Issue: Taxation: Federal - Alternative Policies
It is the specific purpose of this Issue area to discuss different possible types of national tax policy, such as a "flat Tax" or a "VAT" (value added tax). Taxation at the federal level is presumably for the purpose of covering the cost of those national expenses that we have collectively decided are either required by our Constitution as currently interpreted, or otherwise necessary and worthwhile and within our body of current law. Responsibility for deciding what funds should be collected and expended, and for what purposes, rests with the U.S. Congress and the President. The decisions made on federal income and expenses can be based on interpretation, custom, politics, and law, and may or may not be based on reality and fairness. One of the sources of great frustration to many is the complexity of the U.S. Tax Code, and the manner in which potential payees of taxes can avoid payment through the use of tax loopholes, credits, exemptions, shelters, etc. All of these matters can be treated as separate Topics within this Issue area.
The amount of funds "parked" by major corporations overseas is very large and continues to grow. These funds are not available to support the economy within the United States, and are not available for increasing employment within the United States. A process needs to be established whereby the companies keeping these funds overseas can be encouraged to bring them back, and a program needs to be put in place so that this parking of funds overseas is less financially rewarding. One immediate approach which has been suggested is to establish a 90 day "holiday," during which time the tax on return funds would be reduced. This could be to tax the funds at approximately 12%; it also might include the option of allowing for a slightly lower tax rate for any portion of the returned funds that are placed for a period of time in an infrastructure bank.
There have been a number of proposals for the establishment of a financial transaction tax (FTT). The funds generated by such a tax would be substantial, and could be designated to a specific use or uses. The tax rates proposed have been very modest, but would generate a substantial amount of money. As an example, proposals include a rate of 0.25 percent on each stock purchase or sale, and 0.02 percent on the sale or purchase of a future, option, or credit default swap. It is the position of the Forum that such a FTT such be instituted, and in particular, that the monies raised be dedicated to the funding of infrastructure replacement, improvement, maintenance and new development across the United States.