Federal Financial Account

Federal Bank Account

Each citizen would have a Federal Bank Account. They might also hold private bank accounts. But all taxable business would be done through the federal account:

  • All Businesses must pay people through deposits into their Federal Account
  • All taxes would be directly deducted upon deposit of paychecks or investment account profits
  • All government loan payments would be automatically deducted
  • All deposits and withdrawals would be appropriately classified

The Federal Card shall also be usable as a debit card, replacing the 3% credit card fees charged by the private banking industry.

 

 

Taxation

The following taxation policies are proposed:

  • 10% of all income from employment or investment profit up to $50k per year
  • 15% of all income between $50k and $100k
  • 20% of all income between $100k and $150k
  • 25% of all income between $150k and $200k
  • 30% of all income between $200k and $300k
  • 40% of all income between $300k and $500k
  • 50% of all income above $500k

This replaces all payroll taxes, personal income tax, and capital gains tax. There is no longer a difference between income earned from work or investment. There is no longer an employer/employee split of payroll taxes.

This also eliminates the mortgage interest tax deduction and all other targeted special interest tax deductions.

 

Investment Accounts

All investment accounts will handle deposits and withdrawals through this federal account. The Investment Account will differentiate the capital balance from any profit/loss balance for the year. When money is withdrawn, it shall be withdrawn from the profit balance first, and immediately taxed. If capital is withdrawn at a loss, previous taxes on profits shall be immediately refunded or tax protection on future profits shall be credited.

Federal Home Loans

Federal loans to homebuyers shall be available pending credit and value assessment checks. Loans shall require at least 10% down and carry 4% interest rate. Monthly deductions from the federal account will be automatic.

Federal Business Loans

Federal loans to businesses shall be available pending credit checks and underwriting. Loans shall require at least 20% down and carry 4% interest rate. Monthly deductions from the business’s federal account will be automatic.

Federal Education Loans

Federal educational loans to certain students shall be available pending:

  • Financial need
  • Incentivized program of study
  • Academic performance
  • Age

Loans shall not require a down payment and shall only be payable to the qualifying finacial institution. Monthly deductions from the federal account will be automatic. Additional educational funding must be applied for through the nonprofit sector.

Federal Home Loans

Federal loans to survivors of federal disasters (personal & business) shall be available pending credit and value assessment checks. Loans shall be interest free for two years, then 4%. Monthly deductions from the federal account will be automatic.

Implications

A federal financial account, with this simplification of transactions will say goodbye to:

  • Much of the tax preparation, tax attorney, and accountant professions.
  • Much of the tax evasion and inequality in current tax benefits
  • Much of the current employer payroll costs (making more business profit available for wages)
  • Much of the home loan industry
  • Use of the tax code as a means for congress to incentivize behavior or provide special compensation for certain businesses, individuals or demographic groups.
  • 3% Credit Card fees

It will also provide more equitable access to economic opportunity for homebuyers and new businesses owners.