Tag: transaction tax

Taxing The Wall Street Casino

On By southwerkIn Capitalism

This is from the summary of a Paper called: Taxing the Wall Street Casino. It can be found on this web page which belongs to The Institute for Policy Studies.

The report indicates that such a tax would produce would have the potential to generate $177 billion per year.

Financial speculation taxes could’ve made a real difference if they’d been in place before recent financial fiascos:

• Flash Crash: If a financial speculation tax of 0.25 percent on securities trades had
been in place for just the 20 minutes of wildest trading on May 6, 2010, the day of
the stock market “flash crash,” it could have generated $142 million in revenue. That’s
more than $7 million per minute. Big-time investors might have thought twice before
placing their bets, instead of relying on computer-driven high-frequency trading.

• AIG Collapse: A financial speculation tax on the insurance giant’s $440 billion worth
of exceptionally risky credit default swaps would’ve amounted to as much as $1.1 billion,
enough to cover the annual salaries of 20,696 elementary school teachers.

• Greek Tragedy: When Greece cut a derivatives deal with Goldman Sachs designed to
conceal their dangerously oversized debts, a financial speculation tax would have raised
the cost of the shady maneuver significantly. A levy of 0.25 percent on the $10 billion
deal would’ve amounted to $25 million. In the United States and many countries around
the world, there is growing momentum behind proposals to place a very small tax on trades of stock, currency,
derivatives, and other financial assets. Such “financial speculation taxes” would have dual benefits: 1) greater
market stability by curbing short-term speculation that can lead to dangerous bubbles and 2) massive revenues
that could be used for urgent needs, like jobs, health, and climate programs.

Stabilizing Markets and Curbing Excessive Speculation•

Global Precedents: Financial speculation taxes in the UK and many other countries
have had little impact on productive economic growth or investment. Other G-20
countries are pressing the United States to institute such a tax.

• Tax Would Target Reckless Behavior, Not Small Investors: Proposals to institute
a financial speculation tax pending in Congress would exempt retirement funds
and the first $100,000 in trades made by an individual each year. The tax would be
paid almost entirely by wealthy investors engaged in high-risk activity.

Bank Taxes

On By southwerkIn business ethics4 Comments

In the United States, the tax structure is based on an obsolete manufacturing model. The basis of the taxes is the income tax and corporate tax. But the biggest sector of the economy much larger than manufacturing is the financial sector. The financial sector engages in many activities that might be charitably called gambling. A transaction tax aimed solely at the speculative practices of Wall Street would raise hundreds of billions of dollars. Perhaps the tax system could be restructured to take into consideration the simple fact of where money is made in America.

This is a British commercial for a “Robin Hood” tax. I believe we should use such a tax for general revenues. Further, there can be little doubt, the United States could raise far more money with such a banking tax than could the British.

In the United States, the middle class is a continual target for fees and local taxes. The tax system need to be rethought and a greater reliance placed on a single tax system.

James Pilant