Currency conversion taxes are those taxes utilized in the financial sector for financial transactions as opposed to taxes on consumers for purchases and other consumables.
One of the currency conversion taxes is the Tobin tax, named for James Tobin who won the Nobel Memorial Prize in Economics in 1981. This tax is meant to stabilize a country’s economy and prevent anyone from profiting from short term purchases of another country’s currency. This tax is applied to all spot conversions of currency and is meant to penalize short term currency speculators.
Another currency conversion tax that has been proposed is the Automated Payment Transaction (APT) Tax. This tax would apply a small tax (less than .5%) on all transactions. Essentially, every time cash is used from the time it enters the market until the time it is returned to the bank, a tax is imposed. So, when one receives a paycheck, the employer will pay a tax on the amount of the paycheck, and the employee will pay a tax with each transaction she makes with the money from paying a mortgage payment to picking up dinner at a restaurant. Likewise, the restaurants and banks will pay a tax.
The APT tax would replace all other tax systems in the United States and would be done automatically. There would be no need to file an income tax return every year. This tax was originally proposed by the University of Wisconsin’s Professor of Economics, Edgar L. Feige.
There is a movement to try to make others realize the APT tax is a reasonable solution to our complicated tax code and would help our government earn enough on taxes to help cover our deficit and to make sure that payments are received quickly and automatically.
For more information, see the APT Tax.