From TaxWallStreet.org; H/T IPR commenter “Guess What.” This issue has been recently discussed first in our LP presidential debate/discussion thread and then in the January 2015 Open Thread. According to Politics1.com:
TAX WALL STREET PARTY – This party, founded in 2013, seems to have appropriated the populist anti-corporate message of the Occupy Wall Street movement — although the real story of this party is far removed from OWS. The TWSP is run by Webster Tarpley, a vocal conspiracy theorist and longtime activist in the LaRouche political cult. The party supports a 1% sales tax on all Wall Street transactions, wants to “nationalize” the Federal Reserve to make it more responsible to the public, supports single-payer nationalized health care for all, and wants a 15% protectionist tariff (tax) on all imported goods. The party ran a canidate for NYC Mayor in 2013, and a US Senate candidate in Nebraska in 2014 (later disqualified from the ballot).
Other parties such as the Greens have also called for a Wall Street Transactions Tax. We welcome discussion in the comments.
The fiscal problems of the United States are largely due to the fact that Wall Street pays no taxes. While working families pay 7% or more in sales tax for the necessities of life, Wall Street speculators pay no tax on their share of a yearly turnover of over $5 quadrillion (5,000 trillion dollars) in stocks, bonds and derivatives. A 1% tax on this turnover, equally divided between the federal and state governments, largely solves the budget deficit at all levels of government. It also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services – which are now in effect subsidized because they are not taxed – and the tangible, physical production of manufactured goods on which our economic survival depends.
A small federal tax on securities transfer was in effect until the Johnson administration. In New York State, a small transfer tax remains on the books, but the $20 to $30 billion yearly proceeds are being remitted to the zombie banks as a result of successful Wall Street extortion. A Wall Street Sales Tax has been endorsed by a growing number of public figures, economists, journalists and legislators, with several bills already having been introduced into the US Congress.
In December, 2012, 11 member states of the European Union, including Germany and France, endorsed the European Union financial transaction tax (EU FTT), which will charge 0.1% on the sale of stocks and bonds, and 0.01% on derivatives. Opposition to this tax has been centered in Wall Street and the city of London.
We Demand:
We demand a 1% tax paid by all US sellers of stocks, bonds and derivatives, all of which must be traded and reported on open exchanges.
The proceeds of this tax should be split between the federal and state governments to fund social obligations, public payrolls and pensions, and public infrastructure.
Household-level investment must be protected with a $1 million yearly exemption. The 1% Wall Street Sales Tax is not a “wealth tax” but a sales tax directed at professional financial speculators.
You may want to read articles and do some research on how to invest in stocks.
FAQ:
How will this tax affect the little guy or my 401k?
Households with less than $1 million in financial transactions per year will be entirely exempt from the tax, therefore the vast majority of savers with modest brokerage accounts, 401(k) plans, IRAs, Keogh plans, etc. — about 98-99% of the American people — will never be affected by the tax.
Is this a new idea?
No. The United States collected a similar tax on stocks between 1914 and 1966. Today, at least 29 countries, including Australia, Brazil, China, France, Hong Kong, Hungary, India, Ireland, Italy, Russia, South Korea, Switzerland, Taiwan and the United Kingdom, currently use some sort of financial transaction tax (FTT) and the idea is being considered in about a dozen others. The European Union, representing 28 member states, is also seriously debating the implementation of such a tax. Far more modest than what we’re advocating here in the United States, the EU proposal would tax stocks and bonds at 0.1 percent and derivatives — Credit Default Swaps, Collateral Debt Obligations, futures, options, etc., — at a very minimal 0.01 percent. When it comes to the stock industry, there is so much to learn and take in. It can be quite a lot to understand, but if you start by checking out sites like Stocktrades.ca, at least you’ll be on the right track and know the basics if you ever consider investing in the stock market one day.
How will the money be spent and how can we make sure that the money isn’t co-opted?
The Tax Wall Street Party strongly advocates that revenues raised from a 1% Wall Street Sales Tax — to be divided evenly between the federal government and the various states — should be used first to end the “sequestration” budget cuts and rebuild the nation’s tattered social safety net. H.R. 1000, introduced by Congressman John Conyers, proposes a similar tax (albeit with much lower rates), and directs the proceeds to a “trust fund” used for job creation and training.
To take another example, the Robin Hood Tax, sponsored by the British NGO Oxfam, is proposed as a means to pay for global health and climate change projects. “Robin Hood,” endorsed by the excellent National Nurses United, is not only an unwise name in America, but an illustration of how the proceeds of this tax could be misused if they are not reserved for broad-based public purposes.
Is this Constitutional?
The idea of a financial transaction tax has long withstood any constitutional challenge. In fact, although you need a magnifying glass to see it, a very small financial transaction tax — 0.0034 per cent on stock transactions — remains on the books today and is used to fund the Securities and Exchange Commission (SEC).
Why do we need more taxes?
Ordinary citizens pay sales tax, gasoline tax, property tax and income tax. Yet financial speculators pay nothing — absolutely nothing — on more than $5 quadrillion in annual transactions involving stocks, bonds, and derivatives. And their income tax rates, counted as capital gains, are lower than yours and mine. It is plainly unfair that the victims of Wall Street’s recklessness are asked to bail out those who nearly destroyed the U.S. and global economy.
1%? Why not 10%?
Why should a hedge fund pay a lower tax rate on worthless derivatives than the average person pays on a pair of shoes, an appliance or an automobile? Good question. The ideal Wall Street Sales Tax will be high enough to curb dangerous speculation (like high-speed programmed trading), but low enough to keep normal investments and risk management possible. We believe a 1% tax fits that bill better than the much lower rates demanded by other advocates of a Wall Street Sales Tax.
Why a sales tax? Can’t we just raise income taxes on the “1%”?
One of the strongest arguments for a Wall Street Sales Tax is that it collects tax revenue at the moment financial transactions cross an exchange. These speculative flows are the primary source of income for the super-rich. While they remain untaxed, money is sucked out of the real economy only to end up in offshore tax havens or hidden with accounting tricks and loopholes.
For Further Reading:
CEPR: a list of public figures endorsing a Wall Street Sales Tax (pdf)
Daily Kos: Bridging the Fiscal Cliff: A Wall Street Sales Tax
Wash. Post: Ralph Nader on a simple way to avoid the fiscal cliff: Tax stock trades
Salon: Wall Street’s nightmare
I don’t know how sensitive you and whoever else is part of this mysterious we are.
I don’t think it really needs too much elaboration, especially since you already know a lot about public choice theory. The incentive structure of government makes it a lot easier to institute or expand a tax, regulation or department than to get rid of one or even cut it.
Not especially, although you probably would be – as I understand it that’s your concern with various weapons of comment distraction. But that’s an entirely different kind of risk, and a bad try to McGyver up a shoehorn when there’s no shoehorn in sight.
Nope, that’s not it at all. I think my prior comments explain my position just fine. If it still mystifies you, which I find unlikely, we’ll just have to leave it at that.
PF, my aren’t we sensitive? Tell us more about these real, substantive risks you sense.
Were you concerned when the LP platform used to say this:
“We further oppose all attempts to ban weapons or ammunition on the grounds that they are risky or unsafe.”
Just imagine how THIS language may have spun out into reality!
I mean, if your standard is that when a fairer, pro-liberty concept is put on the table but IT MIGHT not work out as intended, that strikes me as biased toward silence on issues of the day.
And that brings me back to my original point that we are at the table when it comes to pushing for issues, much in the same way that the Socialists, Progressives and Prohibitionists were a century ago. Maybe not to quite the same extent yet, but getting there.
The “prebate” welfare scheme makes that arguable. Mike Gravel was/is for it, for example.
But again the details of any new/expanded tax are sort of besides the point for me, since I see the likelihood of other taxes actually (rather than just in theory) being offset to compensate for them as low. And I don’t think this is just an academic point either – I see a real, substantial risk that we can play a pivotal role (in the original meaning of pivotal) in enacting a new or expanded tax while failing to reduce or eliminate any existing taxes.
pf, in my estimation, the risk is zero, since Ls are not at the table.
If say GJ could re-do his tax plan along the lines of a universal transaction tax when he hopefully gets the 16 nomination, this would position him and Ls differently than he was when he advocated the FAIR tax, which is a right-wing viewpoint.
Ls — esp. Randian/Rothbardians — have a “let them eat cake” economic positioning. Rothbard not only REJECTED the concept of free-riding, he celebrated free riding! I see this as a massive non-starter.
At any level of GDP, government needs to be funded in some form. In concept, I’d like to see that funding be as fair as possible. Ls traditionally bristle at the concept of fairness, which leads them straight to the fringes.
I’d rather see the funding — at any level — minimize free riding. If we can’t answer the question: why is it fair to tax the bread transaction but not a financial transaction, I’d say such a person cares very little about bending public opinion in his or her direction.
And that’s OK. Just don’t be surprised that public opinion will continue to march in the direction of statism….
No, I said “Maybe in theory. That theory has been discussed in some detail in this thread and prior threads.” In other words that’s not what I am addressing in this particular point. My point is about any new or expanded tax, not only the FTT. My main point is that the risk that the supposed compensating reduction or elimination of other taxes will get stripped out before final passage is exceedingly high. You seem to think it’s an acceptably low risk; if so, I disagree.
pf: I wouldn’t [take out SS].
me: The point is that the term of art is to talk about discretionary and non-discretionary spending. SS benefits are considered “non-discretionary.” Regardless, the personal income tax is much larger percentage of non-SS revenues is we exclude FICA. It’s simple math.
pf: I wouldn’t go so far as to say virtual certainty, but way too far in that direction for me to find acceptable.
me: That’s fair, for you.
pf: Maybe in theory. That theory has been discussed in some detail in this thread and prior threads. The reality is that the government is badly “in need” (in the same sense that an addict is in need of a fix) of new sources of revenue, since debt and entitlement bubbles are running out of air and the military-industrial complex feels the need for ever bigger and better adventures which have a tendency to turn into endless quagmires and blowback. Passing a new tax, or massively expanding a relatively tiny one, would be just the fix to keep the party going just a little while longer and postpone the eventual crash. Any silly idealistic push to get rid of or seriously curtail other existing taxes as the idea comes closer to implementation is highly likely to be discarded like a booster rocket.
me: Well, I’m pleased that you seem to agree that there is free-riding now, in theory. There can be free riding at ANY level of government spending. My guess is it’s massive currently, which leads to a sense of generalized inequity.
pf: But not “the” income tax, and it depends on how you define income.
me: True. FICA is a tax on what is called “income” by most. You could also say its a tax on wages and other forms of income, which is less prone to misinterpretation.
I wouldn’t. It’s a ponzi scheme and there’s no trust fund. Current taxes are paying for past promises. Ways to wind down the system might include means testing, allowing voluntarily opting out, raising the eligibility age, and selling federal assets to pay off the remaining obligations. Alternatively, and not preferably, the bubble might burst because the size of the retiring generation and their increasing longevity will make it impossible for the smaller, increasingly underemployed/off the books/out of the workforce working age population to keep up with the payments.
I wouldn’t go so far as to say virtual certainty, but way too far in that direction for me to find acceptable.
Maybe in theory. That theory has been discussed in some detail in this thread and prior threads. The reality is that the government is badly “in need” (in the same sense that an addict is in need of a fix) of new sources of revenue, since debt and entitlement bubbles are running out of air and the military-industrial complex feels the need for ever bigger and better adventures which have a tendency to turn into endless quagmires and blowback. Passing a new tax, or massively expanding a relatively tiny one, would be just the fix to keep the party going just a little while longer and postpone the eventual crash. Any silly idealistic push to get rid of or seriously curtail other existing taxes as the idea comes closer to implementation is highly likely to be discarded like a booster rocket.
Even if all of this were true it in no way addresses what you were allegedly responding to, which was a broader point about a new tax passing or expanding and the taxes it was supposed to replace not actually going away or being cut. And that’s any new or expanded tax, not just the FTT.
But not “the” income tax, and it depends on how you define income.
GW makes a good point as well…
FICA is an income tax.
pf: I suggest lowering and simplifying existing taxes across the board, plus spending cuts, as a better plan. No new taxes, no increased taxes, no increased spending anywhere, and nothing as psychologically extreme as outright immediate elimination of any tax, although that’s still my long range goal.
me: I’m generally OK with your positioning here. The only thing you don’t address is the massive free-riding that happens when there is no match for the spending that is done to facilitate financial transactions goes untaxed.
pf: Actually something like 45%.
me: I said “discretionary,” not total. Generally that means taking SS out of the equation.
pf: Not if the end result is all the existing taxes plus a new one.
me: It is a risk, I agree. Since there already are really tiny transactions taxes for the free-riding financial transactions, I would suggest that my idea for a universal transactions tax COULD be positioned as a rebalancing of tax burdens on an existing tax regime that would be much lower rated, fairer, and profoundly less distortive and manipulative.
pf: Greens might consider that to be OK, but why would Libertarians?
me: It would address the massive free-riding that happens now. It would FAR less manipulative. It would lower rates dramatically. It would unleash the productive forces to produce and consume as they choose to, which would likely increase general prosperity and domestic tranquility. It would stop taxing incomes, capital gains, dividends, and the sales tax rate would be tiny. If, of course, it can be structured properly.
I disagree that we are that powerless. We have a much bigger influence on pushing ideas into the public square than on getting elected or even actually (as opposed to in other people’s minds) swinging elections. Alt parties have long been at the forefront of influencing policy.
I fully understand the impetus, but it’s a huge miscalculation.
That might be nice but why the income tax? FICA is worse if anything. It also sounds more extreme than it actually is, and no realistic numbers comprising spending cuts, debt service and entitlements/reform over a presidential term was ever given to put substance to the soundbite.
I suggest lowering and simplifying existing taxes across the board, plus spending cuts, as a better plan. No new taxes, no increased taxes, no increased spending anywhere, and nothing as psychologically extreme as outright immediate elimination of any tax, although that’s still my long range goal. It achieves the goals of simplification and tax relief while not coming off too unbalanced and shrill as “replace it with nothing” can, and not risking unintentionally actually making things worse as introducing any new tax does.
No, it sounds like it, but it doesn’t.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=264
Actually something like 45%.
So it sounds worse or better than it actually is depending on your perspective.
Increased personal exemption and/or no payroll/FICA tax. Way better than making almost everyone used to getting a “something for nothing” check from the government every month even if you mislabel it a “prebate.”
Not if the end result is all the existing taxes plus a new one.
Greens might consider that to be OK, but why would Libertarians?
pf, may be. This is not a problem for Ls or Greens. We’re not at the table. We instead wander lonelily in the wilderness.
The point is to signal to anyone who will listen to give the sense of intentions. GJ, by advocating the FAIR tax, wanted to make the case to simplify taxation while providing for the least well off. However, it comes off as a tin-eared plan, and makes it sound like consumption is bad, and that saving is virtuous.
I always thought that to be L was to be neutral in such matters of personal preferences!
The other positioning one sees in L quarters is RP’s “abolish the income tax and replace it with nothing.” To me, this is also poor positioning, as it sound hyper-right-wing, irresponsible, and implausible. It would require something like an overnight 80% cut in discretionary federal spending. I know that quickens the pulse of some Ls, but it’s so not gonna happen, why waste breath on it and ensuring fringy positioning.
It’s easier to advocate (for positioning purposes) a flat tax, but again that has a right wing feel to it. Screw the lower income folks, they should pay the same rate as Peter Thiel only plays the affluent, right wingers, Ayn Rand enthusiasts, etc.
There’s no need to worry about adoption, dude. I would say any plan SHOULD be plausible, but its enactment is unlikely. Yes, it could be influential, and I’d say a universal very low transaction tax that is equitable is a good influence. Much better positioning on its face.
Mutation happens. Deal with it.
Better to see a good idea mutate in the Public Square than a wacky idea be of no influence at all.
Whatever their respective merits or demerits, any new tax, be it the FTT, VAT, “fair” tax or what have you, are far more likely to end up as new taxes on top of all the exiting taxes than as replacements, no matter what the intention of their proponents. Once you put an idea out there you don’t own it, and it is far more likely to pass in a mutant form than any pure form you envision. It is far easier to pass a new tax than to get rid of old ones. The bill you propose may make getting rid of the old taxes a condition of passing your new one, but that provision can be amended out.
z: More importantly, the world is short of capital. We are short more than $100 trillion in real capital investment we need to rebuild our cities and infrastructure and create jobs for future generations.
me: This has a grandiose, central-planning feel to me, but for conversation purposes, let’s go with it. (It would be interesting to hear how you could possibly arrive at such a number.)
I would think that abolishing capital gains, dividend, and high marginal rate income taxes would be positive steps to undo obstacles to capital formation.
Do you disagree, my profoundly confident friend?
AC re huffiness, at 1026 you wrote this ‘graph:
“Talking about taxing stocks “like bread” just shows that you don’t understand what a stock *is*. And if you want to complain about “speculation” than you shouldn’t be allowed within spitting distance of writing laws and regulations for capital markets.”
It’s one ‘graph. The first sentence talked about “like bread,” which clearly refers to me. You bridge to the second sentence with “And if you…,” which sounded to me like you were still addressing me.
If I was mistaken about your intent, my apologies.
AC, it’s funny that some Ls seem to think that consumption is somehow bad. I would think that Ls would favor the free-flow of goods, services, capital investments, and financial instruments. Favoring any over the other seems contrary to liberty, actually.
I would think that Ls would want taxes to be low, fair, and as non-distortive to economic activity as possible. It’s just not obvious that taxing income or consumption is less bad than taxing all transactions, so long as it doesn’t disrupt the ability of markets to continue to provide what consumers want. The benefit of broadening the base is that rates can go lower still, in theory.
Your apology is accepted.
And admittedly I might have been a bit flippant in how I worded that, but I still think “tax FTs like bread” is a ridiculous argument that doesn’t pass basic scrutiny. Perhaps “don’t know” was assuming too much on my part, but if you did know why finanial transactions aren’t consumption goods, then you were doing a good job of acting like someone who doesn’t with your bread/stocks question.
z: RC can sleep at night knowing he has soaked the rich.
me: I do hope you are kidding. Where have I indicated I’d like to see the rich soaked?
@Robert Cappozzi.
Before getting all huffy and puffy and how-dare-you-I-said-no-such thing, perhaps you could find where I directed my comment at you in particular? Others in the thread have suggested the FTT would be a good thing because it would reduce “speculation.” I was addressing various comments, and the original article. Not just you.
Of course there is no $50 trillion available to be taken as tax. It is a bunch of impossible numbers.
It does, however, make it clear to anyone math literate, with logical ability at any reasonable level, that a transaction tax is a WEALTH tax. It is not taken from any profit generated, instead it comes from the value of wealth being traded.
Even a very low percentage rate would be devastating to the financial markets in any country that would implement such a tax.
More importantly, the world is short of capital. We are short more than $100 trillion in real capital investment we need to rebuild our cities and infrastructure and create jobs for future generations.
*******
Governments only consume. Only consumption should be taxed.
A VAT would tax Wall Street. Since a VAT taxes all new goods and services produced in a year, a VAT would apply. The services provided by the financial industry are being produced and consumed by the market, a 10% tax would be levied, and RC can sleep at night knowing he has soaked the rich. And with a 10% VAT, everyone would be paying their fair share based on a flat-rate percentage of their consumption.
The services provided by the financial industry including commissions on trades, insurance and real estate would be taxable with a VAT.
“That would generate $50 trillion in tax revenue in the US per year.
See the problem yet?”
Seems highly unlikely. That’s more than the entire GDP or GNP or whatever measure you want to use for how much wealth is generated in the country every year. It also presumes a constant trading volume, which also seems highly unlikely. In fact, Zeleni explicitly says the idea is to cut down on speculative investment, so that logically means less tax to be collected. For it to generate any significant portion of current federal government operating revenues, the tax would have to take enough of a bite out of many companies and/or exchanges to cause them to flee the country or go out of business. The tax could be small enough not to have much of an effect like that, but then it wouldn’t bring in much revenue to replace other current taxes, and wouldn’t even do much to curb “speculative investment” even if we were to agree that is a bad thing which needs to be discouraged.
Zeleni
“I’m kind of surprised and delighted that so many Libertarians agree with a new tax – and in alignment with Greens on a fundamental economic issue.”
I’m not seeing a lot of Libertarians agreeing with the FTT here, only a couple.
Math literacy people. Doesn’t the ridiculous math in this jump out at anyone. If you don’t get the math, the economics must totally elude you.
They want a 1% tax on trades that they claim amount to 5 quadrillion dollars annually.
That would generate $50 trillion in tax revenue in the US per year.
See the problem yet?
If the point is to penalize “speculative” investment, this tax may work, or at least succeed in getting people to move their trades to foreign exchanges. If the government responds with countermeasures, more wealthy individuals, stock traders, company headquarters and other company operations would also move to other countries at increasing rates. If the government figures out a way to shut that down somehow, many companies in all economic sectors would have to fire large numbers of employees or go out of business completely due to inability to get capital through stock sales and trading.
As a way to fund the government, though, it doesn’t seem like it would work very well, because if it taxes speculative investment in US based exchanges out of existence or slows it to a trickle, the revenue generated would not be what the government would bank on before the tax is imposed. Meanwhile, the government would have just as much debt to service, as many entitlements to pay out, as many employees and contractors requiring payment, and so on; so either it would have to increase the financial transfer tax exponentially in search of ever diminishing returns, or increase other taxes – and whatever those other taxes are on, whether it be income, consumption, or whatever else, they would be taxing a diminished pool. Regardless of whether the market’s response would be to go to other countries or trade far less, the revenue generated would be insufficient to fund government.
Andy C.
In New York, both the State and many municipalities tax mortgage loans. They also tax the both the sale and purchase of real property (those taxes also apply to co-op apartment sales which are technically stock transfers). I have represented parties in many transactions where the transfer taxes and mortgage tax add up to over $100,000 just for the privilege of closing the deal. All of this is before capital gains taxes kick in.
The socialists love to tax intangible stuff that most people don’t see or ever think about.
1% is not enough, just like $15 per hour is not enough for minimum wage.
The Wall Street tax should be at least 100% (why let those dirty, rotten capitalist investors keep any profit at all?) and minimum wage should be at least $150 per hour to make sure we destroy whatever businesses are left after the taxing and regulatory authorities carve them up like a turkey.
In fact, why do we allow private property at all any more in this country? Everything should belong to the State since that’s the only source of all good things in life.
Viva la revolution!
more….
btw, I wrote a paper once for a Public Choice prof arguing that the optimal tax was the poll tax, as it was closest to a user fee!
Got an A.
I now find that view absurb! Youthful exuberance and narrow-minded dogmatism had me in its grips at the time! 😉
ac: Because a financial instrument is not a product or service. It’s a contract, and agreement to structure an certain exchange. And there is no more reason to tax it at that point, than you would a power of attorney or a mortgage loan or a life insurance policy.
me: That sounds to me like “just because.” All these transactions are facilitated by the existence of contract-enforcing mechanisms, all designed to ensure domestic tranquility. (I’m pretty sure mortgages have government fees involved, btw, though I haven’t done one in awhile.)
The reason to tax it is to support and fund these institutions designed to enable economic intercourse. Without the ability to enforce a contract, I’d submit we no longer have a civil society, but rather a state of nature.
Free riding strikes me as a bad idea on a lot of levels. You?
ac: Talking about taxing stocks “like bread” just shows that you don’t understand what a stock *is*. And if you want to complain about “speculation” than you shouldn’t be allowed within spitting distance of writing laws and regulations for capital markets.
me: You could ask me what I know or don’t know. Wouldn’t you appreciate that from others, rather than making wild accusations? Consider the Golden Rule when interacting with others, I’ve found it works!
As for “speculation,” are you addressing this at ME? Why? I’ve said nothing about speculation. I’d appreciate your retracting this false statement, as I would if I falsely leveled it at you!
fwiw, I studied econ at a masters level at George Mason U, almost finished, under Austrians and Public Choice profs. And I’m a former VP of Investor Relations and was on a team that raised billions on the capital markets.
I see the value of liquid capital markets, and even speculation. I make no claims to be an expert, and I’m not running for office. I am, rather, challenging L orthodoxy, especially when I detect blind spots or other paths toward a freer society.
A more universal transactions tax MIGHT be one…I’ve not taken a position, but the idea intrigues me on economic, political, and equity grounds.
Because a financial instrument is not a product or service. It’s a contract, and agreement to structure an certain exchange. And there is no more reason to tax it at that point, than you would a power of attorney or a mortgage loan or a life insurance policy.
Talking about taxing stocks “like bread” just shows that you don’t understand what a stock *is*. And if you want to complain about “speculation” than you shouldn’t be allowed within spitting distance of writing laws and regulations for capital markets.
I’m kind of surprised and delighted that so many Libertarians agree with a new tax – and in alignment with Greens on a fundamental economic issue.
I typically see proposals from Greens and other progressives at less than 1%, often at 0.05%. Keith Ellison’s “Inclusive Prosperity Act (H.R. 6411) would tax the sale of stocks, bonds and derivatives sold by Wall Street firms. The tax imposed will be 0.5 percent on stocks, 0.1 percent on bonds, and 0.005 percent on derivatives or other investments.”
The fact that so many trades have such slim margins indicate how much is done in short speculative strategies. If the tax is greater than the small expected gain, then it will discourage that type of trading and encourage healthier, more stable investments.
And Robert, you are right on point. I’d rather implement this tax and shift away from sales tax on essential goods. Although the entities receiving these taxes would be different and need to be addressed. But the sentiment and logic is solid.
ac: As they themselves noted, a “small” FTT already exists and is used to fund the SEC. It’s set at 0.0034%, not because of some giveaway to the evil capitalists (the SEC is not exactly a small low-budget agency), but because financial markets *couldn’t work* with any but the most de minimus of taxes.
me: Does this existing 0.0034% fee actually fund the SEC in its entirety? Is this fee charged for every trade, just some trades, what? Is it charged for IPOs, bond raises, etc? (Looks like the SEC budget’s ~$1B. FedGov is ~$3.5T. Mouse nuts.)
If there were a 1% tax on the spread of a trade, and the trade went off at 0.25%, it’s too early for me to do that math, but it’s real tiny.
No one seems willing to bite, so let me try the general question again:
Why is it fair that there’s a transaction tax on bread but not on financial transactions?
The “World According to Tarp,” is a strange one indeed. Whether Tarpley — a conspiracy theorist extraordinaire — ever completely divorced himself from Lyndon LaRouche’s organization is almost beside the point.
Tarpley, who spent a great deal of his adult life in the LaRouche organization — at least twenty-five years, spending several of those years in Europe where he worked closely with Helga Zepp-LaRouche and the Schiller Institute — eventually rising to a leadership position, has his own band of merry followers these days. There’s no more than a dozen or so, but they hang on his every word. It’s a “cult of personality” if there ever was one.
The Tax Wall Street Party’s chief propagandist, incidentally, is a guy who lives in Illinois and doesn’t even use his real name…he’s too cowardly. Moreover, the last I heard, the Tax Wall Street Party’s chairwoman doesn’t even live in the United States these days, but somewhere south of the border. And that’s only the tip of the iceberg.
Exactly. I agree.
Mr. Craig is correct. I support phasing out existing taxes, not creating new ones.
No capital markets, no capitalism. We can rail against the corruptions of the current system, and we should, but destroying financial markets just for the sake of destroying financial markets is something no libertarian or free-market advocate should support.
It’s a good idea, if you want all of the major exchanges to leave New York State (and possibly the United States altogether, if this is to be a federal tax). I guess then, in a literal sense, you will have taken out “Wall Street”. And with it New York’s status as both a global and the American financial capital. Meanwhile, things will be looking up for Hong Kong and London and Singapore, and you will have done nothing to stop the evil capitalists except make them do their business elsewhere.
1% might sound like a low rate, but it’s completely missing how these markets actually work. As they themselves noted, a “small” FTT already exists and is used to fund the SEC. It’s set at 0.0034%, not because of some giveaway to the evil capitalists (the SEC is not exactly a small low-budget agency), but because financial markets *couldn’t work* with any but the most de minimus of taxes. The “relatively modest” 0.1% tax being debated in the EU, is being vigorously opposed by the UK, because the vast majority of it would be paid in London (thus harming their exchanges relative to the global competition). The passage of such a tax, if it is passed (it probably won’t), would be one of the few things under discussion that could lead the UK to finally just up and leave the EU.
GP is right that a huge percentage of trades operate at tiny profit margins. About half result in losses. It’s a teenie tiny few that generate large gains.
If the tax is 1% of the value of the sale, that would be ridiculously high, and would devastate financial markets. And that’s what this sounds like.
The profit on very large numbers of transactions is less than 1%. I am not sure what will happen if this idea rolls through, but I suspect it will be quite disruptive.
Even anarcholibertarians (at least ones who still participate in electoral politics) generally support a soft landing (gradual, not immediate, dismantling of coercive government). A few believe that government can get by on voluntary donations alone, but most would concede that some form or level of involuntary taxation will remain necessary at least in the short run, and most non-anarchist libertarians would say in the long run as well. Personally I would agree that getting rid of all involuntary taxation overnight is likely to produce a shock effect that would be worse than winding involuntary taxation down gradually.
I would also think it would be politically unwise to advocate introducing any new tax, because the reality is that we are not likely to be solely in charge of government, and political incentives make it much easier to pass a new tax than get rid of the taxes it is supposed to replace, so we are most likely to end up with all the current taxes as well as the new tax.
However, I also understand why a lot of libertarians consider the existing taxes suboptimal even if they concede that some type of involuntary tax is unavoidable (whether permanently or not).
Thus, it’s not shocking to me to see libertarians who advocate various new taxes, even though I don’t agree with them.
All this is precisely why I still wonder if LaRouche isn’t somewhere behind the scenes in all this. Then again the party did nominate Randy Credico for NYC mayor, and he doesn’t strike me as a LaRouchie.
As to the idea, I’m shocked to see libertarians get behind taxation. I am against this as I would be against any tax.
And from the LaRouche side, while there is no reference to the Tax Wall Street Party that I have found yet per se:
https://larouchepac.com/20150116-3
http://laroucheplanet.info/pmwiki/pmwiki.php?n=Library.WTarpley
http://www.lyndonlarouche.org/larouche-webster-tarpley.htm
Ziggler – Tarpley cut ties with LaRouche like 15 or 20 years ago.
I like this idea a lot. Tax wall street and the banksters, take care of human needs at home, deport all the deportables, enact a protective tariff, stop sending money to Israel and fighting their wars, and nationalize Hollywood so they stop polluting our culture. Oh yeah, simplify the laws and get rid of most of the lawyers. I think that could be a winning formula.
As discussed on other threads, the germ of a good idea is here, I think. The rhetoric here is most unfortunate. It seems punitive, like Wall St is bad and its trading needs to be punished.
In fact, smooth flowing capital markets are vital for a vibrant economic and civil society. While some trading may well be dysfunctional, as a general matter using a tax to curb certain kinds of trading is a bad idea.
What is a GOOD idea, though, is to disallow free riding. For the most part, all transactions in a civil society require the underpinning of a solid and certain rule of law. Financial trades are for the most part not being matched up with the costs of having the mechanisms of a civil society, and the institutions to maintain it. Instead, financial transactions are taxed only when they take the form of capital gains or dividends. Importantly, those rates are VERY high, which distorts the markets.
An FTT might be structured to set at a very low rate and replace the far more distortive capital gains and dividend taxes, as well as some corporate income taxes.
From a social equity perspective, why is it fair that an individual is taxed when buying a loaf of bread, but a credit default swap is untaxed?
I think this “Wall Street” tax is a interesting idea, certainly better than the Fair Tax. I can see it as a good replacement for the Income Tax and a more desirable alternative to the Fair Tax.
I wonder if LaRouche has any direct connection to them, or if this is just Tarpley’s own project?