EMAIL SIGN UP!
Most Popular This Week
- Corporate Win: Supreme Court Says Monsanto Has 'Control Over Product of Life'
- How the US Turned Three Pacifists into Violent Terrorists
- Cornel West: Obama 'Is a War Criminal'
- Revealed: How US State Department 'Twists Arms' on Monsanto's Behalf
- Victory in Seattle as Teachers Win Battle in Standardized Test Boycott
Popular content
Today's Top News
Time to Tax Financial Speculation
For those of us who want the financial industry to serve people and the planet rather than dominate them, this is the most exciting reform under serious consideration on the world stage.
For decades, international activists have been pushing the idea of a tax on financial transactions. Such a tax would give us a twofer: a drop in short-term speculation that serves no productive purpose and leads to dangerous bubbles, and 2) loads of money that could be used for good things, like health, climate, and jobs programs.
Today, we’re closer to achieving this two-for-one deal than we’ll probably ever be in our lifetimes. Reeling from the worst financial crisis in 80 years, policymakers are not only desperate for new sources of revenue, they’re more open to rethinking the role of Wall Street and making sure it serves real economic needs.
To take advantage of these new opportunities, a wide range of activists, including trade unionists, international health advocates, and climate justice groups, have come together to move this decades-old proposition into practice. Their efforts are gaining traction—and even some celebrity support.
The specific proposal is to tax trades of all types of financial assets, including stock, derivatives, and currencies. The tax rate would be so low that ordinary investors wouldn’t even notice it. Some U.S. legislative proposals would even exempt retirement funds and mutual funds, the primary middle class investment vehicles. The real target would be the hedge fund investors and other high fliers in the global casino, who make most of their money through high-frequency betting on short-term market movements that often have nothing to do with what’s going on in the real economy. Since the tax would apply to each of these transactions, it would make this type of speculative gambling much less profitable and encourage more long-term, patient investment.
The Center for Economic and Policy Research has analyzed the likely impact of a set of taxes, ranging from 0.01 percent on currency transactions to 0.25 percent on stock trades. Assuming that trading volumes dropped by 50 percent, these taxes could raise more than $175 billion per year in the United States alone.
The call for such taxes has been particularly loud in Europe, where activists have managed to win promises of support from leaders of the three largest economies—the United Kingdom, Germany, and France. But more pressure is needed to make speculation taxes a reality.
In the UK, activists have teamed up with filmmaker Richard Curtis (Four Weddings and a Funeral, Notting Hill, Bridget Jones’ Diary) to put some star power behind the cause. Through a creative media campaign being launched today, they aim to secure commitments from candidates vying for votes in the upcoming general election.
One of the campaign tools Curtis has produced is this video, starring British actor Bill Nighy (who you'll recognize from his roles as Davy Jones in one of the Pirates of the Caribbean movies or as the ribald aging pop singer in Love Actually) as a haughty banking executive whose arguments against the tax completely unravel in the course of three minutes. The UK groups kicked off their campaign by projecting a giant image of ordinary people wearing Robin Hood masks and the slogan “Be Part of the World’s Greatest Bank Job” on the side of the Bank of England.
In the United States, we may not yet have Hollywood spokespeople, but we do have prominent business leaders on our side, including John Bogle, founder of the Vanguard Mutual Fund. We also have bills to create financial speculation taxes in both the House and the Senate, introduced by Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA).
President Obama is not yet on board. Recently, he did call for a new fee on the top 50 banks. This is a positive, but far more modest, approach—it wouldn’t directly affect speculation, would leave hedge funds off the hook, and would generate far less revenue.
U.S. activists are hoping to see a shift in the administration’s position by the time Obama travels to Toronto in June for a summit with the leaders of the other G20 big economies. Americans for Financial Reform (AFR), a coalition of more than 200 labor unions, consumer groups, and other activist organizations, has been working to raise the profile of the issue in the media and on Capitol Hill and recently sent this letter to the president, urging his support. AFR is also working with other U.S. and international activists to coordinate pressure on key governments and the International Monetary Fund, which is carrying out a feasibility study of the issue at the G20’s request.
Taxing financial speculation won’t single-handedly prevent another crisis or solve the world’s climate and jobs crises. But for those of us who want the financial industry to serve people and the planet rather than dominate them, this is the most exciting reform under serious consideration on the world stage. And it is an idea whose time has come.
- Posted in
Comments
Note: Disqus 2012 is best viewed on an up to date browser. Click here for information. Instructions for how to sign up to comment can be viewed here. Our Comment Policy can be viewed here. Please follow the guidelines. Note to Readers: Spam Filter May Capture Legitimate Comments...
13 Comments so far
Show AllI think this is important. Extremely important!
Why trades have been tax free I fail to comprehend. It's a very simple concept.
Why so many who can afford to pay taxes find it their right and duty to avoid such I also fail to comprehend.
It's a funny thing to hear some of the 'upper tier' publicly announce that they would gladly pay more in taxes. So clue me in ... why they have the smartest accountants and tax attorneys working for them to insure they take full advantage of the tax codes?
My cynicism however tells me the con-men will prevail ... one way or another ... trades taxes or not.
Oh the big investor will still make out like the pigs they are, just be paying a LITTLE to continue to screw the market -- and the American Main Street taxpayer who will shoulder most of the burden for a bloated government and a gargantuan defense budget.
But it's a good start to reining in these con-men and scoundrels. Now if they'd tax those bonuses we'd really have something to spend on what we NEED.
Where's a petition we can sign?
Gary
“Though force can protect in emergency, only justice, fairness, consideration and cooperation can finally lead men to the dawn of eternal peace.”
-- Dwight David Eisenhower
ranging from 0.01 percent on currency transactions to 0.25 percent on stock trades...
---------------
1) These rates are far FAR too low.
2) You don't start a negotiation by conceding your position in the opening round. If you want a .25% tax on stock trades you start out by asking for a 2% tax. If you initially ask for a .25% tax you'll end up settling for .05.
Well, Sarah did write "Today, we’re closer to achieving this two-for-one deal than we’ll probably ever be in our lifetimes."
indicating she doesn't expect to get there.
Definitely yeah
The entire tax system needs reform. Here are a combination of reforms that would reduce waste, discourage bubbles, and restore a more equitable playing field:
1) Income is differentiated between "wages" and "capital gains." Right now, wages are subjected to higher taxes than capital gains. It should be the other way around---i.e. encourage and reward "real" productive work with reduce rewards for "passive" unproductive activity.
So, the capital gains should be progressively taxed, for example: 0% on gains up to $25,000, 5% on gains up to $75,000, 10% on gains up to $150,000, etc until 50% on gains over $1 million.
Wages should also be progressively taxed and taking into account the basic necessities pegged to its present-day cost of living: 0% on wage income up to $50,000, 5% on wages up to $100,000, 10% on wages up to $200,000, and then a continued graduated tax until it reaches 70% on income of $10 mil or more.
That's the way you restore the middle class & democracy and prevent corporate/ruling class tyranny
2) A small transaction tax on all stock market activity.
3) A national sales tax...also graduated based on the cost of goods. For example:
0% tax on food, nutritional or medicinal products
1% on goods costing up to $50
2% on goods costing up to $100
3% on goods costing up to $2,000
5% on goods costing up to $5,000
etc. until...
30% on goods costing $1mil or more
It can also include some caveats, based on common needs: i.e. cars costing up
to $50,000 would only be taxed at let's say, 2% (one would assume that the $50,000 figure is generous enough to be able to cover something that runs reliably on 4 wheels)
In other words, I would pay nothing on a loaf of bread or a $.20 on a $20 T-shirt, and $250 on my $5,000 Gucci designer bag. This graduated tax would raise much-needed revenues for the government to pay down its debt, and fund other very important things like education and health care. The person who can afford a $2,000 Gucci tie can also afford the sales tax on it!
No doubt the right wing would bring out all its time-worned talking points against this proposal...i.e. it will discourage job creation, investment in industry, bring down the economy and the financial system, etc.
Great wisdom is often couched in simple terms. You have done a great job of outling what appears to be a real gem. Plug that concept into a new political party and we may yet have a chance.
Thanks.
The secret of winners is to keep it simple. This is not simple.
Clearly an excellent idea and long overdue. I hope it would include corporate takeovers wherein one company (or person or group of people) buy another company, such as Chevron buying Texaco, however it is structured.
Various "stamp taxes" have existed and in some cases do still exist. There must be some laws on the books that could possibly be amended by regulation thereby avoiding the Corporate Senate.
This is a red herring, and a dangerous red herring because it sounds so reasonable. But it is putting a bandage on a festering gangrenous wound - all it will do is give the illness more time to do its damage before we see that it has actually not solved anything and start looking for something else. The problem is, we don't have all that much time left before this cancer takes over everything, and it's too late to save us all. The problem we need to understand and face is that we allow a private businesses to create our money supply, with minimal regulation, and allow them to con us into the bizarre situation of not only allowing a private business to own our money that we borrow from the every year, but we pay interest on that money too. Until 'we the people' control 'our' money, we will have no financial security. More info on all of this from a Cdn perspective - What Happened? http://www.rudemacedon.ca/what-happened.html .
Green Island - first we take back our brains, then we take our country
A fractional, progressive tax is simple. A tiny transaction tax is also simple. The tax codes for individuals, as well as corporations, are insanely convoluted. .25 cents per share on stock trades, maybe .0125 on equity option contracts, for example, would generate huge revenues, as the vast majority of trades are institutional - thousands of shares at a time. Commodity futures/options could be taxed, on a per-contract basis, in the same way. Exchanges already charge similar fees to cover the processing costs. The previous poster is right, though. Ask for 2 cents, then whittle it down.
For many years, there was a stock transfer tax, which was put on every sale of a share of stock on Wall Street. It was repealed years ago, and Wall Street has repeatedly stated that if anyone tried to put it back on, they would move to somewhere where they wouldn't be taxed.
We also used to have a two-tiered capital gains tax, where if stock was sold at a profit within 6 months after it had been purchased, then the seller paid double capital gains tax on it.
It just goes to show how completely the rich people have taken over the system.