What Can You Do, Part I: The Tiny Tax That Could Fix the Economy
Our members are asking us how they can get involved in the movement to demand accountability from Wall Street for the 99 Percent and get our economy working again. Here’s part 1 of 3:
It’s called a financial speculation tax.
You may have already heard of it. It’s also called the financial transaction tax (FTT), a Robin Hood Tax, or a Tobin tax, after the Nobel Prize-winning economist who suggested it.
The proposal goes like this: for every transaction of stocks, bonds, foreign currency bets, or the famed Wall Street “derivatives,” the trader pays 0.25 percent of the amount in question in tax. Sort of like a sales tax for Wall Street, a quarter of a penny on every dollar. While this will translate as a small ripple to the market, the fee would generate billions of dollars needed for infrastructure, education, health care, and our social safety net.
How much, you may ask? With the zillions of financial transactions zipping around every day, the fee could take $150 billion off of the deficit every year. Given that Democrats – Democrats, not Republicans – just put $400 billion in Medicare on the chopping block, it’s far past time for a speculation tax to get some serious attention.
In addition to the revenue, the financial speculation tax provides a disincentive to the very activities that lead to the current economic mess – the short term, high yield, risky investments. If Wall Street recognizes gets more value out of longer-term financial products, they’ll get back to their intended function – serving the rest of the economy instead of pilfering it. Paul Krugman describes the thinking of fellow economist James Tobin, the brains behind the idea:
Tobin argued that currency speculation — money moving internationally to bet on fluctuations in exchange rates — was having a disruptive effect on the world economy. To reduce these disruptions, he called for a small tax on every exchange of currencies.
Such a tax would be a trivial expense for people engaged in foreign trade or long-term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks. It would, as Tobin said, “throw some sand in the well-greased wheels” of speculation.
Opponents of the FTT, including our current Secretary of the Treasury Tim Geithner, argue that it would have an adverse effect on the economy. A letter from a group of business organizations including the U.S. Chamber of Commerce and the NFIB stated that an FTT would “impede the efficiency of markets” and “distort capital flow.” Many of these groups are also working against clean energy reform, earned paid sick days, worker protections, and, conveniently, Wall Street reform, so we take their warning cries with a grain of salt. Besides, letting Wall Street run wild and sell lies to Americans tax free did much more to “distort capital flow” than a quarter of a penny fee ever could.
Not convinced? Here is an absurdly long list (PDF) of economists, businessmen and women, world leaders, and other luminaries who support a financial speculation tax, from German Chancellor Angela Merkel to super wealthy Dallas Mavericks owner Mark Cuban.
On November 3, 2011, the AFL-CIO will join National Nurses United and Occupy Wall Street participants in a nationwide day of action calling for a financial speculation tax.
Tags: Corporate Accountability, taxes
I’m a small business owner and I can unequivocally say that the US Chamber of Commerce does NOT speak for me. Tax Wall Street.
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If you are a patriotic American you will restore America by making everyone, even the super rich One Percent, pay their fair share.
Close the tax loopholes. Make America fair.
The 99 percent did not cause the meltdown and you damned well know it!
Whose side are you on? America’s?
Or multinational Wall Street?
Where do you stand? Are you for me?
Or, are you against me?
Do you intend to hand my Social Security and Medicare over to Wall Street?
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I would like to suggest another large corporate attribute that should be taxed. Automated self service checkout lanes found in Wal-Mart, other discounters, major supermarket chains and big box stores such as Home Depot are basically robots that replace people. Each lane can eliminate up to three full time cashier jobs depending on how many hours a week that the store is open. These lanes do not pay social security, medicare, workers’ comp or income taxes. There is something wrong with a system that taxes human labor but not robot labor. These lanes should pay at least part of the taxes that would have been paid by the people that they have replaced.
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Since Reagan, several trillion dollars have actually been redistributed upward as massive corporate tax cuts, etc. Reagan, Bush Sr. and Bush Jr. ran up unprecedented debts, largely through huge increases in military spending combined with those tax cuts for the richest. Since Reagan, the mantra has been, “Cut entitlements (for the poor)!”
Just this past week, they dug out the old “Cut Entitlements” banners again. The fact is, govt has cutting/ending entitlements for some 30 years now, slashing everything to the bone. The entire General Assistance and AFDC programs were ended, disabled workers were hit with a number of Social Security cuts and freezes, etc. The poor have been drained out and there is little left to cut. With this, public spending for everything from schools to fire departments was slashed. The money was not used for debt reduction, economic growth, etc., but simply redistributed upward. We STILL hear that cutting corporate taxes is vital to job creation, even though 30 yrs of tax cuts have left us with fewer – NOT more – jobs. Corps have used this money to export US jobs.The solution: Restore pre-Reagan tax rates for the rich/corps. Get Big Business off of welfare so they can benefit from the free enterprise system they endlessly extol.
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If you are looking for an investment that offers steady compensation with relatively minimal risk, think about bonds. The most common process of issuing bonds is through underwriting. In underwriting, one or more securities firms or banks, forming a syndicate, buy an entire issue of bonds from an issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. As the stock market sputters, soars and flails, bonds stay comparatively middle-of-the-road. For unskilled investors planning to build a retirement fortune, the Wall Street Journal suggests up to a 15 percent portfolio diversification into bonds. Article source: Know what bonds can do for you
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