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Let’s put a sales tax on Wall Street

I learned of a petition at the presidents site, that one where anyone can start a petition and have it addressed if you reach 100,000 signatures. We the People it’s called. The petition is sponsored by United Front Against Austerity which also goes by the name Against Austerity.org  I know nothing about this organization, though I have looked. Thus, I’m remaining without opinion. But, I do like this one idea of theirs and the idea needs push.
The petition is to have a sales tax placed on Wall Street’s transactions. I think this is a grand idea. After all, Wall Street and the banks have always referred to their stuff as “products”. Finance accounts for over 8% of our GDP, over 30% of corporate profits. But, mostly financial transactions are so numerous that the total dollar value makes our GDP look puny. Our GDP represents 1.9% of the total of the financial sales.  Of course, not all items would be taxable. It’ like food. We don’t tax that.
Many would call this a transaction tax but, this is the wrong terminology. Wall Street has made it’s self into a producer within our economy. To paraphrase the infamous words of Larry the Liquidator, they “make you money”. Odd as it is, money is what they sell to the consumer. They’re a regular “retail” establishment. At least that’s how they view themselves. So, we should welcome them to such a status by making them collect and submit biweekly sales tax.  
Sales tax is one of the major methods by which we raise revenue. Everyone knows about sales taxes. It’s the tax that is not mentioned when the conservative bitches about those people who don’t pay taxes. Well, here’s an entire group who truly does not pay the tax every other person pays when they buy something. 
President Obama should love this tax.  He and (too many) other Democrates seem to want a balanced approach with his deficit reduction plan.  A 2 to 1 tax to revenue is often mentioned.  Well, considering sales taxes take up 5 to 7% of the lowest 60% of our population’s income (the bottom 20% pay 7%) and the top 1% pays about 0.5%, it seems to me the concept of balancing needs to look here. 
The total sales are estimated to be $5 qaudrillion per year. That’s some gross revenue there. That means some major coin in sales tax. 

According to UFAA: 
The Wall Street sales tax is very much in the mainstream. HR-6411, introduced by Congressman Keith Ellison (MN), is gaining support in the US Congress and Vermont Senator Bernie Sanders has pledged to introduce such a bill in the US Senate.
Dean Baker wrote about a sales tax in February.
So, please go over to the presidents site and sign the petition. It’s only good until April 10th. The petition needs another 90,000 signatures. Let’s make Obama address this. Spread the word.

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If Europe Adds a Financial Transactions Tax, Will We Follow?

by Linda Beale

If Europe Adds a Financial Transactions Tax, Will We Follow?

Has the time come for the US to impose a financial transactions tax?  It would have several positive features.  First, it would raise revenues, which are sorely needed for everything from climate change action to infrastructure improvements to aid for needy families.  Second, it would raise revenues from those who are most responsible for the financialization of the economy–investment bankers, fund managers, and high speed traders interested in bigger and bigger profits no matter the result for ordinary folks.  Third, it would act in some small way to discourage excessive trading that contributes to the volatility of the stock market.

Of course, such a tax (frequently called a “Tobin Tax” after the Nobel economist who recommended it) would be best if applied by all sophisticated nations.  It appears that the European Union is getting closer to making a financial transactions tax a reality in at least some of the participating countries.  See James Kanter, Tax on Financial Trades Gains Support in Europe, New York Times (Oct. 10, 2012).  Britain will remain exempt so the City of London (Europe’s parallel to Wall Street) would continue on its merry way (or even increase the financialization of the UK economy as trades moved from participating countries to London).  Wall Street has lobbied heavily against any tax on its activities, and would fight bitterly if the US were to impose such a tax while London remained exempt.

So my guess is that even if the EU finance ministers approve the measure for some participating European nations, it will take some time before it spreads to Britain and the United States.  Like climate change, we seem determined to put off addressing real problems until they are upon us with such force that we cannot possibly continue as before.  Thus, our financialized economy rocks along pretending that derivatives are safer and banks are fine and life can go on as before, and Congress debates climate change as a “she said, he said” matter rather than looking at the breadth and depth of scientific evidence supporting man-made effects that are reshaping the globe while we watch.

cross posted with ataxingmatter

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Nader Argues for a Financial Transactions Tax

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, 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

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