HEAL AMERICA | TAX WALL STREET GREED
From the Massachusetts Nurse Newsletter
August 2011 Edition
What would this tax do?
The Wall Street tax would establish a small fee on each trade of stocks, credit default swaps, derivatives (a financial instrument whose value is derived from something else, i.e. a bank selling the value of a home mortgage debt it is owed) or other financial transactions. This fee is known as a “financial transaction tax (FTT),” or “market speculation tax.” It does not apply to ordinary consumer actions, such as ATM withdrawals.
Is this like a Wall Street sales tax?
This tax would be the equivalent of sales taxes that Americans have long paid on most goods and services—every time they buy electronics or other consumer goods, pay their utility bill or eat at a restaurant. There presently is no such tax on Wall Street transactions.
How much revenue would be raised?
Estimates project a range of $175 billion to $350 billion depending on the percentage of the fee on transactions, what is covered, and how much market activity would be reduced as a result of the fee. Applied to the full range of Wall Street actions, including stocks and equities, swaps, bonds, options premiums, foreign exchange transactions, and futures, progressive economists estimate it would raise at least $1.7 trillion over 10 years even if trading volume was reduced by half.
How would the tax affect ordinary investors?
The tax would target the major traders and speculators on Wall Street who carry out most of the market activity. For ordinary investors, the costs will be negligible. The tax would likely discourage many of the worst excesses on Wall Street, such as the excessive speculation on derivatives and other activity that largely prompted the Wall Street crash of 2008 and subsequent recession. Big corporations, in particular the financial industry which dominates the economy, and speculators favor this casino-style capitalism to make windfall profits over long-term investments that build wealth broadly over time; they should pay their fair share.
How would the revenue from the Wall Street tax be used?
New revenue from the tax would be available to rebuild America for everyone on Main Street who has been so harmed by the abusive practices on Wall Street and the diversion of national resources to those who need it the least. The billions raised from the FTT would be available for creating jobs at living wages, health care, education, housing, and other community investment programs.
Who supports a Wall Street tax?
Great Britain has a similar tax on each stock trade which has been very successful in raising revenues while not inhibiting financial activity; the London Stock Exchange remains the largest in Europe and the fourth largest in the world. The European Union is actively considering extending an FTT throughout the EU. Other nations in Asia, South America, and Africa have similar taxes. After the 1987 U.S. Wall Street crash, a number of U.S. politicians endorsed similar measures, including then-Senate majority leader Bob Dole and the first President Bush.