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The following represents two solutions that could raise tax revenues and help ease our country’s debt.  This article is meant to be a primer that touches the surface of the issue and not meant to be an in-depth analysis of all the issues related to these solutions.

Part 1: 1% Tax on all Financial Market Transactions.

January 20, 2009 the Dow Jones market closed at 7949.09. On February 27, 2014 it closed at 16,273. While the U.S. job market and middle America is struggling, the stock market is booming, in part, thanks to federal bail outs of multiple large financial institutions financed by American Citizens.

The sale tax is the classic fiscal accountability tool, you pay for what you use.

In 2009 the Center for Economic and Policy Research published a study called the Potential Revenue from Financial Transactions Taxes. In it, they state clearly:

…transactions taxes could raise $353.8 billion annually based on 2008 trading volumes. If trading fell by 50 percent in response to the tax, then the tax would raise $176.9 billion

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This is at a tax rate is .5%, or 50 cents on every $100.00.  Extrapolating from these numbers is easy.  At a 1% tax rate, you double it, or generate between $353.8 billion per year, if trading fell by 50%, to $707.6 billion, per year, if the trade rates stayed at 2008 levels. There would be no allowable deductions, exemptions or loopholes to this plan.

Part Two: Ban Off-Shoring of Profits from revenues generated in the United States:

Cornell University Law School defines Tax Evasion  as:

Tax evasion is using illegal means to avoid paying taxes.  Typically, tax evasion schemes involve an individual or corporation misrepresenting their income to the Internal Revenue Service.  Misrepresentation may take the form either of underreporting income, inflating deductions, or hiding money and its interest altogether in offshore accounts.

To me, off shoring taxable income generated in the United States to other countries amounts to evading taxes. That is the company’s goal… to pay less taxes. So corporations and wealthy individuals successfully lobbied to legalize this crime for corporations and wealthy individuals.

According to the Examiner, wealthy Americans and companies hold an estimated $21 trillion to $32 trillion dollars in offshore accounts. Huffington Post reported that the United States loses $150 billion dollars a year, due to off-shoring of profits and wealthy individual’s money.

My thought is real simple…  The company or individual earns it in the United States, they pay the United States taxes on that earned income.

Just implementing just these two solutions alone would generate somewhere north of $500 billion to $850 billion in tax revenue per year. These funds would be earmarked for domestic spending only. These funds could then be used to:

  • Revive our educational system at all levels from Kindergarten to College
  • Provide gigabit internet for all communities
  • Revitalize destitute rural and urban communities
  • Rebuild our crumbling roads and bridges,
  • Subsidize a true universal healthcare system for every citizen, that includes legitimate mental health services.
  • Pay for community support services like ambulance services and fire departments.
  • Create innovations that would strengthen our economy, like low cost solar and clean energy.

Again my philosophy is simple, pay your way and pay your fair share. This two pronged approach provides Wealthy Americans and Companies a great opportunity to set the example.

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