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Concept:

Replace all federal “Income Taxes” on individuals and businesses with a transaction fee for using the U.S. Banking & Financial System (with no exceptions).

Why change the system?

The money collected by the federal government via the current income tax system lags government spending by as much as a year. In today’s electronic world, that delay is unnecessarily costly. The current system is also unnecessarily complicated, cumbersome, intrusive, labor intensive and unfair.

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Every American who has ever had money withheld from his/her paycheck hates the system. They all felt robbed, and rightfully so.

In 2015, the Federal government took approx.1.24 trillion dollars (pg. 3 table 1) from American workers before they had a chance to spend or invest it. This loss of available income hurt the economies of every small town, suburb, city and state in the country. It also hurt every business in the country, except those supported by the federal government.

Benefits:

  • Increase the disposable income of every American worker and business

  • Provide a 1.24 trillion dollar economic stimulus in year one

  • Give the Federal Government a daily, easily monitored revenue source

  • Replace a voluminous and confusing tax code, with a simple “Funding Formula” that can be:

    • Easily calculated and tailored to special circumstances

    • Quickly implemented

    • Instantly adjusted to changing financial conditions

  • Stop giving American businesses “a-tax-reason” to move offshore

  • Give foreign businesses a “no-tax-reason” to move to the US

How It Works:

The Federal Government receives a percentage of every dollar value deposited into or withdrawn from all “Financial Accounts” within the U.S. and its territories.

 

The percentage-due is automatically calculated for each transaction and electronically transferred from the “Financial Accounts” to the U.S. Treasury account. Refer to Appendix A; “The New Hamilton Tax Plan in Action” for details)

What Are “Financial Accounts”?

All asset accounts for individuals, businesses and all other organizations: i.e. checking, savings, loans, credit cards, stocks, bonds, commercial paper, hedge funds, commodities, options, derivatives, trusts, foundations, etc.

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Currency and currency equivalents (bearer bonds, Precious metal coins, etc) are also considered Financial Accounts belonging to the individual or organization making a deposit or withdrawal (purchase/sale).

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 Financial accounts are unique for:

 Individuals by SS#-Account#

 Businesses and Organizations by EIN#-Account#

Account numbers are unique by location

The transaction fee formula:

“Transaction Fee” = “Base Rate” + Surcharge

 

“Base Rate” = (Budget / Transfers)

Budget = Annual Federal budget

Transfers = Total dollars transferred between financial accounts (times 2)

 

Surcharge = Fractions of a percent applied:

To specified transactions, such as funds transferred To-or-From:

Foreign   Accounts

“Bailed-out” Companies

Illicit drug producing countries

Countries sponsoring terrorism

         

Or to all transactions for a limited time to:

Pay-off the national debt

Cover the cost of an ongoing war

Re-build the military

Show Me The Numbers For 2015:

The Total Dollars Transferred annually between all of the accounts within the U.S. Financial system is not a readily available number, a low-ball estimate, can be derived by adding the total dollars transferred by the Federal Reserve Banking system.

(Trillions of dollars)

(Cash + Checks + Securities + funds + ACH) * 2

(0.8     +     8.3    +    295.8    + 832.6 +  25.7) * 2 = 2,326    

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      Fee (3.250 / 2,326 = .0013972) or 14 cents per $100 transferred

      Fee adjusted for overspending = (3.688 / 2,326 = .0015856) or16 cents per $100 transferred

 

The estimate above does not include transfers made outside of the Federal Reserve Banking System, such as non-value transactions (including intra-bank transfers), transactions made by non-member banks and mortgage companies, private clearinghouses, and unreported institutional backroom swaps. The inclusion of these numbers will increase the total transfers and reduce the “Base Rate”.

Draw Me A Picture:

Conclusion

Technology has dramatically changed the world of finance. It’s time to take advantage of these changes by using today’s technology to bring about a fairer and faster means of financing the federal budget. It’s time to replace our obsolete income tax code (thousands of pages of rules and exceptions to rules) with a simple and versatile fee for using the U.S. Financial system.

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Using daily receipts to pay down the national debt will seriously reduce the amount of interest paid on the debt.

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In 2015, the employees of For-Profit businesses (33% of the US population) paid 84% of all federal taxes. They covered the cost of every federal worker (both employed and contracted); they also covered the taxes evaded by the million plus tax exempt companies and foundations. If the government continues to expand and the nonprofit sector continues to grow, it won’t be long before there aren’t enough for-profit workers to support the rest of the population.

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The New Hamilton Tax Plan is fair and simple. It rewards profitable companies and individuals who save and invest. It is a Federal Funding Solution the founding fathers would approve, with one reservation; Congress must never be allowed to change the transaction formula; nor use the federal budget for social change or political gain.

The Plan

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