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Financier, Tax Thyself
It's a brazen show of hypocrisy: while low-income families pay up to a 10% sales tax on necessities, wealthy investors who nearly crashed our economy pay ZERO sales tax on their financial purchases.
Politicians seek creative ways to balance the budget, but they stubbornly refuse to consider even a tiny sales tax on the financial purchases of their friends in the business world. Instead they choose measures that are effectively taxes on the middle-class: cutbacks in police and fire departments, mental health clinics, and libraries; new fees on transportation and city services.
The financial transaction tax (FTT) is a sensible tax, an obvious tax. It would help guard against the reckless speculation that contributed to the financial meltdown. And as demonstrated in England, it is easier to administer than federal income taxes.
How much revenue could be generated by an FTT? According to the Center for Economic and Policy Research (CEPR), at least $150 billion a year, which is about the size of all 50 state budget deficits combined. Another CEPR analysis estimated a return of $353 billion. A study by the Chicago Political Economy Group concluded that $537 billion could be generated annually by an FTT. That equates to 15 million jobs at $35,000 per year, which could put all unemployed Americans back to work fixing America's highways and water systems and energy grids.
And the revenue estimates may be understated. The Bank for International Settlements reported that annual trading in derivatives had surpassed $1.14 quadrillion (a thousand trillion dollars!), with about half the trades occurring in the United States.
Yet instead of paying even a minimal share, big corporations are finding ways to avoid their tax responsibilities. Like the Chicago Mercantile Exchange (CME), whose profit margin (income as a percent of revenue) over the past three years is higher than any of the top 100 companies in the nation. They're threatening to leave Illinois unless they receive a tax break.
For over 100 years CME has used Chicago's location, reputation, technology, and infrastructure to build up the nation's most lucrative business, but they're holding Illinois hostage over taxes. It's not much different in the home states of major corporations around the country. An analysis of the 10-K financial statements of 100 of the largest U.S. companies found that less than 10% of pre-tax profits in 2010 were paid in non-deferred U.S. federal income taxes.
Avoiding tax avoidance may be a losing battle, but an FTT would make up the losses. It's not a new idea. A "stock transfer tax" existed in the U.S. until 1966. Economist James Tobin suggested a "currency transaction tax" in 1972. England has had a successful FTT for many years, as has Japan and a number of other countries. Last year the G20 tried, unsuccessfully, to institute a global financial tax, and recently the European Commission proposed a small .1% tax on the trading of stocks and bonds and a much smaller 0.01% on derivatives. As observed by Sweden's finance minister Anders Borg, "All goods and services are regularly subject to tax, so I don't see why financial transactions would have exceptional protection."
Even Fortune admits, "There is growing consensus from diverse corners of society for some sort of financial transaction tax." Apparently the only people failing to see this are the biggest investors and our representatives in Congress.
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10 Comments so far
Show AllRon Paul supports a national sales tax, but otherwise no other intrusive government taxation. I wonder how he feels about financial sales taxes. Posing such a question might really shed light on his self-contented, libertarian hypocrisy. It will never happen in these comedy shows called the Republican debates.
America has become a corporation. Obama is the CEO. Congress is the Board of Directors. Wall Street is Research and Development. The media is its Public Relations Department. The military is its Legal Department. The universities are the Human Resources Department. Hollywood is its Marketing Department. Lobbyists are the Sales Department. The Judicial System are the shareholders. And the Supreme Court is the father of the first corporate citizen. This is what the OWS movement is up against.
Hoa binh
You are right. And like all corporations, their ONLY goal is to shave expenses and increase profits for their shareholders (the corporations who own them). The US government has been nothing but a front for increasing profits for its owners for many years now - I mean that literally. NOTHING the U.S. does has any purpose other than increasing corporate profits. Think about it. Obamacare? Massive profits for the health insurance corporations. The government even stripped a provision from the Medicare prescription legislation a few years back that would have allowed the government to negotiate for discounts from the pharmaceutical companies - i.e., anything that might have benefitted the U.S. citizens and decreased profits for the drug companies was thrown out. The wars we wage? Massive profits for the MIC. Repealing Glass-Steagal? Massive increase in the profits of the financial sector. Gutting the Clean Air Act? Massive decrease in expenditures for polluting corporations, massive increase in their profit margin. The tar sands pipeline? 95% of the oil produced will be EXPORTED, NOT used by Amereichans to lower the price of gas at the pump or decrease our reliance on imports, and thus its purpose is more profits for the oil companies. I could go on and on. In fact, I challenge ANYONE to come up with ANYTHING the US government has done in the last 10-20 years that actually benefits Amereichan citizens that in ANY way causes less profit for the corporations. You won't find any examples.
I will say it again: the ONLY purpose of the U.S. government is to increase the profits of its owners - the corporations - at any and all costs. Period.
You’re exactly right. That’s why the banks got the government to have a special incentive for foreigners to buy some of all the empty homes that the banks are holding. A foreigner can get a visa if he will buy a home. If our government were looking out for the people they would have an incentive for Americans to buy these homes.
Excellent post, Demonstorm. This is why the "supercommittee" has failed. They have no other recourse than to tax their masters yet that is the one thing they fear the most, and simply will not do. Biting the hand that feeds them is not an option. The financial industry calls their fees and credit default swaps "products". Don't all other "products" get taxed? It's sad to watch the contortions our lawmakers go through to avoid admitting the obvious.
How true.
“America has become a corporation.”
-And America Inc. is a subsidiary of One Percent Inc. It is a hostile takeover using the Shock and Awe Doctrine. And now it is being chopped up, bled dry, and what’s left sold for scrap, like so many job providing companies have been since the 80’s.
“This is what the OWS movement is up against.”
-Some of the products and services of these conglomerates include: chemical sprays designed to cause intense pain, misleadingly called “pepper spray” as if was an appetizing condiment; squads of sanitation personnel outfitted with clubs, body armor, teargas and more, to help keep our parks clean; massive wire tapping and data storage to help us keep track of our busy lives; advanced information retrieval systems known as Enhanced InterrogationÔ, also known as torture; thermite, capable of bringing down 3 tall buildings using only 2 plane crashes as cover; daisy cutters that turn lots of 99% ers into daisy pushers; sound cannons; microwave cannons, flying killer robots, and weapons of mass financial destruction.
Love and compassion are necessities, not luxuries. Without them humanity cannot survive.
Dalai Lama
It has become abundantly clear that upper management of the financial sector truly think themselves as nobility a la Ancien Regime France, and that taxes are paid by the 'little people.' Considering the havoc their ongoing depredations has caused, some 1789 style justice is becoming more appropriate by the day.
Exceedingly poor harvests in 1787 & 1788 drove the price of a single loaf of bread up to approximately what the average frenchman earned in a month. They were starving, their children were starving. When you back even the most compliant animal into a life-or-death corner, don't be surprised at the viciousness of said animals response. It was a natural event that ultimately provided the final straw that broke the French Crown's back.
The aftermath of the French Revolution was frightening and barbaric. One mustn't forget that the leaders were themselves beheaded due to their tyrannical methods and butchery. We should not wish for our own type of revolution, because it will most likely be far worse both in scope and atrocity. Violence should always be a last resort.
I must disagree. Although I don't like the thought of a violent revolution, alas, I fear that in certain cases - where the Elites that are crushing their peoples as is the case in most nations today - it is the only way to change things for the better. The alternative is to simply accept the boot on your neck. And no, waving signs and asking the Overlords nicely to change their ways ain't gonna cause any change, OWS's good intentions notwithstanding.
Financiers not only need a little taxing. They should loose interest. Move the moneychangers out side the temple. The temple being all of society.