We need to raise taxes… by microscopic amounts. #GovReform
In honor of election day, PSTI is tackling one of the hottest election issues: taxes.
The situation: There is much ado about taxes, particularly with respect to who should bear the burden of supporting various public services that rely on federal revenue. From the Postal Service to Social Security, our federal government is struggling to pay for its most important services that few members of society could do without. Rather than solving these problems with increases to existing taxes, we need new forms of taxation to level the economic playing field.
The Solution: Rather than large tax increases to the rich or poor, we should institute microscopic taxes on “transactions” that would hardly affect the average individual but would add up to significant revenue for the government. Two industries that would be best suited to micro taxes are email and the stock market.
E-stamps: Just like real mail requires a stamp, we could have the same requirement for email. Because email is so much cheaper to send, the fee could be as small as $0.0001 per email. For the average person this would amount to only a few dollars per year, but for large corporations or spammers, the fees would be significant.
In 2005, Verisign estimated approximately 2.25 billion emails are sent each day. If that number is 40 billion and rising in 2012, then e-stamps could generate millions in tax revenue every day. Moreover, this tax would also place a financial limit on spam. While Internet taxes have been rejected in the past, now is the time to institute such federal fees before people are forever accustomed to fully free email.
E-trades: Another example of a micro-tax is to levy $0.001 per transaction on all trades within US financial markets. Such taxes would cost the most prolific day-trader no more than $100 per year but cost far more to large scale algorithmic financial services companies that employ computers to hedge their positions hundreds of times per second. Not only would this tax help repay our national debt, it would restrict economic activity without intrinsic benefit to society.
Props to Kyle Nasser for raising the idea for micro-taxes on financial institutions.
PS - That said, incentives do matter and no government intervention is a panacea: