Automated payment transaction tax
Encyclopedia
The Automated Payment Transaction (APT) tax is a proposal to replace all United States tax
es with a single tax (using a very low rate) on each and every transaction in the economy. The system was developed by University of Wisconsin–Madison
Professor of Economics Dr. Edgar L. Feige.
The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions. As such, it should be regarded as a revenue neutral transactions tax, whose tax base is primarily made up of financial transactions. The APT tax extends the tax reform ideas of John Maynard Keynes
, James Tobin
and Lawrence Summers
, to their logical conclusion, namely to tax the broadest possible tax base at the lowest possible tax rate. The result is to significantly improve economic efficiency, enhance stability in financial markets, while reducing to a minimum the costs of tax administration (assessment, collection,and compliance costs). Supporters argue that a uniform tax might not, on its face, look progressive
, but would be since the volume of taxed transactions rise disproportionately with personal income
.
Daniel Akst, writing in the New York Times ,wrote "the Automated Payment Transaction tax offers fairness, simplicity, and efficiency. It may not be a free lunch. But it sure smells better than the one we eat now."
On April 28,2005, the APT proposal was presented to the President's Advisory Panel on Federal Tax Reform in Washington, DC.
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es with a single tax (using a very low rate) on each and every transaction in the economy. The system was developed by University of Wisconsin–Madison
University of Wisconsin–Madison
The University of Wisconsin–Madison is a public research university located in Madison, Wisconsin, United States. Founded in 1848, UW–Madison is the flagship campus of the University of Wisconsin System. It became a land-grant institution in 1866...
Professor of Economics Dr. Edgar L. Feige.
The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions. As such, it should be regarded as a revenue neutral transactions tax, whose tax base is primarily made up of financial transactions. The APT tax extends the tax reform ideas of John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
, James Tobin
James Tobin
James Tobin was an American economist who, in his lifetime, served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to...
and Lawrence Summers
Lawrence Summers
Lawrence Henry Summers is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.Summers is the...
, to their logical conclusion, namely to tax the broadest possible tax base at the lowest possible tax rate. The result is to significantly improve economic efficiency, enhance stability in financial markets, while reducing to a minimum the costs of tax administration (assessment, collection,and compliance costs). Supporters argue that a uniform tax might not, on its face, look progressive
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...
, but would be since the volume of taxed transactions rise disproportionately with personal income
Personal Income
In economics, personal income refers to an individual's total earnings from wages, investment enterprises, and other ventures....
.
Daniel Akst, writing in the New York Times ,wrote "the Automated Payment Transaction tax offers fairness, simplicity, and efficiency. It may not be a free lunch. But it sure smells better than the one we eat now."
On April 28,2005, the APT proposal was presented to the President's Advisory Panel on Federal Tax Reform in Washington, DC.
See also
- Income tax in the United StatesIncome tax in the United StatesIn the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...
- Sales taxes in the United StatesSales taxes in the United StatesThere is no federal sales or use tax in the United States. 45 states and the District of Columbia impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose additional local...
- Taxation in the United StatesTaxation in the United StatesThe United States is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, property, sales, imports, payroll, estates and gifts, as well as various fees.Taxes are imposed on net income of...
- Tax reformTax reformTax reform is the process of changing the way taxes are collected or managed by the government.Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more progressive or less progressive. Some seek to simplify...