General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy We Need a Financial Speculation Tax
Lets get one thing straight: The United States doesnt have a public debt problem. Net interest payments on the federal public debt are less than 1 percent of GDP, which is about as low as they have been in the post-World War II era. In the long run, projected debt problems are a result of rising health care costs driven by the private sector -- and would disappear if we were to reduce these costs to the level of other high-income countries.Unfortunately, the lavishly financed debt-scare crowd has the upper hand for now and is threatening to cut vital programs such as Social Security and Medicare. For that reason, and because in the long run our government will need more revenue for long-underfunded spending such as education and infrastructure, it is worth considering progressive measures to increase federal revenue.
One great idea is a very small tax on financial transactions, otherwise known as a financial speculation tax. Senator Tom Harkin and Congressman Peter DeFazio have introduced a bill in both chambers of Congress, The Wall Street Trading and Speculation Tax Act of 2013. It would levy a tiny tax just 3 cents per $100 on trading of stocks and bonds as well as futures, options, and other derivatives. According to the non-partisan congressional Joint Tax Committee, based on a very similar bill, this would raise about $352 billion over the next decade.
The tax is nothing very new or different we had a higher tax on stock trades until the 1960s. There is no obvious down side. It wouldnt apply to new issues of stocks or bonds, but just trades. Most investors would barely notice it. Ordinary savers might actually gain because the tax would reduce the volume of trading, which ends up being a cost to savers holding mutual funds...
(Read more: http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/why-we-need-a-financial-speculation-tax)
Skink
(10,122 posts)why should labor entirely fund the program?
summerschild
(725 posts)Scuba
(53,475 posts)Benton D Struckcheon
(2,347 posts)The super-fast churning that now takes place as part of what's now called High Frequency Trading (HFT). The folks who engage in this actually find it profitable to put their computers as close as physically possible to the computers of the exchanges so as to be first to know who's bidding on what and make a little more on that.
The problem with this is that they've taken the place of regular market making, the guys who used to put up bids & offers on stocks. But unlike those market makers they aren't obliged to put up a bid or offer on a stock if they don't like what they see, hence the flash crash of a few years ago. The markets are treading on thin & brittle ice that can crack at any time for any reason or no reason at all. The exchanges keep putting on different solutions to this, but the simplest solution is always the best: this small tax would actually render most of their trading unprofitable. No more flash crashes.
Of course Wall Street would be against it because a large part of their profits now derives from HFT. The cost alluded to above re mutual funds and savers is the additional cost of supporting all these HFT players. They pay for very expensive servers, and very expensive programmers to make those servers work, and all of that money comes out of the profits they're making on this, and all of those profits are coming at the expense of workers' 401ks and IRAs.
indepat
(20,899 posts)paid-for benefits of social security and Medicare beneficiaries than impose a small financial transactions tax which would raise several hundred billion dollars over ten years: the Legislative and Executive Branches have spoken volumes on how the debt created by junior's extremely reckless fiscal policies are to be paid for and closing tax loopholes or new taxes aren't in the mix, but cutting social security and Medicare is.