April 13, 2016
Page 7
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Wall Street Should Pay a Sales Tax
Proposal finally
gets some
traction
s arah a nderson
In case there was
any doubt, the presi-
dential election fight
has confirmed that blasting Wall
Street, even eight years after the
financial crisis, is still a vote-get-
ter.
Hillary Clinton has said she’d
like to jail more bankers. Donald
Trump has skewered the hedge
fund managers who are “getting
away with murder.” And Bernie
Sanders has made Wall Street ac-
countability a centerpiece of his
campaign.
Of course, financial indus-
try lobbyists aren’t about to take
this lying down. In recent weeks,
they’ve turned up the heat on
lawmakers to block one partic-
ular measure that Sanders has
mentioned in nearly every stump
speech: taxing Wall Street specu-
lation.
Americans are used to pay-
ing sales taxes on basic goods
and services, like a spring jack-
et, a gallon of gas, or a restaurant
meal. But when a Wall Street trad-
er buys millions of dollars’ worth
of stocks or derivatives, there’s no
tax at all.
Sanders has introduced a bill
by
called the Inclusive Prosperity
Act, which would correct that im-
balance by placing a small tax of
just a fraction of a percent on
all financial trades. It wouldn’t
apply to ordinary consum-
er transactions such as ATM
withdrawals or wire transfers.
Wall Street lobbyists are
claiming that such taxes
would still hurt mom-and-pop
investors. The Investment Com-
pany Institute, which represents
the trading arms of J.P. Morgan,
Goldman Sachs, and the leading
hedge funds, recently fired off a
letter to Congress arguing that a
Wall Street speculation tax would
“harm all investors, especially
middle-income American workers
saving for retirement.”
In reality, the type of tax Sand-
ers is promoting would target the
high rollers in the financial casino.
Because the tax applies to every
trade, it would hit the traders en-
gaging in computerized split-sec-
ond stock-flipping the hardest.
That’s a good thing, because that
kind of trading makes markets less
stable and adds no real value to the
Main Street economy.
For ordinary investors in
low-turnover pension funds, the
costs would be negligible — like
a tiny insurance fee to protect
against crashes caused by reckless
and often automated speculation.
Under the Sanders plan, the tax
rate would range from 0.005 per-
cent to 0.5 percent, depending on
the financial instrument. By con-
trast, ordinary sales taxes current-
ly average 8.4 percent.
In addition to discouraging
dangerous speculation, such taxes
would also raise money that could
be spent on urgent needs, like
making college affordable and
fixing our crumbling roads and
bridges.
Since it’s hard to know how
traders will react, it’s difficult to
calculate exactly how much mon-
ey we’re talking. Robert Pollin,
a professor at the University of
Massachusetts-Amherst, predicts
the Inclusive Prosperity Act could
generate around $300 billion per
year in new federal tax dollars.
The Tax Policy Center estimates
that a financial transaction tax with
a slightly lower rate could raise up
to $541 billion over 10 years.
More than 30 countries al-
ready have forms of speculation
taxes that raise billions of dollars
per year. These include many
fast-growing financial markets,
such as the UK, Hong Kong, Sin-
gapore, and Switzerland. In the
European Union, 10 countries
have committed to implementing
the world’s first regional transac-
tion tax.
It’s encouraging to see Wall
Street lobbyists agitated over the
possibility of a speculation tax. It
means this option is finally gain-
ing the traction it deserves.
Sarah Anderson directs the
Global Economy Project at the In-
stitute for Policy Studies. Distrib-
uted by OtherWords.org.
The Law Offices of
Patrick John Sweeney, P.C.
Patrick John Sweeney
Attorney at Law
1549 SE Ladd, Portland, Oregon
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(503) 244-2084
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