Congress should enact a tax of about .5% on the sale of stocks, derivatives, and options, raising about $150 billion per year, while also deterring crazy, dangerous high-frequency trading exposed in Michael Lewis' new book Flash Boys.
Why is this important?
We need to raise revenue (rather than cut vital services) and make the federal tax system more progressive. Ordinary citizens pay sales taxes on the goods they buy, but stock transactions aren't taxed. Michael Lewis has pointed to the dangers in high-frequency trading that is distorting-- and perhaps undermining the stock market. A tax would be a far more effective way to deter HFT than regulation.
