24 Nov 2012

The Universal Exchange Tax

My thanks to Susy for pointing me to a webpage devoted to what the authors call a Universal Exchange Tax.

It's pretty much the same sort of idea that I have been pushing since publishing my first paper on the subject in October 2010, the idea that was (I believe) originally proposed by Prof Edgar Feige, and which is refered to on another webpage as the Automated Payment Tax. It's also related to Andrew VanHook's website called "The Tran$action Tax".

But all I can say is - the more websites there are the better! These ideas desperately need to be aired in public. And yet, as far as I am aware, the idea has never yet been discussed in the major media.

It's not obvious who is behind the Universal Exchange Tax site, and it seems to be "Under Construction". There are other bits to it that can be accessed from the web, such as a some links to facts and figures,  but it appears to be based in the US because it gives some interesting information about the scale of transactions in the USA. My own numbers are based on the figures provided by the Bank for International Settlements. If you take their numbers for 2011, you find that the total reaches very nearly $3 quadrillion.

But the Universal Exchange Tax site comes up with an even bigger number - $4 quadrillion. To reach that number, they note that that  

The Depository Trust and Clearing Corporation, the largest financial clearinghouse in the US, processed nearly $1.66 quadrillion in transactions for its clients in 2010.

CHIPS, The Clearing House, another processor of financial activity, settled over $365 trillion in 2010,

Fedwire, owned by the Federal Reserve Banks, in 2010 processed over $608 trillion in funds and over $320 trillion in securities.

That's roughly $3 quadrillion dollars in transactions cleared by only three processors. Factoring in all the other clearinghouses, banks, credit unions, credit card companies, etc, that handle the day to day business of America, it is apparent total financial activity in the US is easily in excess of four quadrillion dollars. 

Actually, if you go to the sources that they provide, you can get an update on the numbers. 
For example, the CHIPS link allows you to download a pdf file where you can  learn that they handled $403.3 trillion in 2011, and that so far in 2012, they have handled a fruther $306.4 trillion.  Very conveniently, they even provide the total value of transactions handled since the system was initiated in 1970 - it's $8,714,727,654,733,000 - let's call it $8.7 quadrillion  to keep things simple. Oh, and their best year was in 2008 when they managed to process $508.8 trillion. Not bad - but of course 2008 was an exceptional year for the financial sector.
Likewise, if you follow the Fedwire links, you discover that the total value of fund transfers in 2011 was $663.8 trillion - up an impressive 9.1% on 2011. But 2011 was apparently not a good year for securities with a mere $291.8 trillion - down 8.8% on 2010, and way below the bumper year in 2008 when they handled a record $419.3 trillion.

Nevertheless, it really does look like there is a simple way for the US government to get rid of the national debt, while at the same time scrapping the ridiculous US tax code, which now runs to over 77,000 pages : just introduce a simple, automatic, painless and totally fair transaction tax on all financial transactions. I don't mind whether it gets called a Financial Transaction Tax, an Automated Payment Tax or a Universal Exchange Tax. The important thing is to do it.... 

1 comment:

  1. Tragically, I have just noted the Universal Exchange Tax website http://universalexchangetax.com/ has disappeared "Account Suspended". Maybe they got hit by the enemy??