Each day, $4 trillion dollars of currency are traded. For international businesses and travelers, trading dollars for other currencies serve a legitimate purpose. However, nearly 80% of these transactions are undertaken by a handful of major banks. Experts agree that most of these transactions are made for purely speculative purposes.
Wealthy traders and big financial institutions make huge bets on the fluctuations in currency value and they can make massive profits if their bets are correct. This type of speculation helped to worsen the recent financial crisis and serves no purpose other than making a few people and institutions even richer.
Today, I introduced H.R. 5783, the Investing in Our Future Act. My legislation would simply impose a small tax -- of five thousandths of one percent, or 0.005% -- on these currency transactions. The money raised would be put toward investments in children, global health, and climate change mitigation.
For the average person or business, this small tax will hardly be noticed. But, due to the extreme speculation that takes place, it would raise significant funds. Studies estimate that a worldwide 0.005 percent tax on dollar transactions would raise $28 billion a year and reduce currency speculation by 14 percent.
Here at home, the funds from this fee would be used to improve the quality and affordability of childcare. This funding would provide more childcare options, so that working families can obtain the quality care their children need to begin school ready to learn.
Internationally, the bill would create a U.S. fund to assist developing countries with the impacts of global warming. At the United Nations Climate Change Conference in December, President Obama pledged to fund our country's commitment to mitigating the effects of climate change. This bill would make that promise real.
Finally, the legislation would create a Global Health Trust Fund to fight HIV/AIDS, Malaria, Tuberculosis and other diseases that kill millions of people each year in developing nations. This money will fund treatments and prevention for these diseases, as well as research aimed at eradicating them altogether.
For too long the needs of the financial industry have trumped initiatives that will help lift people out of poverty and give children a healthy start. The Investing in Our Future Act will aid in getting our priorities back in order, and reduce financial speculation by Wall Street.
You can help - please call your Member of Congress and tell them to sign on as a co-sponsor of H.R. 5783. Find your member at http://house.gov
Follow Rep. Pete Stark on Twitter: www.twitter.com/petestark