Transaction Tax: Has its time come?

Remember the "Transaction Tax?" It's an idea which originated in McCook in the early 1990s, and eventually gained legislative consideration in a bill introduced by State Sen. "Cap" Dierks.

What the plan proposed was that all transactions -- no matter how large or small -- be subject to a very small "transaction tax." Under the purest form of the plan, there would be no exceptions or exemptions. Every time you made a transaction -- buying a house, picking up a prescription, making a deposit, receiving interest or anything else -- you would pay a tiny percentage in tax.

But, because every transaction would be taxed, a tremendous amount of money would be generated, and income and property taxes could be reduced significantly, if not eliminated entirely.

Promoters of the plan -- including Jack Lytle and Don Klein of McCook -- liked the fairness of the transaction tax method. Everyone who bought, sold or invested anything would pay a tiny tax. But that would be that. Buyers of homes or farms, for example, wouldn't have to keep paying property taxes year after year. Transaction taxes would be calculated at a sufficient level to fund local and state government.

While many saw the merit of the transaction tax plan, it never went anywhere. Sen. Dierks' bill was killed in committee, and no further attempts were made to push the bill through the legislature. Kim Robak, who was Nebraska's lieutenant governor at the time, told Klein, "It's a workable plan, but it's not going to happen. Your plan is star years ahead of its time."

Why bring this all up again? Because no less an authority than Alan Greenspan, the Federal Reserve chairman, is suggesting a similar plan to spur greater economic growth in the United States. Speaking Thursday to the President's Advisory Panel on Federal Tax Reform, Greenspan put forward the idea of "some form of consumption tax, such as a national sales tax."

The thrust of his suggestion is that the U.S. government's emphasis would be on taxing spending rather than income. It's worthy of study, just as was the Transaction Tax idea which surfaced in McCook 15 years ago.

Certainly, changing taxing methods will be tough to do. But -- a tiny tax on spending, evenly applied -- would be a lot better than having exorbitant taxes on property and income as we do now.