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Taxes: Transaction fees could help

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Taxes should be simple to understand, easy to implement and fair to all. Our current income tax system and the Affordable Care Act are not.

Joe Balyeat’s July 11 guest column pointed out the many “excise taxes”/penalties that will be assessed against taxpayers, insurance companies and employers to pay for the act. My suggestion would replace those penalties, reduce the deficit and meet the above criteria:

Assess a transaction fee for ALL transactions of 1 percent to be collected by the banks, brokerage firms and credit card companies. It is NOT a sales tax or value-added tax. Corporations would be required to have a U.S. bank account if they want to do business in the USA. It would collect fees from all hedge funds, stock brokers, corporations and consumers – namely everyone. No exceptions. As the banks, brokerage firms, etc. would transfer the funds to the U.S. Treasury, administration costs would be nearly zero. The IRS would not need 16,000 new employees.

Various states are having difficulty collecting sales taxes on Internet sales, cloud-based services and digital sales, such as Netflix. With a transaction fee assessed at the financial institution, the issue of “nexus” and who pays the state sales tax could be eliminated by allocating a percentage of this fee to the states, based upon the location of the purchaser. No different than a bank or credit card charge, the fee would be $30 for a consumer who earned and paid out $3,000 per month – $15 on the income and $15 on the expenditures. It would impact the brokerage firms and day traders. Credit card companies now collect $48 billion in merchant fees annually. How much would the fee collect?

I believe that businesses and people would rather have a transaction fee than receive IRS notices.

Barbara Pulley, Missoula

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