A tax credit is self-funding when the concomitant economic activity (generated by the tax credit) results in tax revenue which exceeds the tax credit.
How:
Use the tax credit in a way that increases the money supply.
Now the velocity of money takes over.
Federal tax revenue is approximately 18% of GDP.
GDP = money supply multiplied by the velocity of money.
Every dollar increase in the money supply is multiplied by the velocity of money.
Velocity of M1 is 5.74 (variable by time of year).
18.1% of 5.74 = 1.03
Federal income tax, state sales tax, state income tax (in some cases)
Use this method to transition to clean energy.
Use to create tuition free education.
Look at Solar.
1. Because the ITC gets invested in an equity REIT,
2. Collect tax revenue from the increased economic activity.
What is ‘M1’
M1 is a metric for the money supply of a country and includes physical money — both paper and coin — as well as checking accounts, demand deposits and negotiable order of withdrawal (NOW) accounts. The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be converted to cash quickly. “Near money” and “near, near money,” which fall under M2 and M3, cannot be converted to currency as quickly.
BREAKING DOWN ‘M1’
Using M1 as the definition of a country’s money supply references money as a medium of exchange, with demand deposits and checking accounts the most commonly used exchange mediums following the development of debit cards and ATMs. Of all of the components of the money supply, M1 is defined the most narrowly. It doesn’t include financial assets like savings accounts. It is the money supply metric most frequently utilized by economists to reference how much money is in circulation in a country.
Free college
The self-funding tax credit.
A company funds a student. The company gets a tax credit.
The tax credit is monetized.
Funds are donated.
The funds are used to buy shares in a private equity firm which buys a business, which employs students.
The private equity firm would use leverage of 2:1.
Borrowing, increase in the money supply, money created is on the ‘Eduction Standard’.
Tax revenue generated would fully offset the cost of the tax credit.