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Showing How US Can Stand Up to Wall Street, Europe Advances 'Robin Hood Tax'

Green group says 'financial transaction tax is an invaluable means by which to make a down payment on the climate price tag.'

Could European breakthrough provide momentum for U.S. policymakers to crackdown on Wall Street high-rollers? (Photo: Jo Christian Oterhals/flickr/cc)

Ten European Union countries agreed on Tuesday to some aspects of a so-called "Robin Hood Tax" on financial transactions, offering a model for U.S. politicians who have thus far showed little resolve on standing up to Wall Street high-rollers. 

"Now it's time for U.S. policymakers to also stand up to the Wall Street bullies."
—Sarah Anderson, Institute for Policy Studies

As Reuters explains, a financial transaction tax (FTT) "is intended to recover some of the public money used to support banks [and] to curb speculative trading."

The "core principles" agreed to by finance ministers from Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain reportedly include a tax on derivatives and all shares transactions, including intra-day trading.

These small taxes, their proponents say, would discourage short-term, purely speculative trading while generating significant revenue.

According to the Wall Street Journal:

Taxing financial trades is popular with voters in Europe, where many countries spent billions bailing out failing banks in recent years and governments are still cutting spending. Some finance ministers have also hailed the tax as a way of curtailing high-frequency trading and speculation, which they see as damaging to their economies.

While aspects of the tax remain unresolved and there is no guarantee that the plan will ever be implemented, "[t]hese European breakthroughs should boost momentum behind the push for a U.S. tax on financial speculation," wrote Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies (IPS), on Tuesday.

She noted that "[w]hile important details remain, including decisions on tax rates and use of revenue, the negotiators appear to have stood up to fierce industry opposition in several key areas."

And Anderson expressed hope that such momentum would carry over to the United States, where support for an FTT is mixed. As her IPS colleague Janet Redman wrote earlier this year, "An FTT could be a big deal here in the United States...where our bloated and politically powerful financial sector remains largely untaxed."

Presidential candidates Bernie Sanders and Martin O'Malley both support such a tax—with Sanders making it a key plank of his Wall Street reform plan. Hillary Clinton has yet to announce a position on the issue.

"While the EU negotiators say they may not reach a final deal until mid-2016, they have overcome some significant hurdles and the finish line is in sight," Anderson said. "Now it's time for U.S. policymakers to also stand up to the Wall Street bullies."

Meanwhile, the Guardian reported that the news of a preliminary FTT agreement lifted "hopes of a new funding stream to help address the concerns of poorer countries at the UN climate talks in Paris."

Indeed, Friends of the Earth senior international policy analyst Karen Orenstein said in a press statement that the timing of the development—during the COP21 Paris climate summit—"couldn't be better to remind world leaders that there is indeed a good deal of money available to pay for climate finance, if there is political will."

"The cost of climate chaos is growing by the day," Orenstein said, "and the financial transaction tax is an invaluable means by which to make a down payment on the climate price tag."

However, as Pascal Canfin, the co-chair of France’s presidential committee for innovative finance, told the Guardian: "It is obvious that this tax could be a tool to provide more finance to the countries in need but it depends on the willingness of the participating countries to allocate the money for climate objectives."

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