Easy Fix: Wall St. Financial Transaction Tax Scorned by GOP

Ever since I began this web site in 2011, (to try to explain of the 2008 crash, to try to understand why we have a ceiling insead of a floor on Social Security earnings subject to tax, why we were trying to dismantle the Post Office by requiring a non-profit, non-taxpayer-funded organization to fund a pension plan 75 years into the future, etc.) I have called for a Financial Transaction Tax :The One-Penny Solution: one which is a practical, fair, and simple fix to many of the funding problems in our governmental economic system. It also has the added bonus of having no effect on 99% of Americans—and would tax the most notorious freeloaders, scam artists, and politically protected group in America today….Wall Street Brokers.

Who would have ever thought that socialist Europe would be better capitalists than the United States? They already havea Financial Transaction tax on stock exchange trades.

293_cartoon_wall_street_bailout_large

The reckless actions of Wall Street institutions directly led to the collapse of the U.S. economy and the deep recession of 2008-09 after the GOP Glass-Steagall repeal, (see: Gramm-Bliley- Leach Act of 1999,  Think We’re Immune to Another Great Depression?).

The Wall Street firms that looted and gambled trillions away in worker pensions and mutual fund savings were never indicted, much less prosecuted, and never charged with their lies, manipulations and malfeasance.  They all made billions of dollars in speculative money and held hostage the real economy where money is made providing goods and services.

Possibly worst of all, the actions of Wall Street resulted in the loss of more than 8 million jobs, which the GOP somehow, places Obama’s feet ignoring all historical evidence and laws of physics to the contrary.

Despite all the lasting harm caused by the casino capitalists, the big banks are now bigger, richer and more powerful than they were when they were when George W. Bush, Hank Paulson and Ben Benanke shoveled money at them and bailed them out in late 2008; yes BEFORE Barack Obama even took office. The only ones who were punished were the U.S. taxpayers, who footed the $600 billion bill for the excesses of Wall Street.

Shamelessly, and as of December 2014 protected again by putting the U.S. taxpayer on the hook for the repeat of such occurrence that is sure to come, many firms still continue to gamble with other people’s money….which Glass-Steagall strictly prohibited.

From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended.

Something needs to change. One necessary change lies in a financial transaction tax. The Financial Transaction Tax movement began in the United Kingdom in 2010 with the support of hundreds of economists, prominent public figures and social justice organizations.

Rep. Keith Ellison (D-Minn.) reintroduced “The Inclusive Prosperity Act” — inspired by the Robin Hood Tax. If passed, the bill (H.R. 1579) would create a minuscule tax on the purchase and sale of derivatives, options and stocks

Consider this fact: American consumers in most states pay sales taxes on the necessities they buy — cars, appliances, clothes, etc. The rate of such sales tax is, in some areas, as high as 7 percent. For example, a schoolteacher or police officer who buys a $100 pair of shoes pays up to $7 in sales taxes. Most people accept the idea of paying such a tax. But what about the folks on Wall Street? A trader can buy and sell millions of dollars of financial products each day without paying a cent in sales taxes. Why should financial transactions be exempt from a small sales tax?
A financial transaction tax could raise over $350 billion annually — money that could be used to repair critical infrastructure, create decent paying jobs, cut the tax burden on individuals and start to rein in frivolous high-volume trading.

At the news conference announcing the legislation, Rep. Ellison said: “This is a small tax on financial transactions that will allow us to meet the needs of our nation. And didn’t America step up, on very short notice, for Wall Street when it needed help? Well, now the American people need help.”

Critics of a financial transaction tax have all sorts of excuses. They argue it would harm ordinary investors; it wouldn’t, there are protections in place for small investors. Some say it would drive trading to offshore tax havens; but forty countries already have such a tax in place with little compelling evidence showing an adverse effect.

Casino capitalists won’t give an ounce of their immoral obligation without a fight. However, the endorsement of more than a thousand economists speaks volumes. One supporter, the Capital Institute’s John Fullerton (of the Capital Institute and The Schumacher Center for Economics), has stated that a financial transaction tax could have significant impact in lessening the use of high-frequency trading. He has estimated that nearly 70 percent of equity-trading volume falls under this category of highly speculative trading. In June 2012, Fullerton and over 50 other financial industry professionals wrote a letter to the G20 and European leaders advocating for small financial transaction taxes.

The United States had a financial transaction tax from 1914 until 1966. It imposed a tax of 2 cents on every $100 sale or transfer of stock.

What does Wall Street do that is so vital for the national interest? To begin to answer it, they can start paying this small tax.

As the Financial Transaction tax website succinctly puts it with their slogan, it would be “small change for the banks and big change for the people.”

Harvey A. Gold