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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIt’s time to tax financial transactions
By Katrina vanden Heuvel
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We dont need a team of policymakers to tell us this isnt good policy, or that it needs changing. But on Thursday, we heard policymakers propose exactly that: a change.
Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions three pennies on every $100 traded.
The good news is that its a tax so small it could be mistaken for a rounding error. Its so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it. If this were a tax on coffee, it would cost you $1 for every 800 cups you bought at Starbucks.
But theres even better news. This insignificant tax raises a significant amount of revenue $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. Its also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.
As the saying goes, Nothing can resist an idea whose time has come.
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http://www.washingtonpost.com/opinions/katrina-vanden-heuvel-its-time-to-tax-financial-transactions/2013/03/04/d496d738-8516-11e2-98a3-b3db6b9ac586_story.html
By Adam Hersh and Jennifer Erickson
It has been more than 70 years since John Maynard Keynes wrote about the value of a financial transaction tax in mitigating the predominance of speculation over enterprise in the United States. A financial transaction tax works by levying a miniscule fee on the estimated $2.9 trillion of daily financial activity through the trading of stocks, bonds, and derivatives in U.S. financial markets, based on our analysis. The tiny tax makes some of the most speculative unproductive trading unprofitable, thus steadying markets and promoting real investment while raising much-needed revenues. Though many countries around the world already have a financial transaction tax in place, the United States does not yet levy such a fee on trading...Below are five reasons why the world is catching on to the financial transaction tax as a smart policy tool.
A financial transaction tax would bring in much-needed revenue
The U.S. government is currently operating at its lowest level of revenues in more than 60 years....Even a tiny financial transaction tax would raise tens of billions of dollars in much-needed revenue. A tax applied at a very low ratefor example, a 0.117 percent tax on stocks and stock-options trading, a 0.002 percent tax for bonds, and a 0.005 percent tax for futures, swaps, and other derivatives tradingwould raise an estimated $50 billion a year, according to our calculations. To put that amount into perspective, $50 billion in essence pays for all of Americas veterans health services, which ran to $50.6 billion in 2012. Historical evidence and economic theory show that financial transaction taxes have the potential to raise substantial revenues without impeding the function of capital markets. By keeping constant the relative transaction costs of trading in different markets, a financial transaction tax can raise revenues without distorting market behavior.
Business and civic leaders support a financial transaction tax
The idea of a financial transaction tax isnt new, but the chorus singing its praises is growing every dayfrom leading economists such as Nobel Prize winners Joseph Stiglitz and Paul Krugman to entrepreneurs such as Bill Gates and Marc Cuban, to financial leaders the likes of John Bogle, founder of the mutual-fund giant Vanguard Group. The financial transaction tax also has the support of unions for nurses and other health care professionals and service-sector workers.
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A financial transaction tax helps stabilize volatile financial markets
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A financial transaction tax incentivizes investment for real growth
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Many countries already have a financial transaction tax
The standard stalling tactic for bringing a financial transaction tax to the United States is saying that we should wait until other countries do it first. But financial transaction taxes already operate in at least 23 countries around the worldincluding in international financial centers such as the United Kingdom, Switzerland, Hong Kong, and Japanand that number is about to grow.
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http://www.americanprogress.org/issues/economy/news/2013/02/25/54503/5-reasons-the-world-is-catching-on-to-the-financial-transaction-tax/
A Tax That May Change the Trading Game (Europe) - updated
http://www.democraticunderground.com/10022412954
libtodeath
(2,888 posts)from us as they play their trading games.
Jeff In Milwaukee
(13,992 posts)I don't mind it when somebody gets rich providing a service or a product that people either need or just plain want. But these guys? They don't produce anything. They don't provide any service. They just make money by making other things more expensive for the rest of us. They're leaches.
reteachinwi
(579 posts)that produces nothing except manipulated markets.
LonePirate
(13,426 posts)We might as well raise some serious revenue while curtailing some of the illegal activities on Wall Street.
MineralMan
(146,317 posts)Tax each and every financial transaction that involves capital and commodity markets. Every one.
ReRe
(10,597 posts)...needs to be more than 3 cents on $100. $352 billion over ten years? Give me a break. That is spit in the wind. Why not as much as $5 on $100? Or even more?
ProSense
(116,464 posts)"Tax not high enough...needs to be more than 3 cents on $100. $352 billion over ten years? Give me a break. That is spit in the wind."
...that $352 billion over 10 years is "spit in the wind," but I wouldn't complain about a higher transaction tax.
reformist2
(9,841 posts)When you think of the millions of hours of intelligent thought wasted on what amounts to playing games, it's mind boggling. High-frequency trading is Exhibit A on the subject of the waste and inefficiency in capitalism.