The .002 Solution for a Better Future

Imagine a world where you got to keep most of what you earn. Imagine a world where every working age American receive a guaranteed basic income of $24,000 a year, free tuition to most state colleges, free healthcare and retirement. Sounds too good to be true doesn’t it?

Yet, such a world is very much possible and all we have to do is update our obsolete financial system by switching what we tax to pay for government expenses from income to the annual movement of money, which involves all financial transactions and payments, including the sale of Treasury (TSRMF) bonds, derivatives such as mortgage backed securities, and futures.

According to the Red Book, published by the International Bank of Settlements, annual financial transactions in the U.S. totaled $5,000 trillion in 2015. By imposing a tiny, two tenths of one percent tax (That’s $2 per $1,000), on all payments and financial transactions it would generate enough revenue to fund the federal government and all of its programs such as Social Security and Medicare. For someone earning $100,000, that would slash the total taxes they pay from $30,000 to $40,000 a year to just $200, plus give them a $24,000 a year raise!

We’re calling it The Miracle Tax, because it truly creates miracles. By capturing just two tenths of one percent of all the payments, it would generate enough revenue to balance the budget, plus pay for many benefits that aren't possible today. My co-author Scott Smith and I lay it all out for you in our forthcoming book, The Miracle Tax. 

You don’t need to be an economist to see there’s never enough money to pay for what we need both as a country and as individuals. That’s because our 2.4 -million-word tax code is based on a 19th century economy. It doesn’t work in a 21st century America. It’s time to make a change and that change begins with scrapping our tax code. Instead of taxing the income of people and corporations, we tax every financial transaction at 002%, an amount so tiny that it could be phased in slowly as the everyone gets used to the idea.

The Miracle Tax would not only restore the economy following the COVID19 pandemic, but it would position it for continued growth previously unseen in our lifetime. Just imagine how much better your life would be if you were able to keep, spend, save, or invest nearly everything you earn. This will provide a huge boost to our consumer-dependent economy as we’ll all have so much more to spend, invest, and even to save for our retirement. Our economy needs this now more than ever before.

More importantly, in this time of economic rebuilding, the amount raised is still be enough to fund not just the federal government, but it will raise enough money to begin balancing the federal budget, all while significantly shrinking the nation’s huge income inequality gap.

By implementing The Miracle Tax, corporations will be able to use their profits to innovate, grow and hire more employees rather than pay more than $147 billion to comply with taxes.

Finally, this new approach rises above partisan politics because it unites all Americans, democrats, republicans, progressives and conservatives, liberals and independents, under one cause—a higher quality of life for everyone no matter where they are on the economic or political spectrum.

Now all we have to do is convince the policy makers in Washington, D.C. to enact legislation that allows it to happen. This legislation would not need a constitutional amendment. The 16th Amendment of the Constitution states: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. The words “from whatever source derived” includes payments and financial transactions as the source of income.

Let’s all work together to make these economic miracles happen by urging our lawmakers to take whatever action is necessary under the 16th Amendment to switch what’s being taxed from individual and corporate income to payments and financial transactions. We can rebuild this nation’s economy together so that it’s stronger, more sustainable and more robust than ever before. So share this article with whomever you think would benefit from knowing what you've just read, especially anyone in a position to do something about it.

 (This is the first in a series of articles adapted from the book, The Miracle Tax. Next in the series will explain how easy it would be for the Fed to implement a payments tax.)