This blog proposes two means of drawing increased revenues to support government programs and services as an alternative to raising income tax rates as follows:
1. Apply a Small Toll Fee, Payable to Federal and/or State/Provincial Governments, to Sales of Equities:
This proposed means of drawing revenue is not a capital gains tax or a dividend tax. The toll fee payable to governments would apply to any sale of equities at, say, a nominal fee of $10 total for a sale of 100 shares of equities greater in value than $5/share, $50 dollars total for sales of 100 shares of equities greater in value than $25/share, and so on using graded scale proportional to share value.
This toll fee would generate large amounts of revenue income to governments, with relatively no major dampening effect on economic growth. Share prices fluctuate so greatly that attaching a nominally small toll fee would attach only a minor cost to investors by comparison, and such a toll fee would also be small relative to brokerage fees. Considering that volumes of equity trading on North American markets usually range in magnitude from a few hundred million shares to over a trillion shares, sustained over a period of 250 business days per year, this small toll fee would generate very large revenues. Similar toll fees could also be applied to options trading and possibly bond markets. The toll fee would also lessen fiscal pressures that would otherwise compel higher capital gains tax and dividend tax.
Since the toll fee would be applied only to equity sales, it would support market stability and investor confidence by providing a small incentive to investors to hold equities over longer periods.
2. Provide Government Access to Investments in Financial Markets to Support Programs Such as Social Security, Health, and Infrastructure Programs:
Perhaps the greatest single driver of government debt loads is that the only funding means for most government programs lies with tax revenues. The result is a slate of unhealthy debt-equity ratios for those programs.
Funding programs such as Social Security, Health, and Infrastructure, by allowing government agencies access to investments in capital markets would, over time, provide lucrative financial support to the programs and would appreciably improve debt-equity fiscal issues. Such funding programs could be done on an actuarially sound basis, similar to models used in insurance companies.
The Canada Pension Plan funding program established by former Finance Minister and Prime Minister of Canada, Rt. Hon. Paul Martin, has demonstrated both the feasibility and success of such programs.