For a while now Dr Edgar Feige has been a proponent of an automated transactional tax. The idea is that we get rid of all taxes – income tax, sales tax, corporate tax, excise, capital gains, import and export duties, inheritance – and replace it all with a tax on all transactions Every transaction, which can be easily identified through bank accounts, has a very small tax on it. Phil and Steve discuss the pros and cons this week. It’s certain broad in its reach, but is there a danger that it could penalise those on lower incomes. There’s certainly a question mark on how it addresses the hoarding of money or long-term investment in asset classes that show strong capital gains. Perhaps it needs to work in conjunction with some means of taxing wealth – but that means, already, the simplicity of a transaction-only tax disappears.
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