The giant cries of protest sweeping across the country are starting to reverberate in the halls of Congress. Senator Tom Harkin (D-IA) and Representative Peter DeFazio (D-OR) are proposing a Wall Street Tax. Their bill would establish a tiny financial transaction tax of 0.03% on every single trade of stocks, bonds, options, futures, swaps, and credit default swaps.
I think this is a great idea, and Congress should pass the bill. Rebuild the Dream and MoveOn.org started a petition so you can show support for the Wall Street Tax.
Notably, a Wall Street Tax is in the Contract for the American Dream, the 10-point plan to fix our economy that more than 131,000 people created earlier this year, through a grassroots, bottom-up process. To date, more than 300,000 people have signed the Contract for the American Dream. In other words, the idea of a Wall Street Tax is already popular.
The Wall Street Tax would be a tiny cost for those of us socking away our savings for retirement or our children's education -- the average person paying into a 401(k) would pay only one dollar per year.
But Wall Street traders could no longer bet thousands of times a second for free. Much of the risk in today's market comes from rapid-fire "flash trading," where financial firms use computer algorithms to make thousands of trades per second. This doesn't add any real value to the market or to our economy.
When we buy something of real value, like a winter coat for our kids, we pay a sales tax, and rightly so. Yet these Wall Street speculators pay zero taxes while making a fortune passing electrons back and forth millions of times a day, all the while destabilizing our economy.
The Harkin-DeFazio Wall Street Tax is common sense. The concept has been around for a while. Hundreds of economists and responsible investors have long called for it, including Nobel Laureates Paul Krugman and Joseph Stiglitz, plus stock market billionaire Warren Buffett and former Goldman Sachs Chairman John Whitehead.
This idea is already law in several countries, including financial centers like the UK and Hong Kong. And the European Union is currently considering a much steeper version of what's on the table in the U.S.
The Wall Street Tax would raise somewhere between $700 billion and $1.2 trillion over ten years, critical funds we need to create jobs and protect vital programs.
Meanwhile, the Super Committee has been charged with finding $1.5 trillion in deficit reductions and has floated the idea of targeting Social Security, Medicare, and Medicaid. Notice: the Wall Street Tax would cover nearly all of the Super Committee's mandated deficit reductions.
Congress is about to face a telling choice. Will they vote to tax Wall Street gamblers in the 1%, or cut the Social Security checks of senior citizens in the 99%?
Members of Congress should take note: If they vote against the 99% on this bill, they should be prepared for the 99% to vote against them next November.
Go here to learn more about the bill and what citizens can do.
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Why did Bernanke GIVE Wall Street 8 TRILLION dollars if all we get back is a few BILLION. We could have saved the 8 TRILLION and would have come out ahead of ALL THE TAX Schemes you guys are advocating. WHY???
I wanted to comment to this story earlier, but the HP comments went down for hours.
Also, it makes perfect moral sense, but let's look closely at what some of the unintended consequences might be.
your clearly a republican and therefore logic wont work here. they are incapable of grasping the reality of the real world
Unfortunately, I'm not going to lay awake at night wondering how that's going to turn out. After 2012 hopefully things will be different.
Geitner gives 99% of the country the middle finger and he remains Secretary of the Treasury.
This transaction tax is a perfect remedy for economic inequality and a perfect litmus test to see who pretends to represent the rest of us and who is really on the side of 99% of the country
A tax on these "financial weapons of mass destruction" actually gives them greater institutional protections and cover. The state would come to rely on the gambling revenue and would ignorantly work even harder at protecting this malevolent revenue stream -- somehow blind to the fact that these negative bets corrosively work to incentivize failure and work brilliantly to undermine the very fabric of our Capitalist system. This tax would make it all the more difficult to ban these instruments and the "Mega-Banks" know this.
Please Senator Harkin and Representative Defazio,
It is critical to work to ban Credit Default Swaps --- not fall for a "con" by the Mega-Banks that institutionally locks in these "Ties That Bind Too Big To Fail." They are playing you and all of us.
This is not slot machine revenue or smoking...these people are smoking the world.
Outstanding "CBS 60 Minutes" Report: Credit Default Swaps
http://www.cbsnews.com/video/watch/?id=4546583n
Why just 0.03%? Why not a nice round figure of 1%? It is still a small amount, would generate $23 to $40 TRILLION dollars over the next decade and cost the average person who is actually able to put money into their 401k about $33 per year. With that kind of income stream, we could afford to keep the Bush income tax cuts and probably even zero out taxes on corporations, dividends and a host of other taxes the wealthy... err... I mean Republicans hate. We could even pay off the nation's debt in a decade or so as well as afford to bail out Wall Street again.
It seems simple -- however -- the state will become reliant on the revenue from the increased trading volume and will undoubtedly -- serve, protect and promote the interests of the large volume traders to an even greater extent. The black box of high frequency trading would then become a permanent black hole in our economy -- firmly ensconced like state sanctioned slot machines. Most critically, the stock market would continue to be based on opaque micro-second fractional penny arbitrage rather than sound growth based capitalistic activity. This tax could therefore have a potentially devastating effect to both the real capitalists of "Wall Street" and the real entrepreneurs of "Main Street."
"Black Box Trading : The Real Hazard to Markets"
http://www.guardian.co.uk/business/2011/aug/14/black-box-trading-hazard-markets
Black Box Trading - Computers Taking Over Wall Street?
http://www.businessinsider.com/black-box-trading-computers-taking-over-wall-street-2011-8
I'm one of the latter folks and can assure you that you have absolutely no idea what you're talking about.
The historical evidence suggests that when the capital gains tax is reduced, locked-in capital is liberated and, at least temporarily, the revenues from the tax rise. For example, after the 1981 capital gains tax was cut from 28 to 20 percent, real (all figures in this section are 2004 dollars) federal capital gains tax revenues leapt from $29.4 billion in 1981 to $36.6 billion by 1983—a 24 percent increase. After the capital gains tax was cut in 1997, the receipts from capital gains taxes rose from $66.9 billion in 1996 to $114.7 billion by 1999, an increase of more than 71 percent. Preliminary data suggest that the capital gains tax cut of 2003 to a rate of 15 percent has also caused tax revenues to increase, at least in the first year (see Figure 1).
Conversely, total asset sales of taxable capital gains fell from $575 billion in 1986, the year before the capital gains rate was raised (from 20 back to 28 percent), to $246 billion in 1989. Investors were unwilling to sell stock and other taxable assets at the new higher tax rate.
Capital Gains taxes - http://www.econlib.org/library/Enc/CapitalGainsTaxes.html