[The UNI tax idea discussed in this diary was first presented in
Progressive Tax Relief, part I]
How many progressive ideas get ground up in the political grinder of "Democrats just want to raise your taxes?"
Well, the UNI tax concept would allow Democrats to combine the ideas of economic justice AND tax relief, instead of always having to argue for the former at the expense of the latter.
This diary suggests some of the positive political synergies that are enabled by the UNI tax concept and why promoting the UNI tax idea in all 50 states can help Dems--particularly those in red states--freshen their image as a party of new ideas.
To recap the UNI tax idea:
Replace all federal taxes (payroll, income, corporate, excise, estate, gift) with a single, tiny "user fee" of 0.6% (split 0.3% to each party of a transaction) on each monetary transaction. The actual collection and transfer of the tax to the federal account occurs automatically (using robust software) as the transactions flow through our automated payments and transactions systems--as checks are cleared, credits and debits registered, payments electronically transferred, investments bought and sold, cash deposited and withdrawn from banks. No more tax accounting for individuals, small or large businesses. No more April 15th ritual, 1040s, or IRS audits. The IRS refocuses on ensuring the integrity of the relatively few financial institutions collecting the UNI taxes and the software they are using.
The UNI tax is simultaneously 1) simple (no arcane tax code); 2) flat (same rate applies to all transactions); 3) efficient (huge reduction in cost of collection and enforcement); and 4) progressive (number and value of transactions subject to tax increases exponentially with wealth).
Politically, the UNI tax should be manna from populist heaven:
*Nearly every taxpayer would see their tax bill drop enormously.
*Small businesses no longer have to worry about payroll taxes nor the time and money needed to collect and account for them.
*Stealth corporate welfare--the kind flowing from arcane tax loopholes, exceptions, and subsidies--is eliminated completely. Economic subsidies and support to key industries can still occur, but it must be done explicitly through overt legislation and not covertly through mystical exceptions in an arcane tax code.
*Corporate accounting no longer need be distorted and twisted by the need to keep the tax bill low--and corporate expenses will no longer be a tax deduction but themselves contribute their fair share of UNI tax.
*All of those really smart tax advisors and tax lawyers can be repurposed in our economy to finding creative ways to use energy and natural resources more efficiently (well, I can dream at least), thereby saving their clients money.
*Social security is solvent. Permanently. The UNI tax spreads the tax burden over the entire economy and all of its participants in proportion to the value of their participation. SS is no longer dependent upon the current worker/retired worker ratio.
*The UNI tax approach would allow public investments needed to develop an improved health care/health insurance program or to restructure education financing without creating a daunting new tax burden.
*Wiping out our current budget deficit could be accomplished by bumping the UNI tax from 0.6% to 0.7%, meaning that instead of paying $60 on every $10,000, we would pay $70. [Conservatively, $43 billion can be raised with every 0.01% of the UNI tax.]
*The UNI tax could additionally (ie. after it has become accepted nationally) be used to replace state income and sales taxes as well, by adding a small increment to the rate and then passing a pro-rated amount of the collected revenue to the states. I could see this occurring as a means of fairly distributing educational funding for example, with each state receiving $10,000 per enrolled public school student.
*The UNI tax is collected from all flows that impinge on our national economy including foreign exchange and international trade. All users of our financial and legal system are charged the same tiny proportional user fee.
The UNI tax has the virtue of being theoretically simple, fair, efficient, and appropriate as well--not a hodge-podge sealing-wax and bailing-wire mélange and can be robustly defended against other "theories of taxation." Conservatives harp about how payroll taxes and taxes on income and investment--particularly double taxation on savings--is such a job-killer in the economy. Politicians of various persuasions decry the distortions that tax deductions and depreciation and exceptions play in the "free market" of many industries, playing favorites and generating an unequal playing field. The UNI tax eliminates these concerns better than any other alternatives.
The UNI tax is the revenue collection method best suited to a people's agenda that is trying to revitalize the role of decentralized (grassroots) power in our democracy. Very big things can come from a whole lot of people each doing a small amount. Very large revenues can come from a whole lot of transactions each generating a tiny amount. Thus the UNI tax can help reinforce the progressive frames of decentralization , equality, and social justice.
It would be a wonderful thing to see a red state Dem candidate (or two or three) running an underdog campaign in 2006 against a Republican incumbent to try out the political power of the UNI tax idea to gain fresh ears for the Democratic message as a whole.
Future entries in this series will expand on other ideas to help build a fresh, future-oriented Democratic platform.