To: President Donald Trump, The United States House of Representatives, and The United States Senate
Financial transaction tax
Put a 0.5% tax on every $100 of stock, bond, derivative and option sales. This will raise up to $350 billion/year, $3.5 trillion over ten years.
That amount is near what the White House and Republicans agree is needed to fix the deficit.
That amount is near what the White House and Republicans agree is needed to fix the deficit.
Why is this important?
As Eliot Spitzer says, this idea is supported by a wide range of economists, including Nobel laureate James Tobin, as well as advocates, including Ralph Nader in the Washington Post [4] this weekend, and elected officials: a tax on financial transactions. It will give us gobs of revenue. It will fall on a sector that has generated enormous and unwarranted profits for a very few, who at the same time have benefited from huge bailouts and regulatory help and largely escaped any responsibility for their central role in creating the financial cataclysm that we are still struggling with.
And as Spitzer says, there is an added benefit here: Trading in the equity and debt markets has gone wild over the past few years. High-speed trading and speculation have overtaken the economically legitimate reasons for our desire to have highly liquid markets: the capacity to raise capital and then allocate it efficiently among sectors and companies. The trading that has emerged over the past few years is not serving that purpose—it is a casino enterprise driven by hidden pools and computer algorithms that do not seek to hold capital for longer than an instant. To the extent that a financial-transfer tax drove some of those trading practices out of the marketplace, that would be another good outcome.
And as Spitzer says, there is an added benefit here: Trading in the equity and debt markets has gone wild over the past few years. High-speed trading and speculation have overtaken the economically legitimate reasons for our desire to have highly liquid markets: the capacity to raise capital and then allocate it efficiently among sectors and companies. The trading that has emerged over the past few years is not serving that purpose—it is a casino enterprise driven by hidden pools and computer algorithms that do not seek to hold capital for longer than an instant. To the extent that a financial-transfer tax drove some of those trading practices out of the marketplace, that would be another good outcome.