Jim Hightower (Photo by Larry D. Moore)
The congressional Republicans are still whining loudly that the federal government cannot pay its debts, and therefore the programs to help hurting Americans must be cut. What they will not tell you is that it is their own policy that has caused the huge budget deficit — a policy of waging unfunded wars while cutting taxes for the rich and giving unneeded subsidies to large corporations, and perhaps most egregious of all, giving Wall Street a “free ride” when it comes to taxation.
The truth is that the United States is still the richest country in the world, and there is plenty of money in this country to fund programs to help ordinary Americans that are hurting. I have spoken many times on this blog about my belief that the rich should pay a little more (by taxing their capital gains income as earned income), and the corporations should pay their fair share (by removing the billions in unneeded subsidies and loopholes).
But there is another thing that can, and should, be done — and that is to institute a “Robin Hood” tax on Wall Street transactions. This would be a tiny tax on all stocks bought through the stock market. The tax would be small enough to not inhibit any stock trading, but because of the huge volume of trades, would be enough to add hundreds of billions of dollars in federal government revenue.
One of the best explanations of why this tax would be a good thing for this country is put forward by Jim Hightower (a leading Texas progressive). Here is some of what he has to say on the subject at his website, the Hightower Lowdown:
When I buy a $3 pack of toilet paper here in Austin, Texas, I pay an extra 8.25 percent in sales tax. If I buy a cuppa jo, book, bicycle, or blue jeans–same thing.
But if a high-roller in the HFT game buys $10 million worth of corporate stock, $10 million worth of oil futures, and $10 million worth of a Goldman Sachs package of derivatives–he or she pays zero tax on the sales.
First, it’s a rank injustice that even the poorest among us are taxed on their purchases while millionaire Wall Streeters who make high-speed computerized purchases skate through this gaping loophole. Second, the profiteering churners and reckless speculators wrecked the country’s economy, and they’ve never paid for the mess they made for so many millions of families that consequently lost jobs, homes, income, and hope.Third, this is a BIG idea that will let our society do big things again. Plugging this loophole with even a small sales tax on purchases by high frequency traders will generate the money America needs to do what needs to be done.
A Financial Transaction Tax. An FTT is not an idea whose time has come, but simply returned. From 1914 to 1966, our country taxed all sales and transfers of stock. The tax was doubled in the last year of Herbert Hoover’s presidency to help us recover from the Great Depression. Today, 40 countries have FTTs, including the seven with the fastest-growing stock exchanges in the world. Seven members of the European Union (including Germany and France) voted for a financial transaction tax to help blunt rising poverty, restore services, and put people back to work.
This is no soak-the-rich-idea. Rather than asking the Wall Street crowd to join us in paying a six to 12 percent sales tax, the major FTT proposal gaining support in the US calls for a 0.5 percent assessment on stock transactions. That’s 50 cents on a $100 stock buy, versus the $8.25 I would pay for a hundred-dollar bicycle.
Even at this miniscule rate, the huge volume of high speed trades means an FTT would net about $300-350 billion a year for our public treasury. Plus, it’s a very progressive tax. Half of our country’s stock is owned by the 1 percenters, and only a small number of them are in the HFT game. Ordinary folks who have small stakes in the markets, including those in mutual and pension funds, are called “buy-and-hold” investors–they only do trades every few months or years, not daily or hourly or even by the second, and they’ll not be harmed. Rather it’s the computerized churners of frothy speculation who will pony up the bulk of revenue from such a transaction tax.
An FTT is a straightforward, uncomplicated way for us to get a substantial chunk of our money back from high finance thieves, and we should make a concerted effort to put the idea on the front burner in 2014 and turn up the heat. Not only do its benefits merit the fight, but the fight itself would be politically popular. One clue to its political potential is that the mere mention of FTT to a Wall Street banker will evoke a shriek so shrill that the Mars rover hears it. That’s because they know that this proposal would make them defend the indefensible: Themselves.
First, the sheer scope of Wall Street’s self-serving casino business model would be exposed for all to see. Second, they would have to admit that they’re increasingly dependent on (and, therefore, making our economy dependent on) the stark-raving insanity of robotic high frequency speculation. Third, it’ll be completely ridiculous for them to argue that protecting the multi-trillion-dollar bets of rich market gamblers from this tax is more important than meeting our people’s growing backlog of real needs.
Unsurprisingly, then, Koch-funded operatives and other defenders of privilege are rushing out articles that amount to Wall Street blah-blah-blah: “FTT would hurt poor pensioners, farmers, long-term investors, job creation, liquidity… and blah, blah, blah.” Note that there’s nary a mention of who’ll really be pinged: Wall Street’s gamblers and thieves. After all, to concede that they’ll be hurt, even a little, would elicit a coast-to-coast shout of, “Yes!”
The Financial Transaction Tax idea is blessed with broad support, ranging from Bill Gates to Occupy Wall Street to the Vatican, and it’s been embraced by dozens of major economists, including Nobel laureates Joseph Stiglitz and Paul Krugman. But this fight will be won at the ground level of good politics, and that’s well underway. Many grassroots groups and several progressives in Congress have already forged solid coalitions and are going to the country-side with a growing campaign to make Wall Street pay.
A major push is being made under the banner of the “Robin Hood Tax,” led by National Nurses United, National People’s Action, Health GAP, andProgressive Democrats of America. They and some 150 other organizations are backing the IPA. (This IPA is not a beer, though I suggest the organizers brew one to help popularize, cheer, and lubricate the cause.) It’s theInclusive Prosperity Act, a proposal by Rep. Keith Ellison and others for an FTT. Sen. Tom Harkin and Rep. Peter DeFazio have another version with a more modest tax rate.
This campaign offers a remarkable democratic opening. It widens America’s public policy debate from the plutocrats’ tired, narrow-minded mantra of defeat: “We’re broke. Big undertakings are beyond us. Shrink all expectations for yourselves, your children, and your country’s future.” Instead, a new conversation can begin, saying: “Look under that rock. There’s the money we need to invest in people. Let’s get America moving again!”
A sales tax on speculators can deliver tangibles that people need but Wall Street says we can’t afford–infrastructure, Social Security, education, good jobs, etc. Just as important, it can deliver intangibles that our nation needs but Wall Street tries to ignore–fairness, social cohesion, equal opportunity, etc. It’s a holiday gift card for America’s future–a gift that literally would keep on giving.
