What do French President Nicolas Sarkozy and Nobel Peace Laureate Desmond Tutu have in common? They both support taxing harmful financial speculation to pay for global goods. Though hailing from very different backgrounds, both men are championing the placement of a modest levy on harmful speculation in the financial sector to pay for public goods, including funds to help poor countries deal with climate change and health crises.
Activists in Europe are calling this a "Robin Hood Tax," while Sarkozy has called it a "moral and ethical tax." He urged the crème-de-la-crème of the financial world to support such a tax at the World Economic Forum in Davos last month. France is at the helm of the rotating presidency of the Group of 20 (G-20) economic bloc this year, giving it an important space through which to push this proposal.
Activists in over 20 countries around the world have mobilized behind the high-profile Robin Hood Tax campaign and declared February 17 as the Financial Transactions Tax Global Day of Action.
Some forward-thinking members of the U.S. Congress are now joining the chorus and doing their part to buoy this initiative in U.S. Congressman Pete Stark's recently introduced Investing in Our Future Act of 2011.
This smart piece of legislation would place a tiny levy on the currently untaxed and largely unregulated foreign currency exchange market. Proceeds, which Stark estimates would amount to about $5 billion per year, would support urgent causes, including climate change and health programs in impoverished countries, and also help reduce the U.S. deficit.
At a time when public funds are scarce, it can be hard to come up with money to address social needs. Therein lies the beauty of the Investing in Our Future Act. It would create a new source of revenue by going after the bad behavior of Wall Street traders. The tiny tax would help curb speculation, tamping down on Wall Street profiteers who bet on miniscule differences in currency exchange rates to earn quick cash -- a risky game that fuels instability in financial markets to the detriment of society.
The Investing in Our Future Act would tap very lightly into Wall Street's exploding coffers of wealth by placing a micro tax of only 0.005 percent on currency transactions by large-scale traders in the U.S. The bill exempts transactions under $10,000, so it would have little impact on travelers and companies engaging in legitimate international trade.
As Wall Street profits remain sky high and fat cat bonuses are doled out on silver spoons, the world's poor are struggling to deal with a climate crisis that they did not cause, facing increasingly severe droughts, floods, crop losses and water shortages.
The cost of helping developing countries address climate change is large, and it's growing by the day. Funds are required for a wide spectrum of needs -- from watershed restoration to decentralized solar electrification, to installing early warning and disaster preparedness systems. In 2009, the UN Department of Economic and Social Affairs in its World Economic and Social Survey put the cost of climate change for developing countries at about one percent of world GDP annually. Today, it's even higher.
As the world's largest historical climate polluter and its largest economy, the U.S. needs to do far more to help developing countries address climate change. The Investing in Our Future Act will help us put a down-payment toward meeting our responsibility. All members of Congress should support this bill.