“Stabilizing the economy can be accomplished by replacing existing income and corporate tax schemes. By putting the tax where profits are made, we can directly influence the economy and eliminate income taxes.  That businesses will pay all such taxes, is not an unfair proposition given that almost all business transactions depend on government services in one way or another.   Businesses pay for everything already, albeit in an indirect and inefficient way.  They pay every worker a salary from which   income tax is paid by the worker.  But the money came from the business.  By eliminating this inefficient way of collecting taxes the tax burden for businesses can be lowered and individuals can be relieved of this obligation. Businesses in general know that they depend on government services and support to remain in business.  That’s why they foster that dependence with high expenditures for lobbying and financing political campaigns for both parties.

The new tax system should only target profitable businesses, and requires them to share some of their gross profits with the government.  In turn, businesses would no longer bear the administrative burden that plagues the current income, and corporate tax system.  They would receive generous deductions for their employees and for productive investments, resulting in a less onerous burden for these entities than the current tax structure which would be replaced by four simple taxes:

1. The Distributed Profit Tax (DPT)

A modest tax on gross business income with a high deduction for each employee and a large deduction for investment in production capacity.

2. The High Remuneration Tax (HRT)

A levy on a business for paying high individual remunerations. The tax is not meant to punish but to get a reasonable share of the high earnings that a very prosperous business can afford to pay and balances the deductions.

3. The Economic Stabilization Tax (EST)

A sales tax with a low tariff – either positive or negative – aimed at stimulating or slowing down the economy to avoid excessive movements.

4. The Anti Speculation Tax (AST)

A tax on profitable, but unproductive, speculation in order to curb empty speculation and to promote tax-free structural investment in real long term production capacity over short term gains.  That short term gain for one person may cause prices for everybody else to rise is solid reason to curb unscrupulous high risk speculation.

These four taxes are meant to work as a cohesive system, the first and only tax system designed to stabilize the economy and promote full employment.  The high per employee deduction   (envisioned as twice minimum wage or $30,000 at this moment) will stimulate employment.  The high deduction for productive investments (envisioned as minimal 3 percent and maximal 25 percent of raw taxable profit) will additionally stimulate production. Stabilization of the economy will be further promoted by the EST which, in a struggling economy, acts as a stimulating subsidy and in an overheated economy will put on the brakes.”

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