A PROPOSAL FOR THE ADOPTION OF A STAMP TAX: THE BOSTON TEA PARTY REVISITED An opening event of the American War of Independence was the Boston Tea Party -- a revolutionary act by Boston colonists in opposition to the imposition of the Townshend Act, a British tax on commodities which replaced the hated Stamp Tax required of all legal documents in the Colonies. Box taxes were intended to raise financing for England's defence of the colonies against incursions by the French and Indians. Perhaps if George III had had a bitter public relations man in the colonies to explain the legal and defense benefits of the original Stamp Tax, the Townshend Act would not have been adopted, and the American Revolution would not have taken place. Be this as it may, the concept of stamp taxes has never since been popular in the United States, though they continue to be used in Great Britain and a number of other reasonably enlightened countries. As of this writing, the American Congress is considering a number of "revenue enhancing measures" to try to comply with the budget balancing requirements of the Gramm-Rudman Bill. Among these are a series of national park and highway "user fees" and a tax on stock market transactions. One of the major problems faced by small businessmen in the United States is the prevalence of rubber checks. A friend, the owner of an independent car rental agency, went out of business when he found himself unable to secure the support of local law enforcement officials in the collection of bad checks. The police argues that they were simply too overextended to engage in such "minor" civil law enforcement if they were to be free to respond to major criminal acts. And he found that debt collection agencies have been so hedged about with federal court ruling that they are virtually powerless to collect even for those businessmen willing to assume this extra cost of doing business. A restaurant supply business was unable to declare a stockholder dividend one year because of uncollectible checks amounting to a quarter of a million dollars. Examples multiply. One of the peripheral benefits to British businessmen of their government's collecting a substantial proportion of its revenue through stamp taxes is that the presence of a Crown Stamp on a legal document, e.g. a check, a will, a deed, or a contract, makes it a Crown offense to forge or misuse such documents. It is thus a worthwhile quid pro quo for a businessman to pay the slight stamp charge in order to feel secure that any attempt to breach a contract, fiddle a will, or write a bad check will subject the offender to Crown sanction. There are far fewer forged documents, bad checks, or breached contracts in Britain than in the United States. Much of this, to be sure, is owing to the more homogenous citizenry of the United Kingdom and Britain's long history of being a law-abiding country. But there are institutional aspects of the system of British legal documents which should not be discounted. In the American Congress' search for "revenue enhancers", the time may have come to view the possibility of a stamp tax in this new light, abandoning our out dated post-Revolutionary mindset and looking at a pre-printed federal stamp on a check, as one example, as something akin to a "users fee" offering protection to the acceptor of the check while lowering his cost of doing business through reducing one business risk. Few businessmen would be reluctant to pay a dime fee on a check (or see banks impose such charges when issuing new check books to customers) were this to assure that bad checks were to be considered a federal offense, subject to remedy in the federal court system -- rather than a civil nuisance not worth the attention of local police. If a portion of the revenue raised were devoted to enlarging the federal court system, the results could be a) better law enforcement, b) lower costs of doing business and hence greater competitiveness for small businessmen, and c) increased revenues for the federal government at an extremely low administrative overhead. Among the criteria for considering adoption of a new tax is efficiency and cost of collection. Stamp taxes are virtually self-enforcing and thus among the cheapest to collect. Anyone wishing a document to have legal status in the event of controversy will be sure to see that it has been validated by the requisite stamp. And stamp sales could be effected through post offices, either by individual sale, sale in sheets, or through presetting stamp meters for use in business and legal offices. Monies collected could be transmitted directly to the Treasury, leaving the IRS entirely out of the circuit, thus minimizing collection costs. Shirt cuff calculation suggests that a ten cent per stamp tax on personal and business checks along would yield annual revenue of $20 billion. This would provide the funds Congress is presently seeking to close the Gramm-Rudman gap after other revenue enhancing measures under consideration and all acceptable cost-cutting measures have been adopted. If more money is needed, now or in the future, the stamp tax law could be extended to deed, wills, contracts, earnest money payments, sales receipts, court transcripts, and virtually all other legal documents, either on a one stamp per document, or one stamp per page basis. There are economists who would argue that in considering a major new form of taxation, a stamp tax would be a second best substitute for a Value Added Tax, which could raise substantially larger revenues, whose rebate under GATT rules would stimulate exports, and the existence of which would enable an important reduction of corporate and personal income taxes, simultaneously stimulating savings and investment and discouraging consumer over-spending -- among the country's major current problems. The two types of taxes confront different issues however, and have entirely different benefits and effects on the economy. Nor is there any reason why the two measures could not be adopted together. VAT can be presented and defended not as an additional tax, but as substitution of a more effective tax having important economic efficiency and export expansion aspects in return for a commensurate (or partial) reduction in personal and corporate income taxes; while a stamp tax offers important ancillary legal benefits to all users, as explained above. Its adoption could be defended as being part of a new initiative to finance expanded court operations, to assist small business, and to enhance law compliance.