Poll: Majority Of America Supports 1/4% Transaction Tax 54% - 35%

Let’s start with a fairness point. Why should you pay a 5 to 6 percent sales tax for buying the necessities of life, when tomorrow, some speculator on Wall Street can buy $100 million worth of Exxon derivatives and not pay one penny in sales tax?

Let’s further add a point of common sense. The basic premise of taxation should be to first tax what society likes the least or dislikes the most, before it taxes honest labor or human needs.

In that way, revenues can be raised at the same time as the taxes discourage those activities which are least valued, such as the most speculative stock market trades, pollution (a carbon tax), gambling, and the addictive industries that sicken or destroy health and amass large costs.

So, your member of Congress, who is grappling these days with gigantic deficits on the backs of your children at the same time as that deep recession and tax cuts reduce revenues and increase torrents of red ink, should be championing such transaction taxes.

Yet apart from a small number of legislators, most notably Congressman Peter Welch (Dem. VT) and Peter DeFazio (Dem. OR), the biggest revenue producer of all — a tax on stock derivative transactions — essentially bets on bets — and other mystifying gambles by casino capitalism — is at best corridor talk on Capitol Hill.

There are differing estimates of how much such Wall Street transaction taxes can raise each year. A transaction tax would, however, certainly raise enough to make the Wall Street crooks and gamblers pay for their own Washington bailout. Lets scan some figures economists put forth.

The most discussed and popular one is a simple sales tax on currency trades across borders. Called the Tobin Tax after its originator, the late James Tobin, a Nobel laureate economist at Yale University, 10 to 25 cents per hundred dollars of the huge amounts of dollars traded each day across bordered would produce from $100 to $300 billion per year.

There are scores of civic, labor, environmental, development, poverty and law groups all over the world pressing for such laws in their countries. (see tobintaxcall.free.fr).

According the University of Massachusetts economist, Robert Pollin, various kinds of securities-trading taxes are on the books in about forty countries, including Japan, the UK and Brazil.

Pollin writes in the current issue of the estimable Boston Review: “A small tax on all financial-market transactions, comparable to a sales tax, would raise the costs on short-term speculative trading while having negligible effect on people who trade infrequently. It would thus discourage speculation and channel funds toward productive investment.”

He adds that after the 1987 stock market crash, securities-trading taxes “or similar measures” were endorsed by then Senate Minority Leader Bob Dole and even the first President Bush. Professor Pollin estimates that a one-half of one percent tax would raise about $350 billion a year. That seems conservative. The Wall Street Journal once mentioned about $500 trillion in derivatives trades alone in 2008 — the most speculative of transactions. A one tenth of one percent tax would raise $500 billion dollars a year, assuming that level of trading.

Economist Dean Baker says a “modest financial transactions tax would be enough to “finance a 10 percent across-the-board reduction in the income tax on labor.

The stock transaction tax goes back a long way. A version helped fund the Civil War and the imperial Spanish-American War. The famous British economist, John Maynard Keynes, extolled in 1936 a securities transaction tax as having the effect of “mitigating the predominance of speculation over enterprise.” The U.S. had some kind of transaction tax from 1914 to 1966.

The corporate history scholar (read his excellent book, Unequal Protection ) Thom Hartmann, turned three-hour-a-day talk-show-host on Air America (airamerica.com/thomvision), had discussed the long evolution of what he calls a “securities turnover excise tax” to “tamp down toxic speculation, while encouraging healthy investment.”

So, why don’t we have such a mega-revenue generator and lighten the income tax load on today and tomorrow’s American worker? (It was one of the most popular ideas I campaigned on last year. People got it.) Because American workers need to learn about this proposed tax policy and ram it through Congress. Tell your Senators and Representatives — no ifs, ands or buts. Otherwise, Wall Street will keep rampaging over people’s pensions and mutual fund savings, destabilize their jobs and hand them the bailout bill, as is occurring now.

A few minutes spent lobbying members of Congress by millions of Americans (call, write or e-mail, visit or picket) will produce one big Change for the better. Contact your member of Congress. The current financial mess makes this the right time for action.

Ralph Nader is a Winsted native and former U.S. presidential candidate.

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"mega-revenue generator" ...






in the same vain that the stimulus "created" jobs, rather then saved the jobs of thousands of government parasites, and gaurenteed the pensions of union thugs.

 

How about answering the question??

Again:

Why should you pay a 5 to 6 percent sales tax for buying the necessities of life, when tomorrow, some speculator on Wall Street can buy $100 million worth of Exxon derivatives and not pay one penny in sales tax?


Help me out here boys..

 

I don't' argue with idiots ...

 

BTW ... I'm in Chicago...



The Sales Tax is 10.5%

 

You're never going to get them to agree to fairness. You have to shove it down their throats.

 

I'l address the 1st two points.

The speculator WILL pay tax on any gain. If your going to go down that road, why not just tax wealth? We don't need to wait for people to die to tax their estates, do we?

How is this for fairness: Over 40 million working Americans pay no income tax. Out tax base is becoming very concentrated in the upper middle and high income brackets. If your want to see how that plays out, look at California.

The basic premise of taxes should be to provide enough funds for the govt to function. What has fucked the system up is exactly what you cite....taxing to change behaviour. It's not the govt's job to judge or try to change any behaviour that is legal. If they can to it to someone else, they can do it to you.

 

You answered your own question:

"Why should you pay a 5 to 6 percent sales tax for buying the necessities of life"

 

Most sales taxes are imposed at the state and local level,although there is a federal gasoline tax and various federal txes on such things as phone service, the so-called "Gore tax" after the inventor of the internet.

This type of tax is usuallyjustified on two grounds. One, to tax people who use services but otherwise would escape taxation, eg the poor and tourists. Two, to pay for government services connected to the tax, eg hihgway funds from the gas tax.

The securities markets already are subject to fairly hefty "user fees" of the latter nature in terms of the SEC tax on every stock transaction.

The stated justifications fro a transaction tax break down pretty quickly under rudimentary analysis. First, these transactions already are heavily taxed as cap gains. The effect of humongous increases in trading costs would be to decrease or eliminate the profitablility of trading and would thus cannibalize the cap gains revenues.

Second, unlike gas or telephone useage, trading is extremely cost sensitive. The profits on short-term trades are very small typically, and an additional 1/4% on each end of the trade would effectively make such trading non-productive. Thus, the government would snuff out a productive economic activity that provides jobs for hundreds of thousands, and would get nothing in return.

Third, the idea that short-term trading is something to be discouraged is naive. Efficient markets require liquidity, and short term traders provide that liquidity.

Fourth, the idea that such taxes are a fitting or appropriate "payback" for the financial crisis is totally wrongheaded. The people responsible for the crisis are in government, the Fed, the executive suites of banks and securities firms, etc. The government has done little but reward them since the crisis, and the rest of us will be paying obama's huge tax increases to pay for it. High frequency stock trading had nothing to do with collateralized mortgages or the like. If there is to be a search for scapegoats, let's look in the right places and not blame the innocent.

At the end of the day, the Tobin tax and this type of per trade tax are merely backdoor methods to either tax wealth or assert even more government control over private economic activity. It's no coincidence that the pressure for the Tobin tax comes from socialist countries who want to be able to manipulate their currencies without outside interference.

 

Well said as usual gentlemen.