Universal Exchange Tax

Universal Exchange Tax is a proposed method of taxation.
Universal Exchange Tax (UET) assesses a 0.1% tax on all documented transactions of value occurring within an economic arena. The potential tax base of UET is the totality of all documented economic activity of the subject economy, affording a low rate of taxation.
Unlike other methods of taxation such as Fair Tax, federal income tax, or Value Added Tax, UET does not differentiate between certain transactions as being taxable or not, therefore taxation is no longer subject to political machinations or concerns of constitutionality. Under a true implementation of UET, manipulation of the tax code is no longer possible.
Basis for UET lies in the common business practice of exacting a percentage of a transaction for facilitating said transaction. UTE is a low burden, predictable cost of doing business for any participant in an economy.
Possible financial advantages of UET are many. Infrastructure for implementation is already in place, in that virtually every transaction of value is currently documented and facilitated by an existing entity responsible for the execution of the transaction for the benefit of all associated parties. Assessment and remitting of UET occurs in real time, similar to credit card fees or sales commissions, wherein a percentage of a transaction is exacted for services rendered and credited to the proper account during processing of the transaction.
Some exchanges of value are not processed by financial clearinghouses. Titles, deeds, stocks, options, and other instruments of value are often transferred outside of the financial system, however, such transactions are documented and facilitated by responsible parties such as brokerage houses, tax collectors, and accounting firms, among others. Under UET, any documented transaction is liable for assessment.
Under UET, any need to adjust revenues for the taxing authority is a matter of changing the percentage rate. UET eliminates the need for a costly and reviled enforcement arm of the taxing authority while relieving the subject economy of the expenses associated with tax compliance and tax avoidance and tax evasion. Compliance is transparent, affordable, democratic, and automatic. Avoidance is difficult, unprofitable, and impolitic.
It is likely that transactions of value for obfuscation of ownership, or those that are speculative in nature, are negatively impacted by UET.
How UET Works
Proposed as a baseline or primary method of taxation for any economic arena whereby any and all documented exchanges of value associated with the subject economy contribute equally to the coffers of the taxing authority, UET assesses a very low rate of taxation on all exchanges of value within its subject economy. An economy such as the United States, with an estimated total economic activity between four and five quadrillion dollars , a UET rate of one tenth of one percent (0.1%) yields revenue between four and five trillion dollars.
Assessment and remittance of UET revenues is easily accomplished by the existing financial infrastructure. In 2009, a single financial clearinghouse, the Depository Trust and Clearing Corporation (DTCC), alone cleared $1.4 quadrillion in transactions Depository Trust & Clearing Corporation. At a UET rate of 0.1%, in 2009, DTCC would have remitted 1.4 trillion dollars in general revenue to the treasury of the United States.
UET also assesses non-financial transactions. Stock swaps, transfers of deeds and titles, options, and mergers are examples of documented transfers of value that may be processed by responsible parties other than financial clearing centers. As part of the documentation of these types of exchanges, it is incumbent upon the responsible party to assess, collect, and remit to the taxing authority the requisite amount of revenue.
UET vs other proposed methods of taxation
Being a tax on transfers of value, UET shares some characteristics with financial transaction tax proposals such as Automated Payment Transaction Tax, Tobin Tax, Tobin tax - Eurozone Total Economic Activity Levy, and National Debit Tax.
The primary differences are:
* UET is universally and equally assessed across all exchanges of value, not just monetary ones.
* UET is proposed as a baseline tax across the entirety of an economic arena regardless of size.
* UET operates under the jurisdiction of a single taxing authority.
* UET reduces transmitted revenue, it does not back charge the remitting account.
* UET does not assess transfers between financial accounts of an individual.
* UET is the only proposed method of taxation that provides equal protection under the law for all citizens as required by the fourteenth amendment of the constitution.
* UET is transparent, easily implemented, and cost effective.
* Compliance with UET is automatic, virtually eliminating the opportunity to cheat, and requires no paperwork or other filing requirements of taxpayers, thus providing citizens with privacy in their financial affairs.
Winners
UET benefits the vast majority of individuals. As proposed, UET reduces gross income by 0.1%, allowing a take home pay of 99.9%, while potentially replacing income, social security, sales, and estate taxes.
All participants in the subject economic arena benefit from the simplification of taxation as compliance and avoidance expenses are virtually eliminated.
The taxing authority benefits by eliminating the expense and citizen resentment associated with assessment and collection. Transparency and fairness benefit all participants.
Losers
Spot traders, currency traders, tax accountants and lawyers, offshore account holders, hedge funds, derivatives, etc. Corporations that currently have no tax liability may be perceived as losers, however, once the expenses associated with compliance and avoidance are eliminated, and the public perception of the corporation changes, UET will likely benefit those entities as well.
Concerns and Responses
The most immediate concerns with any financial transaction tax are the cascade or inflationary effect on the price of products and goods, and the increased expense imposed on financial markets. However, at a rate of 0.1% or less, UET compares favorably to other business expenses, such as profit taking, salaries, commissions, fees, and inflation, in terms of cost of doing business. Additionally, compliance related expenditures are greatly reduced, if not eliminated.
Implementation of UET may severely impact financial transactions that are based upon slim profit margins, potentially shrinking the tax base by 50% or more. Being a baseline tax, UET equally assesses all transactions of value regardless of the size of the tax base so that even if the level of total economic activity in the United States shrank to one quadrillion dollars a year, one trillion dollars would still be remitted to the treasury, an amount greater than the $915 billion raised by taxing individuals in 2009.
Potential for undocumented cash transactions to negatively impact the UET tax base is low. A November 2009 report Money supply by the federal reserve indicated that the cash money supply of the US is less than two trillion dollars, including commercial banks' reserves and bank vault cash. The relatively small fraction of cash available plus the fact that most cash transactions are documented and assessable indicate that undocumented cash transactions will have minimal effect on UET. Also, the profit potential in avoiding a 0.1% tax is virtually nonexistent, removing the major incentive in tax avoidance.

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