less burdensome than our current system--for two reasons.
First, it eliminates all of the tax reporting we currently do and the costs of its processing and collection. The IRS as we know would have to be downsized and repurposed, if not outright eliminated.
Second, the UNI tax would be collected automatically as financial payments are processed, using slightly modified software from that currently in place that keeps the trillions of dollars a day zinging through the economy. Checks pass through clearinghouses, credit and debit cards are processed electronically, bank deposits and withdrawals are recorded automatically, stocks and bonds are bought and sold electronically, loans are paid and repaid with money flowing through our electronic systems. The UNI tax would be deducted and credited for every flow and paid immediately to the federal tax account. The government needs only spend money on robust oversight of our financial institutions and their accounting system software (which, to a lesser degree, they already do).
The savings just in reporting, enforcement and collection costs represents something on the order of $500 billion a year (by comparison, our budget deficit this year is $427 billion).
Objection 3: Everybody knows that if you tax something you get less of it. So, if you tax electronic transactions and payments, won't the UNI tax create an explosion in the underground all-cash economy?
Currently cash transactions represent only 6% of the value of all transactions in the economy. Furthermore, many of these transactions involve the deposit into or withdrawal from a bank account in which the activity is recorded electronically and thus be subject to the UNI tax. Businesses would be obligated by the UNI tax law to treat cash-paying customers identically to customers paying with another with other means (i.e. they don't have to pass the UNI tax on to their customers, but if they do, they must do it uniformly).
To evade the UNI tax, a small business would have to take its cash from customer sales and use it--as cash--to pay wholesalers and suppliers, as change to customers, and to pay labor. Businesses doing this right now are capable of evading most current taxes as well, so the UNI tax isn't adding a new evasion strategy. In fact, it may help reduce evasion in this sector because these cash businesses would no longer risk having to pay much larger income and payroll taxes to have the convenience of using the banking and invoice system connecting them to a wider range of suppliers and customers. The small UNI tax would be a reasonable price to pay for many of these underground cash businesses (particularly since having lots of cash sitting around carries its own security costs). Isn't paying $6 ($3 upon deposit and $3 upon withdrawal) worth the safety of keeping $1000 safe in the bank, and being able to access it by check or credit, particularly when, by doing so, you are NOT subjecting yourself to having to pay other taxes?
Clearly, the UNI tax would be systematically evaded by a tiny percentage of diehard anti-tax types and a modest number of relatively low-income individuals who prefer living on a cash-only basis. Individual cash transactions are limited in value because most individuals don't want to carrying large sums of cash. I don't think the small individual cash transactions between friends and relatives that we all participate in need to be subject to the UNI tax--the revenue foregone would be very small percentage of the total. Overall, I cannot see the vast sums of money shifting to all-cash transactions that would be necessary for "cash evasion" to be more than a round-off-error-size problem.
One additional note: Dr. Feige suggests in his proposal that the tax rate for these cash entering and leaving the banking system be multiplied by a factor (2 or 4) to account for the "cash loop"--the fact that cash will pass through multiple transactions (from 2.5 to 8 on average) before it returns to an electronic form. Dr. Feige is correct theoretically about collecting a multiple of the UNI tax on cash entering or leaving the banking system, but I believe politically it is far stronger to make no distinction between cash and other transaction forms, making up for the materially-small cash loop effect by adjusting the UNI rate slightly. In fact, my instinct tells me that, because it makes using a bank for one's cash more expensive, it might encourage more people than it would otherwise to use cash to avoid the UNI tax.
Objection 4: It seems that corporations would try to evade the UNI tax by creating large vertically-connected organizations so that no tax would have to be paid as materials moved from raw to finished to fully-marketed products. Doesn't this give an unfair advantage to the largest of corporations at the expense of smaller competitors? And is this vertical integration really good for the economy?
The UNI tax would definitely provide an incentive for companies of all sizes to reduce the number of taxable transactions to the minimum number that makes economic sense. What this objection tacitly fails to recognize is that the actual economic impact of the UNI tax will be dwarfed by other business-specific issues for most industries. That is, the economic advantages of outsourcing may easily be larger than the tiny UNI tax cost of creating separate taxable transactions. At the same time, the existence of the UNI tax does represent a small disincentive to outsourcing, a disincentive that gets larger as the products get more expensive (eg. large durable manufactured items) or as components of manufactured products are outsourced offshore.
Now a couple of objections I've heard from progressives:
Objection 5: The UNI tax is a flat tax in that every transaction is treated exactly the same. As progressives, we like the fairness of this. However, doesn't this mean, like with sales taxes, that the poor pay a higher percentage of their income than do the wealthy and isn't this regressive taxation, not progressive?
Materially, the UNI tax represents a tax saving for the working poor, who replace the non-refundable payroll taxes with the tiny UNI tax. Furthermore, simulations of the UNI tax have shown that it is VERY progressive in its effect, even though it is nominally a flat tax. This is because the exposure to the UNI tax increases non-linearly with increasing income--the very wealthy have more involvement with multiple-layered transactions and investments. Despite the fact that the UNI tax catches the wealthy more and more often has the wealth increases, its burden doesn't rise so fast that it fails to massively advantage all taxpayers who earn a majority of their income from work. In fact, I would say that most taxpayers with incomes less than seven figures would find that they are better off under UNI tax. The extremely wealthy, lacking their customary tax shelters, might find themselves paying more with a UNI tax (since even a tiny percentage of a very large number is a large number) than in the current system. I would argue that it is appropriate that the very wealthy, who rely on our financial infrastructure the most, pay the most in "user fees."
Objection 6: The UNI tax removes all tax deductions and thus will harm charities, religious organizations, real estate prices (due to loss of mortgage deductibility), and industries which currently depend upon tax subsidies to remain profitable. In otherwords, won't it hurt jobs and poor people?
I think the loss of mortgage deductibility might be more than offset by the increased demand stimulated by a lot more take-home pay in the UNI tax world. What percentage of charitable contributions would cease to flow if they became non-deductible? Who knows. The working poor is relieved of their payroll taxes, which more than offsets the UNI tax they pay. Employers are relieved of their payroll taxes, which makes the cost of employment drop significantly, and thus makes the UNI tax reform likely to "create jobs." Perhaps the tax code is not the most appropriate place to either stimulate charity or subsidize industry. Clearly some peoples' livelihoods are at risk under the UNI tax proposal (mainly in the tax and financial industries), but is their protection worth the price of all of us paying 70 to 100 times more tax than we need to?
Now the objections from the conservatives (see this Freeper discussion if you want to see it in its ... uhh... raw form).
Objection 7: Transaction taxes have a cascade effect--like the dreaded "turnover" tax--and will send prices through the roof and our economy into the toilet.
The idea here is that if a product is subject to transaction taxes at each intermediate stage of production as it is passed from one subcontractor to another, to, in effect "tax the taxes," then a tax cascade occurs. A tax cascade creates a situation where products that have been through many intermediate taxable transactions have a higher effective tax rate than competing products that have been through fewer such intermediate transactions. The difference in cost isn't due to any inherent quality differences between the products but solely to business structure. Furthermore, from a conservative point of view, tax cascades are bad because they tax your taxes, which at first glance seems downright evil. However, when you remember the other tax maxim, "whatever you tax you get less of," you see that taxing taxes actually will result in fewer ...wait for it...taxes. ;)
All of this can be scary or not depending on the transaction tax rate. It takes 11 "cascades" for a rate of 2% to cascade to more than 23% (the rate proposed for the National Retail Sales Tax idea so beloved by some on the right). It takes 69 "cascades" for the UNI rate of 0.6% to be effectively cascade to more than the 23%. This means that a product or a component of a product must undergo 69 serial taxable transactions in its route from raw material to retail purchase to match the 23% rate of the NRST. Snort. Even in complex products like cars or airplanes, you may be hard pressed to trace many parts that go through even half that many separable taxable transactions. Remember that multiple parts being assembled at one location for one taxable entity only represents one cascade. Even if you could find some parts of some products that might be exposed to such a long string of taxable moments, the cost of the product would only be impacted proportionally to value of the part with respect to the whole, while the NRST would always charge a full 23% on the whole value of the whole product.
So what is the effective tax on a product that's been through, say 12 cascades? Mathematically it would be: ((1.006)^12 - 1) x 100% = 5.53%. This tax is divided up between the parties to the 12 transactions involved, with the parties later in the sequence paying proportionally more of the total than those earlier in the sequence. Many products and services wouldn't have even 12 cascades, so the effect on price of the UNI tax is not exorbitant. The UNI tax is small enough that market forces may dictate that it doesn't get passed on to the next level as a higher price, but gets "eaten" by the intermediary entity and reduces its profit instead. In otherwords, free market competition may lower the total taxes built into the price of products, at the expense of profit margins. Conservatives should be giddy with excitement at such market efficiency.
Finally, remember that although the cascade effect may result in a 5% or even 10% total tax on a product (spread throughout its production/marketing system), the UNI tax proposal removes roughly 20% of the cost at EACH intermediate level as well when it eliminates payroll and corporate taxes. Let's see ... (0.6% higher taxes - 20% lower taxes) x virtuous cascade effect = higher profit margins and greater investment in the economy. The cascade effect of the UNI tax will actually be a very positive one for the economy. Tada... [sticks the landing].
Objection 8: Transaction taxes have been tried in other countries and they have failed miserably.
Without quibbling about the degree of failure of previous transaction tax implementations (which could be debated at length), understand that transaction taxes haven't been tried as a REPLACEMENT for other standard taxes, but as SUPPLEMENTARY to them. Furthermore, they've been tried in developing countries with far weaker financial markets and far shallower investor demographics than the United States has.
Essentially, we are living in a moment and a place where an idea like the UNI tax has become feasible--for the first time in history. We have the most dominant and vital economic engine in the world's economy, the largest consumer base, strong financial and legal traditions and structures, a large middle-class, and the technological infrastructure to support the UNI tax implementation. Businesses all over the world want to sell their products to our consumers and are willing to pay a reasonable fee to do so. Not every country can make that claim.
One might actually be able to make the claim that implementing the UNI tax would be essential for our national security. Because, if we don't, the European Union could probably do it as well (Jerome? Welshman?). Actually, I would expect that if one of the G7 nations tries it, soon all others would be trying to follow suit. All these nations have impending issues with paying for social safety nets and looking to income tax systems for the needed revenue is squeezing blood out of the political turnip.
Objection 9: Transaction tax base depends upon the securities market and this market will collapse (or move overseas) in the face of taxing its flows instead of its profits.
This objection argues that stocks and bonds, even US stocks and bonds, can be traded overseas, so why wouldn't the big institutional traders move their stock trading offshore to some tax-free haven. Actually the proposal assumes that a fair amount of this may occur (remember dividing the current transaction base in half to account for market response), particularly "hot" money that works on temporary small margin trades or that buys and sells with very short holding periods. However, for the majority of investors, who invest in intermediate to long term trades, the UNI tax will simply reduce their after-tax profit by something similar to the current capital gains tax rate. The longer the investment is held (actually, the greater the cumulative growth % which tends, on average to increase with time) the less the percentage effect of the UNI tax.
To illustrate these effects, compare the tax effects for a variety of investment round-trips (buying, holding for a given margin, then selling). A round-trip gain of 2% creates a UNI tax equivalent to a 61% capital gains tax, a round trip investment yielding 12% growth creates a UNI tax equivalent to a capital gains tax of 11.2% whereas a round trip investment yielding 40% growth creates a UNI tax equivalent to a capital gains tax of 4.2%. Also, investors must remember that the UNI tax is collected when stocks are sold at a loss as well as when they are sold at a gain. The UNI tax adds a little over 1% to the loss when this happens (adding less as a percentage as the percentage loss increases). This illustrates that investors who live on a steady diet of smaller gains may seek other pastures (even if they have to pay extra UNI tax whenever they want to repatriate their gains. Long-term investors (who are less likely to experience heavy losses) are probably better off most of the time under UNI than under the current capital gains tax regime.
This example also illustrates that the market will be reasonably sensitive to small changes in the UNI rate, serving as a balancing force against the unbridled use of a relatively painless tax to inefficiently expand government (see Objection 10). It serves to remind that the UNI tax rate should be kept as high as needed to balance the books for an effective, efficient, responsible government--but no higher.
Objection 10: Transaction taxes are painless and invisible, allowing the growth of government unchecked because average voters aren't confronted with the costs of their government.
This is a rallying cry of the smaller government crowd. Taxes should be painful so that you resent government spending on anybody but yourself. As sympathetic as many Republicans are to this theme, I really think most would resent paying 70 times more tax than they need to even more. (Can you say, "wedge issue?")
There is a legitimate concern hiding in amongst the umbrage, however. It is quite easy to imagine the government bumping up the UNI rate "slightly" and generating whopping increases in revenue to do any manner of mischief. Conservatives will worry about safety net social spending, but consider for a moment if Bush could pay for his military adventures by bumping the UNI rate from 0.6% to 0.65% "temporarily" until the war is over (I know, I know, it means a Bush would be raising taxes). For the hypothetical individual making $70,000 this bumps his taxes from $630 to $682.50 a year while generating 250 to 300 billion dollars annually. Or consider if the Social Security debate changes any if Bush could argue that the same increase (0.6% to 0.65%) over 10 years would be sufficient to fund the transition to private SS accounts. Small sacrifice by everybody pays huge dividends for reform.
This is scary leverage. The UNI tax is an efficient, fair, and progressive way to raise revenue for governing, but it hardly obviates the need for intense vigilance of what they're up to in Washington. Joe Average Citizen may be lulled into even more complacency, allowing his vigilance to stay on autopilot for decades at a time. The stock market and investors will be sensitive to small changes in the UNI rate and will serve as a counterbalancing force to the tendency to indefinitely raise taxes. (Yes, progressives are the party of checks and balances government, so it is a good thing).
If you're still here, maybe you see that the idea has merit, but maybe it can't be implemented because ... well, because it's so different. Here are the main implementation objections.
Objection 11: It can't get political traction because politicians lose the ability to give tax favors to their corporate contributors (one spin) or to use tax advantages to leverage improved social policies (another spin). It reduces the leverage of the government on the economy and, we will be told, this is a "risky scheme."
It is absolutely true that a host of special interests--and the politicians they support--will find many favored tax breaks gone. But one of the most valuable aspects of collecting taxes in this new way is the fact that it requires Congress to leverage social policies or economic incentives directly using overt appropriations whose fiscal impact is transparently observable to all interested parties. It is a pro-democracy form of taxation.
Objection 12: We have to implement the UNI tax all at once; we can't dip our toe in to check the temperature because to replace any tax with the UNI tax, we have to involve all transactions in the economy, not some subset of them, because otherwise money will flow away from the taxed and toward the untaxed transactions.
It is true that all transactions must be implemented at once, but we can proceed one step at a time with respect as to how much of the current system is replaced by the UNI tax. We could begin by replacing the payroll taxes first, or even a portion of them, until we get an empirical idea of the revenue generated and to allow markets to adjust to the changes more gradually. Of course, we won't see the major savings in paperwork and compliance costs of our tax system until the income taxes are fully replaced.
That's all for now. The next installment will cover the political impacts of this idea--what other progressive ideas it feeds into, how it might affect the electoral map, and other fun things. Thanks for your patience.