Rethinking Taxation: Implementing the Automated Payment Transaction Tax for Economic Equity

Subtitle: A Pathway to Universal Basic Income and Sustainable Societal Welfare in an Automated Economy

Abstract

The current taxation system in many developed countries is characterized by complexity, inefficiency, and inequity, leading to widespread tax evasion and societal discontent. This article proposes the implementation of an Automated Payment Transaction Tax (APT Tax) as a revolutionary approach to taxation. By taxing the movement of money rather than individual incomes, this system could automate tax collection, minimize compliance costs, and provide a stable revenue stream for governments. Coupled with the establishment of a Universal Basic Income (UBI), this paradigm shift has the potential to alleviate poverty, reduce social tensions, and support economic stability in the face of increasing automation and technological displacement of jobs.

Keywords

Automated Payment Transaction Tax, Universal Basic Income, Taxation Reform, Economic Inequality, Financial Automation, Social Welfare

Introduction

Taxation has been an integral part of state governance for centuries, primarily functioning as a means of revenue generation. However, the traditional models of taxation have not evolved in tandem with the rapid advancements in technology and changes in economic structures. Current tax systems often place an undue burden on the middle class, while wealthier individuals and corporations exploit loopholes to evade taxes (Piketty, 2014). This paper explores the feasibility of replacing conventional tax systems with an APT Tax, designed to capture a small percentage of all financial transactions, thereby streamlining tax collection and significantly reducing the administrative burden associated with current taxation methods.

The Flaws of Current Taxation Systems

The inefficiencies of existing tax systems stem from their reliance on income-based taxation, which allows for significant evasion and exploitation. As Adams (2012) points out, tax compliance costs are disproportionately borne by lower and middle-income earners. In contrast, wealthier individuals and corporations frequently utilize complex strategies to minimize their tax liabilities (Zucman, 2014). This systemic inequity not only undermines public trust in government but also exacerbates economic disparities.

The Automated Payment Transaction Tax

The APT Tax proposes to shift the focus from taxing income to taxing the movement of money itself. Every financial transaction — whether it be a corporate merger, a stock trade, or an individual purchasing a coffee — would incur a minimal tax, estimated at around 0.5%. This model draws upon concepts proposed by economists such as Tobin (1978), who suggested a financial transaction tax to stabilize markets.

Advantages of the APT Tax

1. Efficiency: Automating tax collection through financial institutions would eliminate the need for individual tax returns, drastically reducing administrative costs (Feige, 2016).
2. Equity: By spreading the tax burden across all transactions, the APT Tax ensures that everyone contributes to the public purse, minimizing the impact on any single group (Hacker & Pierson, 2010).
3. Stability: In times of economic crisis, the tax rate could be adjusted dynamically based on the government’s budgetary needs, providing a flexible revenue model that can respond to fluctuations in the economy (Gordon, 2018).

Implementing Universal Basic Income

Alongside the APT Tax, this paper advocates for the introduction of a Universal Basic Income (UBI). The UBI would provide all citizens with a regular, unconditional payment, ensuring a basic standard of living regardless of employment status (Standing, 2017). This concept has gained traction in recent years, with trials in various countries demonstrating its potential benefits.

Benefits of Universal Basic Income

1. Poverty Alleviation: UBI has the potential to eradicate extreme poverty by providing individuals with the means to meet their basic needs (Widerquist, 2018).
2. Economic Stability: By ensuring a minimum income, UBI can stimulate demand and contribute to economic growth, particularly in times of recession (Dube, 2019).
3. Social Cohesion: Providing a safety net for all citizens can reduce social tensions and promote a more equitable society (Van Parijs & Vanderborght, 2017).

Addressing Potential Objections

Critics of the APT Tax and UBI often cite concerns about potential disincentives to work and the costs associated with implementing such systems. However, evidence from existing trials and research suggests that most individuals will continue to seek employment, using UBI as a safety net rather than a replacement for work (Häusermann et al., 2019). Furthermore, the revenue generated from the APT Tax could offset the costs of UBI, creating a sustainable economic model.

Conclusion

The introduction of an Automated Payment Transaction Tax, coupled with a Universal Basic Income, presents a viable solution to the pressing issues of economic inequality, tax evasion, and societal discontent. As we move further into an era characterized by automation and rapid technological change, it is imperative that we rethink our approaches to taxation and social welfare. By embracing these innovative ideas, we can pave the way for a more equitable and prosperous future.

References

• Adams, C. (2012). For Good and Evil: The Impact of Taxes on the Course of Civilization. The Independent Institute.
• Gordon, R. J. (2018). “The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War”. Princeton University Press.
• Hacker, J. S., & Pierson, P. (2010). “Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class”. Simon & Schuster.
• Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press.
• Standing, G. (2017). Basic Income: And How We Can Make It Happen. Pelican Books.
• Tobin, J. (1978). “A Proposal for International Monetary Reform”. Eastern Economic Journal, 4(3–4), 153–159.
• Van Parijs, P., & Vanderborght, Y. (2017). Basic Income: A Radical Proposal for a Free Society and a Sane Economy. Harvard University Press.
• Widerquist, K. (2018). “A Critical Analysis of Basic Income Experiments”. Basic Income Studies, 13(1).

Keywords

Automated Payment Transaction Tax, Universal Basic Income, Tax Reform, Economic Inequality, Financial Automation, Social Justice, Revenue Generation, Fiscal Policy, Technological Unemployment, Economic Stability