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ENGINEERING ECONOMIC VITALITY FOR ALL

HOW TO CUT TAXES

The Numbers

Collectively, we earn $20 trillion per year.

There are over $7,244 trillion in payments each year.

We Should Not Tax Income!

If we taxed payments instead of income, your tax rate would drop all the way down to 0.2%.

There Are Two Economies at Play 

The material economy is the flow of goods and services. The monetary economy is the trading of financial assets, which is 350-times the size of the material economy.

The Monetary Versus the Material Economy

We're Taxing the Wrong Thing!

The large blue sphere represents the total payments in the monetary economy.
We are taxing the red sphere when we should be taxing the blue sphere!
The tiny red sphere represents the total payments in the material economy.

What a 0.2% Tax Rate Would Mean for You

If you're single and earning $30k, your taxes would drop from $6k to just $60 .

ANOTHER VIEW

A Bar Chart Comparing Our Income to the Total Payments in the Economy

The volume of payments in our economy - $7,244

Trillion

Versus our income -

$20 Trillion

$20

Trillion

$4,500 Trillion

$3,500 Trillion

$3,000 Trillion

$2,500 Trillion

$2,000 Trillion

$1,500 Trillion

$1,000 Trillion

$500 Trillion

$5,000 Trillion

$6,000 Trillion

$6,500 Trillion

$7,000 Trillion

$7,244

Trillion

$4,000 Trillion

$5,500 Trillion

Today we tax our income, which is 0.3% of the economy. That's why taxes are so high!

If we were to tax payments instead of income, we could reduce the tax rate to 0.2%.

TABLE OF PAYMENTS

The Federal Reserve tracks the above payments, and the Bank for International Settlements publishes the data in its annual Red Book (click United States).

Here's a Breakdown of the Payments in Our Economy

WHY IT WORKS

In 1913

When income taxes were first imposed, income was the right thing to tax. 

Henry Ford shocked the world when he paid his employees five dollars per day. Workers could produce more with machines, so their value increased. Both income and production grew.

Then Everything Changed

Automation changed everything in the 1970s. Wages have been flat for the last 50 years, while production has continued to increase.

Automation caused a shift in jobs to the financial sector, which gave rise to unprecedented growth in the monetary economy. The volume of payments left our income in the dust.

HOW IT WORKS

How a Payments Tax Would be Implemented

A payments tax would entail debiting a very small amount of each and every payment anyone receives. 

Payments.jpeg

Creating and Deleting Money

The money debited from a payment would not be credited to any account at all.

This would delete the debited money from the money supply.

The Fed would create the money the government spends, which would replace the deleted money and balance the money supply.