by Linda Beale
Nader Argues for a Financial Transactions Tax
Ralph Nader provided an op-ed on the question of a financial transaction tax, “Time for a Tax on Speculation,” Wall St. Journal, A17 (Nov. 2, 2011). He ties the need for the tax as a curb to speculation to the growing concern among ordinary Americans about corporate power and Wall Street excesses.
A financial transactions tax would impose a small charge on the value of stock, bond and derivatives transactions–probably somewhere around 0.25% to 0.5% (the latter is the figure pushed by Nader and groups like National Nurses United). Such a tax would raise a considerable amount of money and at the same time serve another important function–curbing speculative and high-frequency trading.
[This tax] has the potential to curb risky speculative trading that contributes little real economic value. The Capital Institute’s John Fullerton has stated that a financial speculation tax could have a significant impact on the high-frequency trading and other ‘quant’ trading strategies that now comprise an astonishing 70% of vastly bloated equity-trading volume. Over the past few decades, trading volume has grown exponentially. In 1995, according to the historical charts on the best stock trading apps, the total shares of stock traded on the Nasdaq and the NYSE, not including derivates and other options, was 188 billion. By the peak of the financial crisis, in 2008, this annual number had skyrocketed to three trillion.
*** Sen. Harkin, Rep. DeFazio and others in the past few years have proposed protecting ordinary investors from the direct effects of the tax by providing exemptions for mutual funds, retirement funds and for the first $100,000 in trades made annually by an individual
originally published at ataxingmatter