HOW A PAYMENTS TAX WORKS
We Are Simply Taxing the Wrong Thing Today
Collectively, we earn $16 trillion per year. However, there are over $5,000 trillion in payments each year that are currently untaxed. We should be taxing payments instead of income.
The graph below compares our income to the total payments in the economy.
The volume of payments in our economy - $5,000 Trillion
Versus our income - $16 Trillion
Today's taxes (income, sales, and property) target our income, requiring a tax rate of 33% to meet our current budget.
If we were to tax payments instead of income, we could reduce the tax rate to 0.2%, while enjoying many benefits we cannot afford today.
Breakdown of Payments in the U.S. in 2015
New deposits in banks
New deposits in nonbanks
Stock exchange trades
NSCC and FICC transactions
DT and Fed transactions
OTC IR trades
CME commodity trades