5 Reasons the World Is Catching on to the Financial Transaction Tax

[ProSense]

5 Reasons the World Is Catching on to the Financial Transaction Tax

By Adam Hersh and Jennifer Erickson

It has been more than 70 years since John Maynard Keynes wrote about the value of a financial transaction tax in “mitigating the predominance of speculation over enterprise in the United States.” A financial transaction tax works by levying a miniscule fee on the estimated $2.9 trillion of daily financial activity through the trading of stocks, bonds, and derivatives in U.S. financial markets, based on our analysis. The tiny tax makes some of the most speculative unproductive trading unprofitable, thus steadying markets and promoting real investment while raising much-needed revenues. Though many countries around the world already have a financial transaction tax in place, the United States does not yet levy such a fee on trading...Below are five reasons why the world is catching on to the financial transaction tax as a smart policy tool.

A financial transaction tax would bring in much-needed revenue

The U.S. government is currently operating at its lowest level of revenues in more than 60 years....Even a tiny financial transaction tax would raise tens of billions of dollars in much-needed revenue. A tax applied at a very low rate—for example, a 0.117 percent tax on stocks and stock-options trading, a 0.002 percent tax for bonds, and a 0.005 percent tax for futures, swaps, and other derivatives trading—would raise an estimated $50 billion a year, according to our calculations. To put that amount into perspective, $50 billion in essence pays for all of America’s veterans health services, which ran to $50.6 billion in 2012. Historical evidence and economic theory show that financial transaction taxes have the potential to raise substantial revenues without impeding the function of capital markets. By keeping constant the relative transaction costs of trading in different markets, a financial transaction tax can raise revenues without distorting market behavior.

Business and civic leaders support a financial transaction tax

The idea of a financial transaction tax isn’t new, but the chorus singing its praises is growing every day—from leading economists such as Nobel Prize winners Joseph Stiglitz and Paul Krugman to entrepreneurs such as Bill Gates and Marc Cuban, to financial leaders the likes of John Bogle, founder of the mutual-fund giant Vanguard Group. The financial transaction tax also has the support of unions for nurses and other health care professionals and service-sector workers.

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A financial transaction tax helps stabilize volatile financial markets

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A financial transaction tax incentivizes investment for real growth

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Many countries already have a financial transaction tax

The standard stalling tactic for bringing a financial transaction tax to the United States is saying that we should wait until other countries do it first. But financial transaction taxes already operate in at least 23 countries around the world—including in international financial centers such as the United Kingdom, Switzerland, Hong Kong, and Japan—and that number is about to grow.

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http://www.americanprogress.org/issues/economy/news/2013/02/25/54503/5-reasons-the-world-is-catching-on-to-the-financial-transaction-tax/

A Tax That May Change the Trading Game (Europe) - updated
http://www.democraticunderground.com/10022412954

[Sekhmets Daughter]

1. It is long past time to enact this tax. n/t

[ProSense]

2. Kick! n/t

[NightWatcher]

3. let's make those who are benefitting from the system pay a teeny tiny bit

They are gaming the system (and some say manipulating) by making these split second purchases and sales. Lets make them pay and see what happens to our markets as a result.

[reformist2]

4. They will say that it will hurt "price discovery" - always a howler. LOL!

[Enrique]

5. proponents see an opening for the U.S. to get onboard

now that Tim Geithner is out.