The 1USATax Mechanism

Explanation of the Mechanism of the 1USATax.
The 1USATax utilizes the existing commercial paper and credit card clearing system for payment of most sales, with the balance enforced by pretax at the maximum rate permissible (10%) for cash withdrawals (cash deposits are credited for the same amount). Cash payments are charged a tax rate of ten percent; all others are charged at the declared tax rate. Five major incentives are introduced to encourage "recorded transfers" over cash:


 * 1) The tax usually is significantly lower (typically five percent);
 * 2) The individual receives credit (similar to the "cash back" for credit card purchases now) for their two charity and health care funds.
 * 3) For major purchases, it also effects title transfer by the Transfer Agent (credit/debit card, money order, or check).
 * 4) It is more convenient and provides proof of purchase.
 * 5) Both the buyer and seller share credit for tax paid, thus both will prefer a Transfer Agent for significant purchases.

Currently, most sales transactions (purchase events) occur at the retail level. Since the 1USATax requires that only net prices may be used, any tax computation by a buyer is eliminated which greatly simplifies most public transactions. Every price includes tax.

Producers, manufacturers, jobbers, distributors and wholesalers deal in fewer sales events, but with larger quantities having much more value per transaction. However, most of these are usually handled by product family. For example, all plumbing fixtures are likely to be taxed at the same rate and most electrical products, or automotive products are likely to have the same tax category. Thus, the manufacture and intermediate distribution channel often will have only one tax rate for a particular product and this is the same tax rate for the product for its life throughout the distribution channel. The manufacturer’s selling price includes tax and a declared tax rate which is deducted from the proceeds by a Transfer Agent (bank) when it is purchased. Any buyer never computes tax (it is included in the selling price), so it is transparent to the buyer. This tax rate is uniform throughout the United States for all direct competitors. Thus the computation of tax (even though it can vary by product/service) is greatly simplified. There are no other taxes that a distributor, jobber or manufacturer must pay. It is solely a single rate by product or service.

An Example An electrical contractor
Say Tom has an electrical contract business. Wnhatever wholesale electrical material he buys, any tax is included in the selling price. The labor services (salaries) that he pays, include tax. If electrical services had a tax rate of 6% nationwide, he knows he will have 6% deducted by the Transfer Agent (bank or credit card company) for any money he receives, so he merely divides his net price by (1-tax rate, in this example it would equal 0.94) to get his selling price. He has no other tax obligation. He's done.


 * There is no sales tax exemption certificate, no license tag fees, no property tax fees, no excise taxes, no inspection fees, no income tax, no payroll withholding tax, no inventory required for tax purposes. Plus, he gets a statement each month from his Transfer Agent (bank) of:


 * 1) The amount of money he paid out;
 * 2) The amount of money he took in;
 * 3) The amount of tax deducted;
 * The amount that went to his local government,
 * The amount that went to his state government,
 * The amount that went to his federal government,
 * The amount given distributed to charities that he predeclared,
 * The amount of money accrued in his Individual entitlement/health care account

This includes a 50% credit for everything he purchased. So he knows that every other electrical contractor is paying the same tax load. Tom can concentrate on his business. Whatever additional things he wants to track with his accounting system, he does for his own reasons.

No Tax Due Without Wherewithal to Pay
This system also ensures that taxes are due only when money to pay them is in hand. Thus it avoids the stress and desperation of having a tax assessed as now routinely occurs on recurring property tax assessments or income tax audits. Just like gasoline now is sold now, the 1USATax requires that the buyer be informed of the 1USATax rate, but it is always included in every price. There is never any add-on tax. This makes the 1USATax under ClampIt easy to enforce, because it eliminates the "surprise" that plagues the property tax and income tax systems. More importantly, it is reasonable, always less than ten percent, thus gives little incentive to avoid the system.

Each separate product is already on a separate line item of any invoice and separately identified, thus no additional granularity is required by the 1USATax.

The 1USATax shifts the burden of tax payment collection to the seller, which in reality it is now even though "sales tax" is added to your retail bill. The seller has the option of running it through a transfer agent (who both collects it and distributes it directly to the five fiscal accounts), or qualify as a transfer agent. This is identical to that now done by credit cards for merchant fees, which eliminates any fee calculation at the point of sale.

Even if a merchandiser handled every possible product that could be sold in the United States, the maximum possible tax rates under the 1USATax are eleven (zero to 10 percent). Under the current add-on sales tax scheme, there are over 78,000 plans of rates.

Example Super Market
For a supermarket, it is likely that they will end up handling several 1USATax rates. Because of the high inventory/low margin turnover, Congress will very likely set the 1USATax on food very low (say) 3% and, likely staples and other necessaries like milk even lower. However, it is just as likely that Congress will set “sin products” such as tobacco, beer, wine and other luxuries very high. For a super market, it is likely that the will handle several tax rates, but never more than eleven (zero to ten percent) and likely only three or four. The tax is included in the price, but it enables the price to be subtotaled by tax category, thus simplifying transactions for tax collection. The rates are nationally uniform, thus it is no longer necessary to have varying tax rates by local store. A super market chain may elect to function as its own Transfer Agent (like a large retailer), but it is not required.

Advantage of Uniform Rate by Product
It is important to realize that a 1USATax differential is compounded at each level of distribution and is further compounded by distribution channel margin. Though this analysis is somewhat complex, its implementation is simple. A nine percent 1USA tax for liquor would typically be 30 times the tax burden of a 2% 1USA tax rate for milk because the distribution chain is longer and the margin is higher for the former. Part of this phenomenon is due to the greed of Congress, the other is due to the greed of the market. This is because the distributor margin on liquor luxuries is usually high, whereas the distributor margin on staple commodities is usually low. This margin further compounds the order of magnitude difference in tax rate.

Yet at each level of distribution the incremental tax margin is relatively small (always less than or equal to ten percent).

This is no accident. It was done to discourage bootlegging, by minimizing the margin tax at each level of distribution. It was also done to give Congress tools to deal with the reality of differences in product distribution and to recognize that “one size fits all” is an over-simplification of those that would like to make the tax code simpler than it should be. A “one size fits all” policy shifts the tax burden to low margin, high turnover, multi-level distributed products and favors high margin, low turnover, single-level distribution products (monopolies and most luxuries). It follows the advise of seminal economist Adam Smith, who first asserted that no tax should be over ten percent.

The 1USATax feature of variance by product/service also permits Congress to either discourage or shift burden to certain products that are more costly to control, yet at the same time it does not allow Congress to set a tax rate so high as to encourage bootlegging and crime. It was made uniform by product to keep all players on a level playing field. This permits recognition of so-called "externalities" of environmental costs that are not recognized in the normal distribution process, but avoids complexity and controls abuse of this feature.

“Sin” products already demand different sales treatment by supermarkets (liquor, tobacco and prescription drugs). The 1USATax easily facilitates this as a common mechanism. Certain products can easily be flagged to require control of purchase, storage, or historical tracking. This is a useful function for any industry and, unlike the “divide by your social security number, multiply by your shoe size” gobbledygook drivel in the income tax code, it is a logical structure that any business should have.

Milk, for example, may be very low (2%) since it is the only tax rate any seller pays any time it is sold. Even so, food is a fairly large expense for most families, thus they are likely to pay for it with a debit/credit or check card in order to earn the individual and charity fund. This encourages voluntary participation in tax collection and provides a broad public vigilance that the right amount is collected. It is similar to a double entry accounting system in that 50% of any tax paid by the seller is credited to the buyer. Any seller knows the buyer will be expecting to get a tax credit identical to the sale and this is subject to audit by a neutral third-party transfer agent.

These distribution share ratios are constitutionally fixed and cannot be changed by law. The 1USATax only permits Congress to declare a separate product/service category to be declared or an existing rate to be varied. Even then, it is limited to a range of zero to ten percent and must be nationally uniform. It cannot exempt or favor anyone.

This control of tax policy greatly expands the economy because it restores certainty (within bounds) that all comers will be treated the same. Yet it imposes minimal discipline on ever citizen to be self-sufficient, without over-reaching into their private lives. It treats death with the same even hand as life. It restores local government power to do the will of the people, but protects all citizens from abuse of taxing power by all governments.

Benefits to Local Governments
For the first time, it permits the economic behavior of a local community to be the focus of the common interest of local government. Having a citizen is important and getting productive citizens is important. If a citizen can’t vote and is not a resident, you can only get half of their tax receipts (the seller's half). Conversely, if they are residents and buy locally, your tax revenue is doubled.


 * For example, if a housewife decides to buy groceries in a neighboring county, 50% of the local tax money will go to her county of residence; the other 50% of the local tax money will go to the county where she purchased it. The tracking of this information is useful to the retailer for demographics of their market (maybe it would be a good idea to expand to another area?).

There are other reasons the 1USATax benefits local governments besides facilitating retail sales:


 * 1) It ensures that each respective government will get their revenue share of their constituents purchases.
 * 2) It brings immediately another set of vested interest eyes to any tax transaction (the respective local governments) and again ensures that it is very difficult to pull an Enron.
 * 3) Local governments get their funds immediately (they don't have to wait on state disbursements) and both the state and the local government can reconcile their gross receipts since they must balance (because of the fixed ratios).
 * 4) Local governments get 50% credit for their constituent’s sales out of state.
 * 5) Every local government knows that it is not legal for any state to undercut their tax; it is all the same for every local government throughout the United States. This stops the cutthroat competition for tax discounts, whereby "attracting foreign investment" which in effect surcharges domestic business, making a bad situation worse.
 * 6) Every local government also gets 50% credit for international sales and purchases by their constituents.
 * 7) Every local government gets at least 50% local credit for taxes collected on any wholesale, jobber, manufacturer, miner, agricultural and government sale or purchase in their jurisdiction.
 * 8) Local revenues are naturally balanced. A rich suburb is assured 50% of local tax from their constituents. Yet an inner city suburb will also get 50% of the sales made from its constituents. A relatively poor rural town will get 50% of the wholesale tax revenues that its area produces (including its timber, hydroelectric or nuclear power plant, if it has one).
 * 9) A local government gets its share of labor/service sales from its constituents (they get nothing now; it's "trickled down" from the state or federal government). This may not be enough in every case and may require balancing by the state or federal governments, but it breathes new life into local control.
 * 10) The local government no longer has to set or raise taxes, they only need manage their operating budget.

The Transition - Elimination of Recurring Property Tax
Now why would a local government want to have recurring property taxes on real estate and vehicles and run off its chief source of revenue, its citizens? This is made a moot point because all recurring tax is illegal under the 1USATax.

But it is not immediately illegal, since existing real property will fall under the protection of ex post facto provision of the U. S. Constitution. This means that only new sales will fall under the "no recurring tax" protection of the ClampIt? amendment. So local governments will "wind down" their old system (auto tags, property assessments) which is covered below under the federal transition. A provision of the ClampIt? amendment provides for a special transition that will allow homeowners and businesses to convert their property without selling it to someone else, but the revenue generated must be first applied to retire public debt (state, federal and local debt).

This will retire most public debt. Under ClampIt, the local government swaps its limited power to tax for a national guarantee that they will receive a fixed percentage of all tax collected from their constituents. It is the only tax that may be levied and it is uniform for the same product anywhere in the United States. There are no recurring property taxes of any kind. There are no income taxes. There are no state-mandated real estate appraisals. There are no real estate equalization boards. They are no longer stuck with the dregs because the federal and state governments have picked their citizen's clean, but instead receive the same revenue share as the state and federal government.

Benefits to State Governments
The 1USATax has the same effect at the state level. The state receives the same amount of money as all of its local governments and, because of the fixed distribution ratio, these amounts must balance. The state gets new revenue from sales of services (a much larger share of what was consumed by the federal government in income, excise and international tariffs).

State and local government jurisdictions are relieved of the enormous liability of an unfunded entitlements health care by a separate Individual fund. Further, the are also greatly relieved of welfare because this is transferred (and policed) by the public at large. Like the state's local governments, the state suddenly gets 50% of those tax funds for goods and services sold or purchased by its constituents from outside of its borders. Of particular note, it gets a significant increase in wholesale distribution within its borders, particularly from international trade. It no longer has the administration or worry of recurring property tax or real estate assessment. It can no longer levy any tax, but is guaranteed its fixed share of all revenues collected.

Advantages of National Rate Control and Uniformity
Having common commercial language is as important as having a common spoken language.

The 1USATax has a profound effect at the federal level, which will undergo the most change. Since 80 percent of the revenues are shunted from the federal government and these go directly to the state and local governments from the point of collection, plus health care and charity functions are separately funded, the federal government has a pronounced reduction in its involvement of redistribution of funds. However, the benefit of uniformity is imposed since only the federal government can set a tax rate category for a product/service and this must be done by Congress.

This is a good thing, because it prevents inferior governments from laying tax on non-residents, which is the major philosophy behind the 250% expansion in sales tax rates over the past two decades. This was a very bad trend because it is, in effect, "taxation without representation" since any non-resident has no standing (could not vote, nor appear before, the body levying the tax). It was also stupid (like all "something for nothing" scams generally are), in that every other local government reciprocated and did exactly the same thing. Thus, any citizen faced double the sales tax both at home and away. The only winner was the local governments, since local residents lost both incentive and often standing to control those that were taxing them. Oddly, many newspapers thought this was a great idea (like the tax on rental cars), but it raised the tax everywhere and any early adopters lost any advantage overnight. This is one of reasons for the principle that a tax rate and tax category can only be changed at the national level and it is the reason the further constitutional constraint is placed on Congress that it cannot discriminate either by market or territory.

One could see that, if the rate could only be changed at the national level, the rental car industry and every road warrior that used rental cars would be opposed to any such silly increase in rate. They would oppose what has slipped by naive locals, educate the public of the bait and switch, and likely be successful. This is as it should be. Further, Congress could not get away with a "ten percent on rental cars" without a super majority approving the tax rate every year.

But Congress could easily make a good case against tobacco and alcohol with little opposition. Likewise, they could easily reduce the tax on necessaries (like milk, oatmeal and hamburger) with little opposition.

This tax system thus restores these natural checks and balances so favored as the construct of our Constitution:


 * Government jurisdictions always want more tax revenue
 * Consumers always want lower prices
 * Producers and distributors want lower tax burden.
 * Producers align with consumers, rather than scheme against one another.
 * Consumers realize that higher tax rates mean higher prices for products they want to buy. It is the product or service, not merely the seller, which is of concern to consumers.
 * The progressive, super majority approval for tax rates that differ from five percent, ensures that any exceptions are highly visible to the public.
 * The maximum tax limit prevents "Robbing Peter to pay Paul"; the little guy and the individual is protected.
 * It discourages bootlegging and limits the size of government.
 * The limit of government to an optimum ratio to Gross National Product achieves the highest and most efficient economy.

Elimination of Paperwork.
This system also eliminates an estimated 8 billion man hours per year in tax preparation for the income tax alone, plus it eliminates duplication in economic and administrative data collection. The public, as well as the government, need not be plagued by legal demands for information on product and market data that is destroyed by the secretive income tax collection scheme. This will provide better environmental data, better transportation data, better hazardous material data, better analysis of need and want and use our modern technological tools of the Internet and computers to effect it. It will also protect the individual privacy of every citizen and every business, because they choose their Transfer Agent(s) competitively. Only the Transfer Agents are audited; the public is freed from oppressive, tedious, and completely unnecessary burden of record keeping. It eliminates recurring property tax and the senseless periodic appraisals that go with it.

The latter will provide incentive for all property owners to prefer quality over quantity. Painting your home, fixing up your business, keeping up your yard, are no longer penalized by higher taxes and slums subsidized with lower taxes and free government services.

It will also go far to restore our balance of payments on International purchases, yet prevent unfair discrimination among competitors. The rate can only be from zero to ten percent and is imposed on the seller everywhere in the United States where the product/service is sold. All other taxes are abolished and the 1USATax is the sole revenue source for all governments. The IRS will still exist, but will no longer process income tax or have cause to audit the general public, but instead will be used to implement transition to the 1USATax system and to audit transfer agents and international ports of entry.

International Trade
Existing trade agreements will be unaffected to the extent that any such tariff rate imposed for international imports is the same as domestic goods or services. Currently, most are biased in favor of international sourced products because there is no tax on intermediate distribution. This is wrong and it is stupid. The so-called "discount of tax for international sales" is nothing more than a "surcharge for buying domestic." They mean exactly the same thing, an your choice of words depends only on whose ox is being gored. Under ClampIt, all new foreign goods and services will be assessed to their true value on port of entry and the applicable 1USATax paid. This is what the IRS should be doing and it is thoroughly abused, with captive market invoices escaping and rendering completely ineffective the income tax (which should be eliminated anyhow). There will be incentive for international distributors to have multiple ports of entry to avoid two levels of taxation (interstate transfers). There will also be incentive for foreign investment in manufacturing as close to market as possible and to use as much local raw material and finished goods as possible since this results in the lowest tax burden under the 1USATax. This will be further enhanced by "zero tax on ownership" policy of the United States under the 1USATax, which will provide real (rather than imaginary) economic incentive to build in the United States.

The effect of the repeal of the 16th Amendment and income tax will be partially replaced by whatever 1USATax rate Congress may set for various labor services. Likewise, regressive labor taxes such as Social Security will be replaced by the combined universal Individual entitlement (Health Care/Social security) fund, but funded by the entire economy, not just labor services and without any complicated cap. Regardless, the maximum tax on labor cannot exceed ten percent and, even at that, will be a large tax decrease and resultant real income boost for the American worker.

Corporate Income Tax Abolished
Corporations will no longer pay income tax, which will be abolished. Instead, they will pay whatever 1USATax rate Congress sets for their respective product/service sales. In no event can this exceed ten percent and it is more likely it will be five percent, which is the tax burden most corporations pay now, nor can a special "corporate tax category" be established because it is explicitly prohibited. This ensures that natural, market force alliances are established to resist taxation. Nevertheless, the reduction in labor tax cost will be a decline in total cost to most manufacturing and service industries, thus all corporations will not only be much more competitive internationally, they will be tremendously more competitive locally. Corporate property (including intangible tax) is still subject to ex post facto provisions, so it is still subject to recurring tax until it is sold. This is also true of stock, bonds, and other securities. However, as soon as property is traded, it can no longer be taxed until it is sold again.

Congress may wisely decide to first implement a maximum life of trusts and corporations to prevent private monopoly. A suggestion is the average lifespan of the American citizen, which would put corporations, bonds, and all other financial securities on the same tax base as any citizen, but no greater. Or, this may be a ratio of less than one like the period of patent (17 years) - the debate I'll leave to Congress. Either of these solves the problem of foreign ownership of U. S. real estate and provides a common incentive to look after the well being of American labor.

Unlike the situation today whereby Congress takes what should rightfully be called bribes from deep pockets to look the other way when enforcing anti-monopoly legislation, the tax limit will make them take a jaundiced eye since they can no longer hike the tax on the little guy to make up for what they give away to cronies.

Any product or service not specifically identified by Congress will be taxed at five percent (the target average). This provision will throw out all loopholes of the old tax codes and cause any real ones to surface. By implementing the ClampIt amendment, Congress can create no product/service category that exempts and/or favors any person, company, government, region, organization, or other entity. Moreover, even if it managed to grant a lower (or imposed a higher and burdensome) 1USATax rate, it requires a progressive plurality to approve it. A six or four percent rate requires 52 percent of Congress to approve; a three or seven percent rate requires 53 percent of Congress to approve; and a zero or ten percent rate requires 60 percent of Congress to approve. Even if approved, it will decrease in difference by one percent annually unless reproved by the same plurality. This puts public scrutiny on taxation and naturally causes industry associations to lobby for lower rates. But unlike the lame duck loopholes that are routinely sneaked through the Ways and Means committee in the past, these cannot escape public scrutiny. Even if a temporary indulgence got pass on a lame duck session, it would only be reviewed the following year.

Stock and Commodity Markets
Currently, transactions on the stock market are not taxed, nor are they on the commodity market. The 1USATax does not permit separate tax rates by market, only by product or service. Thus, stocks may be a legitimate product category, but they cannot be delineated by "who" owns them, nor can bonds. Although "tax free municipals" can still exist, they are subject to being immediately reclassified when sold and are treated like any other bond. Since under ClampIt all ownership is tax free, "tax free municipals" will only lose their tax free revenue stream if they are sold and lose their ex post facto status. Most such bonds only specifically grant immunity from federal income tax, thus there would be no advantage to sitting on such an asset. Even then, Congress could establish a zero tax on a particular type of debt product, but they could not restrict it to a market. Congress may rethink doing so, because the ClampIt amendment no longer tolerates any tax rate above ten percent, thus the concession cannot be made up by loading it up on another product category. The CLAMPIT clause, "ownership is not taxed, nor may it be enforced if the 1USATax is not paid..." is specifically designed to allow existing tax-free bond owners to choose. If they sell, it is subject to tax, but no more recurring tax unless the new owner sells it. Not too many years ago, most brokers had a fee for transfer of stock (typically ten percent) which has gone away with the discount broker trade. Congress may decide to lessen or increase the 1USATax on stock and bonds and use it as a tool to fine tune the economy. But, like everything else, it is unlikely that the rate will be much different than five percent without good cause. Congress could tinker with the tax rate on stock transfers much as the Fed now does with the discount rate, but it would be probably left alone at five percent.

On commodities, it is likely that the 1USATax will differ, with commodity foodstuffs set very low and certain other elements higher. The 1USATax will certainly dampen commodity speculation somewhat, but it will form a powerful alliance between the commodity market and the consumer to keep the tax on necessaries very low or at zero. Not all of what is traded on the commodity market are necessaries, e. g., gold, silver, precious metals and others. These will could have a higher tax rate than necessaries.

The stock and commodity markets will be a new source of revenue for the government, but it will be tempered by the fixed ratio of state and local participation in the trade. Previously, when stock was bought or sold, no local government cared; after the 1USATax, their interest will be heightened.

Provision for Retirement of Public Debt
The federal government has control over the means to retire public debt through the controlled offering of transition purchase of real estate. For example, if a homeowner now has a mortgage and is paying $150 per month into an escrow fund for recurring property tax, it might make sense to have the house appraised and repurchase it, thereby bringing it under the "no recurring tax on ownership" provision of the 1USATax.

However, the homeowner would have to pay the same 1USATax rate that is for any other new homeowner. Assuming this was five percent of the appraised value, this would certainly make sense for a given interest rate and internal rate of return. The same is true for corporate property. On the other hand, if the homeowner was planning to move in the near future, it may be more economical to pay the recurring property tax until then. The homeowner is still in control of the value and the timing of any tax and not at the mercy of an appraiser.

This is not a free ride, because the government is getting front end cash for the sale of an asset (the ex post facto revenue stream of recurring property taxation). The absorption of this debt by the private sector will provide immediate tax funds and these are constitutionally constrained for retirement of public debt. The resulting interest expense decrease would bring down government expense significantly while transferring the debt (in essence) from public to private. This activity could be subject to abuse (over/under-appraisal) and therefore is a target transition for existing task for existing government workers involved in the recurring tax collection. Though the ClampIt amendment permits this inevitable process to be accelerated, it constrains the revenue derived to retire public debt.

Fixing Entitlements and Social Security
Transfer of the Social Security funds to the Individual Health Care/Social Security fund is another task of the federal government. Unlike any other common wealth fund, the proceeds can only be spent on behalf of the individual owning the fund. Its purpose is to eliminate any citizen from relying on the sympathy of others to meet their predicted needs of health care and social security for retirement. Three positive elements occur because of the this:
 * 1) The health care/social security fund is made truly universal and is by law funded by twenty percent of the entire tax base of the national economy, not merely wage earners as it was under the Social Security/income tax system.
 * 2) It makes some floor program health care universal for every citizen and therefore lowers the cost of insurance by enlarging the pool of risk.
 * 3) It provides a mandatory contribution that is non-optional, but that is floor-reasonable for all citizens that is a fixed ratio of cost that cannot be altered.  Because it is rational, it needs no indexing.

This alone will not solve escalation of medical costs, because there exists fundamental flaws elsewhere in the system that must be corrected. The Individual Social Security/Health fund will replace Medicare, Medicaid, Social Security, Unemployment Compensation and CHIPS, replacing them all with a single comprehensive plan having universal contribution of the entire economy. It is envisioned that the Health care component will be floor-defined by the federal government and that any health care entity must agree to a standard of care and cost to participate in these funds and this can be supplemented temporarily for transition by the Government Charity funds. Government health/social security funds earned through government purchases are contributed to the general health/social security fund for the respective jurisdiction. Corporate health/social security funds must be contributed to employee/stockholders health social/security funds.

Budgeting Charity
As was pointed out by Congressman Ron Paul and the author, it is a very bad idea to have governments give money away because it transfers an optional, if-you-can-afford-it expense, to a prime tax debt that risks everything a citizen has. Everyone knows that one does not need any help to give money away, most people can take care of that by themselves. ClampIt thus relieves governments of this function and restores it to the people where it rightfully belongs, but still preserves a Charity fund for government and companies. This Charity fund is non-optional and is a full fifth of all of the tax revenues collected in the United States. It cannot be saved, nor can it be encumbered by the courts. It is always free to be dispersed by the owners to anyone other than themselves. This enables Congress and the President to sidestep demands for Charity to put the appeal to the people; if they agree, the Charity is funded. If at a later time they think other things are more worthwhile, it will be reduced. In the constitutional establishment of the Charity fund, every individual citizen is given a fiduciary government responsibility to distribute one fifth of tax funds to those things he or she feels are the most worthy. As with any other government official, the sole constraint is that this money cannot be given to the individual responsible for the distribution. As with all other government funds of ClampIt, these funds cannot be legally encumbered and remain the sole discretion of the individual entrusted to them. Thus, an individual citizen can only declare where the fund goes, which can be any entity the individual citizen sees fit, provided that the individual, like any other government official, does not give it to his or her self.

One of the purposes of establishing this Charity fund was to remove most (80 percent) of this function from other government entities (the governments also have Charity funds, but they, too, are likewise constrained) in order to increase the granularity of recognition of true need, particularly down to the individual scope and finer detail only known by each and every citizen. Most of the Charity fund (that distributed by individual citizens) is therefore not territorially constrained nor is its purpose constrained: indeed, to whom or for what the funds are distributed is solely determined by each individual citizen as funded by the citizen's fund. In short, it permanently takes away this function away from republican government and establishes it with every individual citizen as a democratic function.

The Charity fund must be dispersed immediately as declared by the respective buyer and seller, else it will be transferred to that defined as default by local, state, and federal government. Each citizen may designate any individual or entity, other than themselves, to receive these funds. This can be children as an allowance, spouse, parent, friend, church or other religious institution, or even a foreign government. The charity fund replaces the so-called "deduction" of the old income tax with real money. The fund may not otherwise be legally pledged or encumbered, but is always at the option of each and every individual citizen. It also cannot be "saved." It must be given away to anyone, other than the fund's owner, that the fund owner chooses. Normally, it is envisioned that any citizen may declare (to their bank, credit/debit card or other transfer agent) what percent of their charity fund is to go to whom. The money transferred from a charity fund is transferred tax free (no charge to the donor).

Ayn Rand, Adam Smith and Charity
It has been argued that charity cannot be mandatory. This is typified by Ayn Rand's argument that each individual's selfish pursuit of their individual freedoms protects those freedoms for all individuals. Furthermore, she argued that you can't be forced to practice "good" behavior and still have freedom or even be "good" because the latter must be a free, non-mandatory option; truly free individuals should have the right to practice "bad" behavior as well. Anytime you are mandated to give money away, she argued, you are forced to do something. She argued that it should be therefore be entirely optional, not mandatory. Of necessity, this argument correctly assumed that an individual had no right nor responsibility to allocate commonwealth resources. But it does not follow that such a distributed government cannot or should not be established. The ClampIt amendment does exactly that. It is not directly at issue with Rand's admonition in that it establishes each and every citizen as a fiduciary agent of their portion that collectively comprises one fifth or more of the total tax revenue of all government. In Rand's time, the individual had no right to make laws, only to follow them. The ClampIt Charity fund permits, in a limited fashion, an individual citizen to implicitly make laws and conditions because it entrusts a portion of tax money to each and every individual citizen to allocate such funds to those entities as the citizen sees fit. Not only is this derived from the transactional base of the each citizen, but it also includes those funds assigned national distribution (fees, fines and extraordinary windfalls received by the government beyond that funded by the 1USATax cannot be retained by government). This goes beyond Adam Smith's philosophy of rational self interest (which only governs private funds) in that it establishes each citizen as a fiduciary agent for a rational component of commonwealth funds.

Who else can best truly be entrusted to distribute these funds? Where should they go? Well, if we ignore for the time being the allocation of funds for Charity that result from what each citizen receives as result of their own commerce and concentrate instead only on those funds that our government collects that are in excess of that allocated to it from the ClampIt fundamental ratios, we can see why this is so. It is because under ClampIt we still permit the government to fine people and to impose fees or even to sell assets. But if we allow the government to spend the money, we have no rational budget control because any tax limit imposed by the ClampIt amendment would then have a loophole: government fees could be imposed to augment taxes and that would increase the ratio of government financing.

ClampIt establishes that the 1USATax is the sole source of financing for all government. Thus, unless we leave the allocation of these funds directly to the people, we have no choice but to leave it up to government or some select group controlled by government, i. .e, we put the fox in charge of the chickens. Thus, this is partially the reason for the Charity account, i. e., to limit the growth of the ratio of government to the free economy through the pursuit of fines and fees as a way around the limitation of taxes by requiring that the allocation of any such funds be democratically done by all citizens.

But it is also not the only reason. The Charity account recognizes that disasters occur and prudence dictates that they be anticipated by a budget. The American people are thus the best to do this function and their vigilance is essential to see that it is done properly and be reasonably free from corruption. Foreign aid, relief to natural disasters, all can be done from government charity or individual citizen funds, but it then becomes a budget item with accountability to the democracy. Governments, charities and schools are subject to the same tax as any other citizen if they sell any product or service. So if a car dealer sells a car to the federal government, department of defense, or a bishop, he pays same tax as if he sold it to any other citizen; likewise, if a government sells any product/service, they are assessed the same rate of tax for the same product/service as anyone else. Charities are thus determined by what they do, not who they are. There is no further IRS designations for charities.

The Charity fund provides a rational, budgeted cash stream that can only be directed, not encumbered by law. Each citizen has such a fund always has the right to redirect it at any time. Its sole restriction is that it cannot be given to the owner of the fund.

In the constitutional establishment of the Charity fund, every individual citizen is given a fiduciary government responsibility to distribute one fifth of tax funds to those things he or she feels are the most worthy. As with any other government official, each citizen is constrained that this money cannot be given to themselves, i. e., the individual responsible for the distribution. As with all other government funds of ClampIt, these funds cannot be legally encumbered and remain the sole discretion of the individual entrusted to them. Thus, the individual can only declare where the fund goes, which can be any entity the individual sees fit, provided that the individual, like any other government official, does not give it to his or her self.

Cash
Cash is taxed at ten percent when withdrawn (from any transfer agent such as a bank, etc.) on the pretense that it can be spent for anything. Because of the loss of Charity and Health/Social Security credits, it is undesirable for a buyer to use cash to purchase any major product/services unless they wish to remain anonymous. Further, only record transfers can be used to purchase and get title for most major purchases such as automobiles, major appliances, securities and real estate and for transportation tickets such as airline or rental car. These provisions are made to encourage voluntary compliance with the 1USATax policy.

Lotteries
Under ClampIt, no government may constrain competition by law to enhance collection of its own special fees because only the 1USATax may be used to finance any government function. Thus, if a state chooses to allow lotteries the only way they can obtain any revenues is to allow it by private competition, and therefore make it subject to 1USATax.

As any rational person can see, ClampIt needs no law for or against lotteries to ensure that blue laws are not exploited hypocritically. One can't rely on the revenue from sin to do good. Financing colleges with lotteries is folly, highly regressive, and robs from the ignorant to support the elite. It is akin to taxing prostitution to further a girl scout troop. Local and state governments are still free to determine whether the sale of an item within its jurisdiction (such as gambling) is permitted, but if it is permitted the rate of taxation is nationally fixed. This gets the government out of the sin business.

State of the Art Implementation
Banks largely deal with wholesale transactions and point of sale terminals (cash registers) deal with most single customer, multiple product elements. There are some notable exceptions, which include individual purchases of big ticket items (automobile, real estate, etc.) and recurring taxes and licenses, education and tuition, health and medical, insurance, utilities, professional fees. Insurance and credit card companies are generally private bills.

The trend is to make payments on line, including those for taxes and licenses. Banks are preferred to credit card companies for central clearing, though credit cards are preferred to banks for multiple product retail purchases and, increasingly, for food. The problem is not whether or not complex schemes can be tracked or effected by computer, but whether or not political checks and balances can prevent the steady increase in monopoly power that might ensue.

Credit card companies have certainly adapted to on line purchase and either record all information necessary for the most complex title transfer, or could easily be modified to do so. Software purchases are now done on line with a download rather than a brick and mortar store visit. Increasingly, intellectual professional services are done on line. The objective of the 1USATax is to accomplish a tax scheme that is effected as simply as possible, particularly as to enforcement of title and payment, yet provide an effective limit on government and monopoly size.

Like the recent flap over the FCC sellout of public airways, before you can enforce a cap you have to have some means to easily measure it. To control government size, we must control how much money it gets.

Optimized Tax Rate
If we first assume that there exists an optimum size of government and, secondly, that it can be defined as a percent of free economic society, then we then have to have a handle on how to measure it.

Right now, the most representative measurement of the total economy is the Gross National Product (GNP). GDP (Gross Domestic Product) excludes imports. GNP, therefore, is a better indicator of roughly all that is bought or sold. This is a pretty good indicator of our government's task to secure private property (goods and services) as valued by its citizens. The magnitude of the government task is the size of the GNP.

Without being too crass, every right we have can be expressed in money. Whether or not individuals have more or less freedom can be thus expressed as the ratio of government expenditure of money versus private expenditures of money. Right now, the U. S. is 60 percent free (40% of our money is retained and spent by our government). If one uses this same yardstick, you can easily see the difference in the former Soviet Union, which was only 3% free. This is not a perfect yardstick, but it beats subjectivity. In 1900, the U. S. was 98% free. A lot of us would think some things were better in 1900; we would likely agree that some things were worse.

It is important to realize that these numbers (all sales that make up the GNP) are already recorded and the transacting parties are already known.

Ownership does not, in itself, produce anything. It is only when a product is sold as a result of ownership (rent, mining, agriculture, intellectual property development, power, cars, food, services, etc.) that any production value can be fairly quantified. History has shown that any management task is directly related to the price of the sale. That is not to say that the size of the management task or cost of the management task is the same for all products. But, within a particular product family, the ratio of management to product value is relatively constant and it generally falls within certain bounds. As to the value of anything, we all would agree that this is best defined by the free enterprise system, "what you can get for it," or, as the IRS prefers "the value determined by a willing buyer and a willing seller." The chief charge of government is to enforce title (ownership) and value exchanged (sales) between its citizens. If we chose the most effective means to compensate results, we would put our government "on commission," raising that commission when we wanted more sales of something and lowering when we didn't think they had too much to do with it. Just like we would do in private enterprise, we would negotiate to set the commission rates. That is not what is being done now. Now, the commission is set solely by the government.

We would have a real problem with a real estate broker that over several years increased his average commission from 1- 2% to 40-46%, but that is what has happened to us with our government. It shouldn't surprise us, because that's what always happens when you let someone fill out their own report card or put the fox in charge of the chickens. Even if the real estate broker sent birthday presents to our children, it would stick in our craw.

Now if we restricted real estate broker's to an average of 5% and no more than 10%, they would not be alarmed - they can still make a good living. We don't have to, because real estate brokers are competitive and, if you charge too high of a commission, the market will just go somewhere else and make a better deal. We don't have that luxury with government because it is a monopoly and we can't go anywhere else. Worse, we have three agents (state, federal and local) and each of them sets their own commission. So, like all cost-based pricing, their size of the pie constantly increases. We need a limit and that limit needs to constrain government size to a percent of the economy not only for our own good, but even for the good of those that work in government. We know that too much control (46%) stifles the economy and that too little common ownership and common defense (2% or so) likewise imperils us and restricts our free mobility.

The 1USATax seeks to reduce government down to no more than 10% commission on any one sale and an average of 5%, just like a real estate or stock market broker. Immediately, this may raise some eyebrows that it may be inadequate. What the devil, you might say, sales tax is already more than that. How would it be possible to set it that low? The reason is because government exacts this commission on everything that is sold any time and anywhere it is sold and it is therefore compounded, if it is exacted at all levels. This will reduce government size to around 20-25% with an average 5% commission. This may still be too high, but it is a terrific step in the right direction and represents the best conservative thinking, which has historically shown that our best standard of living is achieved when the size of government is around 20-23% of our economy.

Government usually gets money in two ways: either taxes or fees. (We'll leave out for now contributions, criminal fines, and printing money but will revisit it later). It is not enough to control the rate of a single tax (like income or sales as others have attempted reform), since doing so simply results in other taxes and more fees.

Pulling the big hog (the Federal government) from the feed trough will not save any grain, because the other hogs (state and local governments) will quickly take his place.

Right now, the IRS income tax code is over 110,000 pages and it is just the tip of a gigantic iceberg that chills our economy. There are over 78,000 other jurisdictions (state and local) that have even more taxes and even more pages of rules. This lack of system if out of control. It has grown steadily since 1900 from 1% of our economy to over 35 to 46% today. It is essential that the aggregate amount of tax be limited. Although it is possible to impose an aggregate limit on taxes and still leave the quagmire alone (like some central registry scheme), the practical result would be that the biggest (federal) soaking up all the money and leaving the smallest (local government) with the dregs. Worse, it would still leave the fox (the government) looking after the chickens.

What Should Our Government be Paid?
Our decimal system is scientifically sound because it is based on a counting system of two hands of five fingers each. This has much more than tradition and history going for it and for a lot longer than does the certainty of death and taxes. Now, despite the large population we have in the world, all each have ten fingers, which is something we can count on. When a free deal is struck, the parties shake hands. One hand belongs to a buyer; the other, a seller. The buyer agrees to pay a given amount of money; the seller agrees to transfer title of a given product or service. Ten fingers are involved, five belonging to the buyer and five to the seller. The government's role is to ensure that each gets what they bargained for and to enforce the transaction.

Now what should the government be paid? Well, that's darn hard to figure, but it sure as the devil shouldn't be over 40 percent (which is what it is now). The 1USATax scheme says about 5%, but no more than 10%, for any one transaction. That's because we only have five fingers on one hand and only two hands were shaking when the deal was made. As weak as this may sound, I submit it is a better reason that all of its opposition.

But the government says its providing a lot more services to each of the parties than simply guaranteeing the buyer will pay and the seller will deliver. It is forcing the buyer and the seller to plan for retirement. It is building and maintaining roads. It is ensuring diversity in education. It is funding basic research (that rarely produces anything, but spends most of the money). It is building monuments and museums and parks. It is building and operating schools. It is funding art and culture. It is building airports. It is building nuclear bombs. It is protecting the environment. It is still thinking about what else it is going to do and how much it will cost and how it can get from you what it hasn't done yet.

Now imagine you went to buy a car and you had a bunch of options, including a tacky vinyl cover on the roof. You didn't want it, but that was the only way you could get it. The salesperson said it was a valuable option, but you felt it was a negative. The auto maker's bundle (putting the options together in an all-or-nothing package) forces you to buy it. Some people think it's cool; most people think it's not. Now some nitwit product manager will no doubt track that the vinyl option is selling well, an wrongly conclude that vinyl roofs are demanded by the public.

The same is true with government. Ever hear the trite platitude from bureaucrats “…the demand for government services?” Sure you have! It has the same validity as our nitwit product manager on the vinyl roof: Both misinterpret an effect of their own making to be a real selection from a free market.

Right now, bureaucrats feel that government should be paid on whatever it is asked to do and whatever it costs government to do it. They feel it should be a fuzzy number, sort of like their salary limit. One of these, the Congressional Budget Office (CBO), is an Enron-like watchdog that periodically declares whether or not the target is properly drawn around the arrow shot.

Government size needs to be rational. It needs to be a sensible ratio.

What is this sensible ratio? Well, any ratio is simply one whole number divided by another whole number (not zero). For the ratio to be rational (mathematics tells us), both the numerator and the denominator must be rational, which simply means it is capable of being precisely expressed.

The people should control the overall ratio because history has shown that governments cannot be trusted to determine or enforce how big they should be. They never come up with a solution that is smaller than they last were. History has shown that all governments will always make their share of the pie larger; heretofore, only revolutions make them smaller.

Reasonable people will agree that every member of society should pay for the common things that must be provided for their self-sufficiency. No grasshopper should live off the toil of the ant. So certainly everyone should set aside funds to provide for their own health care and retirement. We should finance education of our young. We should build roads to lower the cost of transport and increase our mobility. We should provide for our common defense. We even could agree that it would be nice if we were always charitable.

So take your five fingers, involved in that handshake, and set aside these fiscal functions. Give the Federal government one fifth of the tax. Set aside one fifth of the tax for your Individual health and social security. Give your State one fifth of the tax. Promise that your will give one fifth of the tax to Charity (anyone but yourself). Finally, Give a fifth to your Local government.

One fund for each finger, five fingers for the hand of the buyer and five fingers for the hand of the seller. Accountants and the National Financial and Accounting Standards Board can take solace that these funds (Federal, Individual, State, Charity and Local) have an acronym of FISCAL, which is dear to their hearts.

The scientific reason these ratios are chosen is because we all have five fingers, which is a much more defensible reason than that given by any rear-view-mirror economist or Congressional Budget Office for it to be different. The government can certainly make exception for the unfortunate that Fate has left them with fewer than five fingers, but only to the extent that it is compelled to collect more from those that have more than five. Now this sets the ratio of how much of any tax imposed each fund (treasury) will get.

We had the wisdom and foresight to base our monetary system on ten fingers rather than use the historical insight of sixpence and pounds of Britain. None of us had a sixpence, but we all had ten fingers. It must be simple for the public, not accountants (who are smart) or legislators (who are mostly lawyers).

It has the advantage that it does not have to have 78,000 taxing authorities, God knows how many pages of rules, and an infinite amount that each of the authority can tax and an infinite way that each authorities can define the rules it sets, and exactly who gets what from whom. It has the further advantage that it avoids going through one fund to get to another and it enables us to set an aggregate limit that does not give priority of one fund over another. The local finger isn't attached to the thumb.

Now lets agree on one other thing. We don't need any history to determine the value of any sale. We don't need to know what the seller paid for it. We don't need to know how old it is. We don't need to tell how much inventory the buyer or the seller has. We don't need to know if the seller is making money or losing money. We just need to record the event, which we know they both already know and have agreed to be so, else there could be no sale. Thus we don't need to "file" anything, add it up, divide it by our shoe size, and regurgitate it later. We can put the income tax filing to death.

Why no tax on ownership
Now then, we can turn our attention on another government intrusion and that is on recurring tax on ownership. At first, it sounds logical and fair:


 * Your local government has to provide fire and police protection;
 * your house and business needs police and fire protection;
 * the cost to the government is on the amount of houses and businesses it must protect;

So what could be fairer than just coming up with a recurring tax on the value of your property to support these functions?

The reasons this is wrong is because we all know it is wrong regardless of the arguments that seem to be so logical based on history. A few of them:


 * 1) The "value" always increases due to inflation.
 * 2) If we clamp the transaction tax, the pigs will head for the sacred trough of recurring property tax.
 * 3) So rather than let a tax break go through (like the current events), they'll hike their fees and property taxes.
 * 4) Senior citizens will be taxed (appraised) out of their homes. When the property tax is hiked, a lot of people don't have any money to pay for it. All of the reasons given by Proposition 13 adopted in California certainly apply.
 * 5) It is bad for long term financing because the tax is uncertain (you have to sign a blank check escrow fund).
 * 6) Since it can be changed, it allows the government to borrow against future property tax hikes and live beyond its means on debt. The argument that basing the tax on property that is not being sold (instead, using an "appraised" value).
 * 7) It is flawed because it assumes government needs the tax base assurance even if the local economy is dead. If there are no sales, no food purchased, no goods produced, no health care given, no power consumed, no meals eaten, no funerals, no agricultural sales, no manufacturing sales, no new home constructions and no salaries paid, what do we need a local government for and how does the local community survive?
 * 8) Even if the above awful scene above could be envisioned, even old school Keynesian economists would say the last thing that the government should be done is to raise taxes.

Thus, the biggest reason that it should not be done is it is totally unnecessary. Instead, tax is collected when the sale is made just like any other sale. Since it is small, nationally uniform, and the buyer always has the money, it eliminates the necessity to have recurring property tax at all. The local government's share of revenue (formerly restricted to only property taxes) is been expanded to their total economy and their share of that revenue is assured. Thus, again, we can eliminate the wasteful practice of artificially appraising something that is not intended to be sold and the rest of the senseless activity that follows paranoid's first assumption: that the economy can die and only property values remain.

If such were the case, any property would be worthless. The same is true for automobiles, inventories and other "tax base" arguments. People don't need cars if they have no businesses, no sales and no jobs. There is no elasticity in recurring property taxes if there is not a healthy and vibrant transaction economy. So we can put an end to recurring property taxation and simply say "There is no tax on ownership; only change of ownership."

Local governments and their accountants put their head in the sand and call themselves "tough" as the endure others suffering. It is sheer nonsense.

Abolishment of the Income Tax
Now we can turn to the income tax. In 1913, it seemed like a good idea because there were a lot of monopolies that escaped any taxation and there was no federal sales tax. A lot of people were pretty well fed up with railroad, big oil, and other monopolies and knew they were artificially controlling the free market.

Government preference for big monopolies was so corrupt that it even prompted Mark Twain to joke about the futility of suing a railroad that "... no judge would be so treacherous as to rule against a railroad."

So the federal government instituted a 1% income tax on the richest 1% as a cure. This was not a demand of consumers and labor, it was a kiss your sister concession calculated to take the pressure off of a small core of elite wealth.

It didn't cure anything, until the Taft-Hartley Act (1946) and Sherman Act finally put some teeth in controlling monopolies. But a steadily bribed Congress and compromised judicial has resulted in complete dilution of monopoly control. Because of tax concessions and lazy government preferring to deal with fewer rather than many, we have steadily increased the presence of monopolies. These monopolies have now hit on the idea of nationalizing losses and privatizing profits in the new bailout era (or error, if you prefer).

This is facilitated by the federal income tax which hides these activities from the public.

The income tax does not tax wealth. It taxes change of wealth. And we made a mistake when we didn't heed one lone representative who suggested that a cap be put on the income tax way back when it was adopted in 1913. He was guffawed, because no legislator could even dream that the tax bite would increase to even 3%, not to mention the 36% that it is today.

There is no such thing as a simple income tax, because determining what one's income is not simple. It requires that you maintain a history. You can't tell what your income is unless you know the value of sales made, the purchases and expenses and other costs in doing so, and what portion belongs in what year, i.e., (depreciation and inventory schedules) and it is ripe with abuses. What is "income" for a corporation is not what "income" is for an individual because the allowed expenses are different. The yardstick is mostly a secret.

The progressive income tax makes sure that the poor cannot suddenly become rich and that the rich cannot suddenly become poor. As usual, spin doctors proffered rationales that sounded good: Those that get the most from the system should pay the most; government is a partner in profitability and the more profitable it makes you, the bigger share it gets; if you lose money, you shouldn't be taxed, etc., etc. Meanwhile, the real architects (the elite wealthy) pretended to oppose it. So we got the sixteenth amendment (the income tax) right along with the federal reserve (the banker's bank that prints money), both in 1913. Neither prevented 1929, yet a lot of people confuse the "Federal Reserve" with the "FDIC" (the deposit insurance instituted as a fix).

Republican Candidate Ron Paul predicted the current Federal Reserve debacle in an interview following a Republican presidential debate and was rebuked as being some kind of nut by ABC newsman and former Clinton staffer George Stephanopoulos.

The income tax of 1913 was corrupt. It was corrupt then, but is so corrupt now that it is not any kind of babe in dirty wash water; it is a maggot-infested troll in a cesspool. One hundred ten thousand pages of special indulgences now abound so as to make the Constitution's guarantee of "equal protection under the law" a joke. Unnatural cooking of the revenue books conjured up over the past 80 years have the biggest corporations now paying less than 5% tax on gross revenues and school teachers, truck drivers and laborers paying close to 45%. That's because we have transaction taxes for the latter categories and exemption certificates for the former. It is the very system that has an investment banker paying no transaction tax on buying out a textile plant for $35,000,000, disassembling it and selling the capital equipment overseas and a housewife paying more tax on a gallon of milk. The $69 billion takeover of BellSouth by AT&T was (harrumph) not a taxable event. It needs to be chucked, with the admonition that anyone that will steal for you, will steal from you. A simple, uniform, national transaction tax on sales of five percent would produce the same amount of money that the current corporate 36% "income" tax rate does now. (Try it yourself: Take any Fortune 500 company and divide its gross revenues into its "reserve for taxes.” then do the same for a truck driver or school teacher.)

It is important not to make the same mistake twice. Tax reform proposed by either the government, academia or the rich should be viewed with a jaundiced eye. If the pigs don't squeal, it's a steal.

ClampIt Doesn't Soak the Rich - It Protects the Poor
ClampIt does this and it makes sure it won't happen again because it doesn't soak the rich; it protects the poor. This is done by limiting tax on labor, not hiking tax on capital. Hiking taxes beyond an optimum level even reduces revenue to government.

The 1USATax imposes a simple test that requires at least three parties to any sale: Currently, the arrangement of credit card companies between selling merchants and card holders is very nearly the mechanism proposed for the 1USA tax in that a fee is negotiated with each merchant (based on a variety of factors) that is transparent to the buyer, but deducted from the seller's proceeds. This has naturally evolved in the free market because it is much simpler to charge the buyer and leave the price of the merchandise purchased alone. This fee is uniform for the entire amount of purchase.
 * 1) a seller, whose product/service is subject to the 1USATax based on its classification,
 * 2) a buyer, whose interest is to get the product and pay the money, but wants title and guarantee, and
 * 3) at least one or more neutral Transfer Agent(s) that is known and trusted by the buyer and seller and is subject to stringent regulation, audit, and responsible for the accounting of the event.

For example, if you purchase $175.36 worth of groceries on (say) a VISA or Master Charge credit card, the aggregate transaction is recorded as one line item (one sale event) on your credit card account. The issuing card company has negotiated a fee with the merchant to get a percent of the purchase for their services. This fee is variable, but the buyer is not exposed to the variability of this fee. It is deducted from the selling price they have charged you. When you pay your bill to the credit card company, they deduct their fee from the proceeds to the grocery store. As far as you are concerned, there is no fee exacted by the credit card company from the merchant; it is not disclosed. In the case of a debit card, this is the only revenue the card company makes (they have no interest for credit extension to the card holder). This is the identical mechanism of ClampIt and the 1USATax.

The Transfer Agent (credit card company of bank) is selected by the buyer and seller and is a private company, subject to competition. The Transfer Agent knows the merchant and knows the buyer, including their address and telephone number. They also know the amount of the purchase, its description, its quantity and the total amount authorized. The only thing unknown that has to be added is the 1USATax rate to compute any tax due. One line item is required for each different tax rate, so a maximum of eleven line items can occur for any one transaction event. The ratio that each fund receives, for the buyer and seller, is exactly one tenth of the amount. Experience has shown us that there is advantage in using the decimal system.

In the grocery example, you have an itemized list that is "daisy chained" by reference to the credit card with a transaction number and you can prove you made the purchase and the grocery store can likewise prove they made the sale. The grocery store could have issued its own credit card, but it could not be used for your other purchases and is not as convenient to you. Most people have more than one credit card (because its not good to put all your eggs in one basket) and also because of aggressive competition between card companies to secure the business.

Note with the credit card, your accounting is done by the card company. It's already in "machine readable" form, so it is quite easy to use the information for a variety of purposes.

A similar arrangement exists (though not nearly as widespread) between industrial and commercial wholesalers known as Electronic Data Interchange (EDI), whereby multi-line item purchases are effected electronically between major manufacturing and commercial companies. Although this system works, it is very crude as compared to the credit card arrangement which has had the benefit of orders of magnitude of refinement. EDI lacks neutral third party financial authentication, but it could be easily added. Though EDI needs a thorough overhaul, it could be easily adapted to carry the 1USA tax. However, it is in the author's opinion that a clean sheet of paper would be a better solution.

A fast growing rival to credit card payment is online bank draft which is mostly used by governments and government utilities as an alternative to paying credit card merchant fees. This has the disadvantage that the payee loses any consistent accounting control, doesn't have parity checking, etc., but with a variety of software accounting packages (Quicken, Peachtree, etc) this could be patched fairly easily.

Necessaries such as food will be most likely taxed at a low rate, so most people will prefer to purchase a "recording debit card" from various sources that records transactions. Grocery stores, however, like to include high margin items (like beer, wine and tobacco) and offer "one stop shopping" as an enhancement to sales and profit. Thus, in grocery stores, it is likely that the tax rate would be different (as it is now) for items that could be purchased. Under the 1USATax, the total possibilities are 11 (0 to 10 percent), which is far less than the point of sale terminals now accommodate (78,000 local tax structures). Of the range of possibilities, it is likely that only 3 or 4 tax percentages would occur on any one purchase event, thus a 3 or 4 line item credit card transaction could be made (one for each tax rate).

Another possibility is to permit the retailer to be a transfer agent (subject to audit) as they are now for retail sales tax and simply permit the bill to be aggregated as a single line item, but with some fractional tax amount (as it is now, but hidden). The 1USATax does not prevent a store from taking this tack, but it does not compel it either. Indeed, there may be advantage to forcing a separate transaction for certain restricted sale products (alcohol, tobacco and prescription drugs, or other items that may be hazardous). Certain titled and major purchases by law can only be sold via record transaction. This includes stocks, bonds, other securities, real estate, vehicles and the like. Since a significant credit is received to the buyer and seller (40 percent of tax paid to named charities or individual fund), "gray market" cash purchases are discouraged.

Using the Internet and RFID tags would make all of this a snap and an accounting package for transfer agent has been developed (GNU public license) that will provide at least one method to implement. However, accounting packages could be easily converted to conform.

The IRS would no longer audit citizens (except those who elect to be Transfer Agents, which are continuously audited by batch balance). There would be no "filing" of taxes or periodic payments of recurring tax for property acquired after the amendment is put in force.

Most citizens will see an immediate rise in after tax income and a reduction in price, particularly necessaries such as food and the like. International goods (since they are now subsidized) would lose this subsidy, and therefore would have prices on imports rise somewhat.

Government will transfer give away projects from operating budget, prime debt to the option of the public's charity fund. Such things as foreign aid and welfare will be on a budget and very responsive to need.

Provision has been made within the ClampIt amendment to extend this tax system by treaty, but it is specifically prohibits any dilution of the ClampIt amendment. Thus, it would be likely that Canada and other like nations will reciprocate the 50/50 share of tax. Thus, it is extensible. A purchase of a product from Edmonton, Alberta, Canada over the Internet by someone in Charleston, South Carolina USA could result in 50% of the tax going to the accounts of each government. The same could be true for New Zealand or Singapore. The treaty negotiation would therefore insist that the same benefits are extended to international trading partners and citizens; failing agreement, the ClampIt amendment exacts the same tax at port of entry, then takes the International source and assigns it to the national charity fund to be given away as the United States citizens see fit. This prevents an advantage of lower price due to lower tax load on domestic sales, yet gives no incentive for government not to extend the benefits to trading partners.

Perhaps the greatest benefit is that it puts the citizens back into control of their government and brings us to a new era of extending our way of doing things that others can appreciate.