For Immediate Release
Flash Crash Anniversary Intensifies Call for Tax on Wall Street Trades
High Time for Congress to Follow EU Lead and Curb High-Frequency Trading
WASHINGTON - May 6 marks the fourth anniversary of the Flash Crash of 2010, when the Dow Jones dropped more than 1,000 points, losing 9 percent of its value in a matter of minutes. High-frequency trading is widely blamed for the Flash Crash, as computer algorithms (PDF) intensified the ripple effect on the economy.
High-speed trading by computers has been receiving much attention lately due to Michael Lewis’ book, “Flash Boys: A Wall Street Revolt.” About half of all market activity is still generated by computers run by high-frequency traders. The Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating claims that high-frequency trading amounts to illegal front-running, providing an unfair advantage in the market.
The leading long-term solution to high-frequency trading is a modest tax on Wall Street trades, called a financial transaction tax. Proposals have been introduced in Congress to tax trades at anywhere between 0.5 percent and 0.03 percent of the transaction. Even such a small tax would slow down high-frequency traders, who realize only a fraction of a cent per trade but do well because they make billions of trades. Moreover, the Joint Committee on Taxation calculated that a .03 percent tax (only 30 cents per $1,000) would raise $352 billion over 10 years. Proposals for a higher tax rate could generate considerably more.
Financial reform advocates will mark the Flash Crash anniversary by calling on Congress to pass a financial transaction tax and to support the European Union (EU) nations as they move to implement a unified tax on trades. Eleven EU nations are expected to make an announcement on May 6 regarding how they plan to move forward with their proposal for a unified tax on trades.
Susan Harley, deputy director of Public Citizen’s Congress Watch division; Taylor Lincoln, research director for Public Citizen’s Congress Watch division; Marcus Stanley, policy director for Americans for Financial Reform; Nicole Woo, director of domestic policy for the Center for Economic and Policy Research; Sarah Anderson, global economy project director for the Institute for Policy Studies; and Jim Lardner, communications director for Americans for Financial Reform are available to discuss:
- Legislative proposals to tax Wall Street trades;
- The impact of the Flash Crash and high-frequency trading on our economy;
- A recent Public Citizen report (PDF) showing that a financial transaction tax wouldn’t harm average investors;
- Opinion research showing Americans’ support for a tax on Wall Street; and
- European action to tax financial transactions.
Please contact the Public Citizen press office to arrange an interview. For live updates, follow #FlashCrash and #WallStTax on Twitter.
THE LAST FIREWALL AGAINST THE LIES
Independent media has become the last firewall against government and corporate lies. Yet, with frightening regularity, independent media sources are losing funding, closing down or being blacked out by Google and Facebook. Never before has independent media been more endangered. If you believe in Common Dreams, if you believe in people-powered independent media, please support our critical Winter campaign now and help us fight—with truths—against the lies that would smother our democracy. Please help keep Common Dreams alive and growing.
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.