Following is a list of links to several transaction related tax proposals in various stages of development:
Transaction Tax / User fee
This is a proposal for a transaction related tax by Paul Bottis who started working on his idea around 1992 and placed his idea on the internet after 2000-0226 when he registered the domain name for his website. The tax proposed is a very small tax of 0.1% on most transactions. The way this tax system is explained, it will not collect enough revenue to replace the taxes it aims to replace. The general premise for a transaction tax system is presented however and with proper modification can be developed into a functioning system
Automatic Payment Transaction Tax (APTtax)
This is a very informative website administered by William J. Hermann, M.D. with URL www.APTtax.com and it features an electronic transaction tax proposal by Dr. Edgar L. Feige, Professor of Economics Emeritus at the University of Wisconsin. Dr Feige published his initial paper in "Economic Policy" in 2000. The proposal is essentially for a tax rate of between 0.2% and 0.3% on each side (the paying and the receiving) of every money transfer. This amounts then to a total of between 0.4% and 0.6% of tax on any transaction of funds from one party to another.
There are no exceptions to the system and all transactions involving financial and speculative transactions in financial instruments such as bonds, foreign exchange, stocks and commodity speculation are subject to the tax. Professor Feige is aware that such a tax involving all of these financial speculative transactions will have a negative influence on the volume of underlying money transacted because of the increase in the cost of transaction for these financial trades.
Professor Feige expects the trading volume in these financial instruments to decline by no more than 50% and he has taken this into consideration in his calculations for the required APT tax rates whose revenue, he expects, will eventually replace all Federal, State and lower jurisdiction taxes. It is my layman opinion and actually absolute belief that these financial speculative transactions will disappear almost all-together overnight as soon as this APTtax of between 0.4% to 0.6% is applied to them.
The reason why the speculative financial markets would disappear overnight is because they operate their arbitrage trading on razor-sharp margins of fractions of percentage points often so small that they are expressed in hundreds and thousands of of a percent. Such trades will not be transacted with a transaction cost expessed in tenths of a percent because the transaction cost will be greater than the marginal profit.
These trades run often in the millions and even billions of dollars of face value in single trades and the profits per trade are in the tens of thousands and sometimes hundreds of thousands per single transaction. One billion dollars in international currency trading or international bond trading may make two turnaround trades within a single day if the margins of difference between European and American quotes are as little as one hundreds of one percent (0.01%). That will amount to a healthy $200,000 profit for the two trades with a transaction cost of little more than two clever traders at opposite sides of the Atlantic and an open phone line plus the transaction fees.
Thousands of these million and billion dollar trades are set up by clever people on opposite sides of phone lines sitting in front of computer monitors looking for the next arbitrage trade opportunity. In order to make a profitable arbitrage trade, the smaller the fractional percentage margin between the quotes, the larger the underlying dollar amount must be. One billion dollar round-turn trade twice a day would incur a $6,000,000 (six million dollar) APT tax. Such trades currently are transacted at "only" $200,000 profit. Those realities convince me that the entire trading in financial instruments will disappear completely or move to offshore places where the transaction tax does not apply.
Dr. Feige thinks that only 50% of those financial markets might disappear. I politely disagree. That is why I initially exclude financial transfer transactions completely from my AutomaticFlatTax. Professor Feige has the academic credentials and should be a good asset in the promotion of the best among all the transaction tax proposals. He has made several modifications to his proposal during the past years and all of these changes were for the better. The transition from the current taxation to APTtax is proposed to be done in several steps. In my opinion the transition has to be undertaken in smaller more gradual stages. With my AutomaticTax I propose a very gradual transition over a period of 20 years at an average rate of 0.25% increase per year to the eventual 5% tax rate proposed by me.
A proposal first published in 1988
Mr Bottis makes mention of another tax proposal by a Mr. John Newman in 1988 and that tax proposal is descibed in the Congressional Research Service Report 88-103 E. It can be found at http://www.taxmoney-notpeople.com/faq.html The Congressional Research Service Report is interesting because it gives some understanding and insight into the lack of knowledge the people have that write these reports to ostensibly help members of Congress understand the proposal. These people have already preconceived premises that they themselves deem important for a system of taxation. Their "research" report certainly is biased with fundamentally wrong premises that assume that a system of taxation should serve as a tool to implement certain social and political agendas. It can be safely assumed that much of the so called "research" done by the Congressional Research Service is done by students that are because of their age group still burdened with socialist idealism.
Electronic Funds Transfer Tax, by Mike Blackburn
This is in concept a brilliantly written and well described tax proposal by Mike Blackburn with great attention to detail.
The tax is based on deducting 1% of tax from every electronic money transfer and it is assumed that the 1% EFT-tax will be sufficient to cover the entire revenue needs of the Federal Government while eliminating all current forms of taxation at the Federal level.
Indeed the 1% deducted from all transfer payments would be quite sufficient to replace all current Federal taxes were it not for the fact that roughly 85% of current electronic money transfer transaction would disappear virtually overnight as soon as the 1% tax would be applied to them. The reason for this is that 85% of the money volume transacted electronically is for transactions that involve arbitrage trades in financial instruments such as bonds, stocks, currency trading and trades involving settlement of commodity trade related financial transactions.
All these financial transactions take place in a highly speculative arena with razor-sharp small trading margins that are often in the minutest fractions of percentage points. If 1% taxes would be deducted from these financial instrument fund transfers, then these financial trade related markets that account for 85% of electronic transfers would disappear overnight. This would reduce the tax base to the 15% remaining money transfer transactions that are not related to financial instrument trading.
To raise the same revenue from the remaining 15% money transfer volume the 1% tax rate would now have to be increased to 6.67% . I have personally made some calculations and concluded that 3.9% will be enough to create the total revenue requirement to cover the budget needs for all levels of government while property tax and several exise taxes included in the price of energy products (gasoline etc.) and utility bills (electric, gas, phone) remain. That would then constitute double taxation on these items since they are also subject to my AutomaticTax. Fact is that all taxation constitutes a form of multiple taxation because the price of any product or service contains a cost of anticipated taxes or taxes already paid by the seller or provider of the service.
Congressman Chaka Fattah of Pennsylvania has a transaction tax proposal of his own at http://www.house.gov/fattah/issues/FinalFattahFeeLegSeal.pdf . The proposal is not very well researched and it lacks in detail and proposed implementation.