Monday, May 26, 2014

Musings on a Future Payment System Job

I want to depart from my light hearted analysis of payment system structures and enter a world of pure whimsy. I am in a darkened room somewhere deep in the bowels of the NY Fed and performing a job I created myself; I am the tax tickler adjusting tax rates on subject transactions running through the combined value gross real time payment system. The system moves about 2.8  trillion dollars a day (whimsy alert 2.8 trillion represents money flowing through US gross real time payment systems (Fedwire, NYCH) and all non-cash payments (see 2013 Federal Reserve Payment Study  and data at )

At first most firms claimed the funds moving were tax exempt, but when it became overly burdensome to show how the funds met the definition of tax exempt and no reporting requirements at all if the funds were taxed, the target .07% tax became a bargain.  The added bonus of no income taxes, no payroll taxes, and no user fees for most industry made the concession that much more valuable.

I sit in front of a screens that present the current aggregate position of tax revenue and payment flow. I am reading a novel, sipping a glass of chardonnay, and completely ignoring the screen.  The video phone comes on and the director of the national weather service pops into the monitor. She tells me the hurricane off the gulf coast is a category 4 and expected to make land fall in 3 hours; her economist estimated a FEMA requirement of 2.5 billion dollars. I nod, close the phone window, pull up a menu, click FEMA, enter 2.5 when queried, and click the “apply” key. The monitor shows the tax per transaction increase .005 %, and the flow stayed pretty much the same.  I go back to reading my novel. Ahh, I think to myself, every day is holiday.

My imaginary screen:

Next Blog: The Regressive Move to the Europay, MasterCard, Visa, (EMV) Payment System

No comments:

Post a Comment