RSN April 14 Fundraising
FB Share
Email This Page
add comment
Print

Nader writes: "Despite all the lasting harm caused by the casino capitalists, the big banks are now bigger, richer and more powerful than they were when they were bailed out in late 2008."

Ralph Nader being interviewed during his 2008 presidential campaign, 08/01/08.  (photo: Scrape TV)
Ralph Nader being interviewed during his 2008 presidential campaign, 08/01/08. (photo: Scrape TV)


Time for a Sales Tax on Wall Street

By Ralph Nader, Reader Supported News

18 April 13

 

ere are some questions to consider: What do the Wall Street firms do that is so vital for the national interest? How does speculation contribute to our society? It's time for Wall Street to step up and provide some answers.

The reckless actions of Wall Street institutions led to the collapse of the the U.S. economy and the deep recession of 2008-09. The Wall Street firms looted and gambled trillions in worker pensions and mutual fund savings. The Wall Street traders made billions of dollars in speculative money - bets on bets - holding hostage the real economy where money is made by providing goods and services. And the actions of Wall Street resulted in the loss of more than 8 million jobs.

Despite all the lasting harm caused by the casino capitalists, the big banks are now bigger, richer and more powerful than they were when they were bailed out in late 2008. The only ones who were punished were the U.S. taxpayers, who footed the $600 billion bill for the excesses of Wall Street. Brazenly, many firms still continue to gamble with other people's money.

Something needs to change. One necessary change lies in a financial transaction tax - often referred to as the "Robin Hood Tax." The Robin Hood Tax movement began in the United Kingdom in 2010 with the support of hundreds of economists, prominent public figures and social justice organizations.

Yesterday, Rep. Keith Ellison (D-Minn.) reintroduced "The Inclusive Prosperity Act" - inspired by the Robin Hood Tax. If passed, the bill (H.R. 1579) would create a minuscule tax on the purchase and sale of derivatives, options and stocks. The tax would be small, half a percent or less of the transaction value, depending on the product. This amounts to half a penny or less per dollar.

Consider this fact: American consumers in most states pay sales taxes on the necessities they purchase - cars, appliances, clothes, etc. The rate of such sales tax is, in some areas, as high as 7 percent. For example, a schoolteacher or police officer who buys a $100 pair of shoes pays up to $7 in sales taxes. Most people accept the idea of paying such a tax. But what about the folks on Wall Street? A trader can buy and sell millions of dollars of financial products each day without paying a cent in sales taxes. Why should financial transactions be exempt from a small sales tax?

A financial transaction tax could raise $350 billion annually - money that could be used to repair critical infrastructure, create decent paying jobs, reduce the tax burden on individuals and start to rein in frivolous high-volume trading.

At the news conference announcing the legislation, Rep. Ellison said: "This is a small tax on financial transactions that will allow us to meet the needs of our nation. And didn't America step up, on very short notice, for Wall Street when it needed help? Well, now the American people need help."

Critics of a financial transaction tax have all sorts of excuses. They argue it would harm ordinary investors; it wouldn't, there are protections in place for small investors. Some say it would drive trading to offshore tax havens; but forty countries already have such a tax in place with little compelling evidence showing an adverse effect.

It's obvious that the casino capitalists won't give an ounce of their moral obligation without a fight. However, the endorsement of more than a thousand economists speaks volumes. One supporter, the Capital Institute's John Fullerton (a former managing director at JPMorgan), has stated that a financial transaction tax could have significant impact in lessening the use of high-frequency trading. He has estimated that nearly 70 percent of equity-trading volume falls under this category of highly speculative trading. In June 2012, Fullerton and over 50 other financial industry professionals wrote a letter to the G20 and European leaders advocating for small financial transaction taxes.

The United States had a financial transaction tax from 1914 until 1966. It imposed a tax of 2 cents on every $100 sale or transfer of stock.

The question I posed at the outset was: What does Wall Street do that is so vital for the national interest? To begin to answer it, they can start paying this small tax. As the Robin Hood tax website succinctly puts it with their slogan, it would be "small change for the banks and big change for the people." The $350 billion raised annually with a financial transaction tax would go a long way in helping American workers and bolstering the economy.

If you agree, stop practicing futility. Show a civic pulse. Write and call your Congressional Representative. Tell them you support "The Inclusive Prosperity Act" and they should support it as well. National Nurses United, the largest union and professional association of registered nurses in the United States, has already done this and much more with their national Robin Hood Tax campaign. Visit robinhoodtax.org to learn more.



Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

 

Comments   

We are concerned about a recent drift towards vitriol in the RSN Reader comments section. There is a fine line between moderation and censorship. No one likes a harsh or confrontational forum atmosphere. At the same time everyone wants to be able to express themselves freely. We'll start by encouraging good judgment. If that doesn't work we'll have to ramp up the moderation.

General guidelines: Avoid personal attacks on other forum members; Avoid remarks that are ethnically derogatory; Do not advocate violence, or any illegal activity.

Remember that making the world better begins with responsible action.

- The RSN Team

 
+54 # Firefox11 2013-04-18 15:40
Brilliant idea from Ralph Nader, as always, practical and useful. Let us all get behind this Inclusive Prosperity Tax and do our due diligence: call our Reps, tell our friends, spread the word.
 
 
+1 # Nick Reynolds 2013-04-19 19:07
Quoting Firefox11:
Brilliant idea from Ralph Nader, as always, practical and useful. Let us all get behind this Inclusive Prosperity Tax and do our due diligence: call our Reps, tell our friends, spread the word.


Absolutely! Write you Congressperson. It's worth a try. Dion't just talk about it. It's pretty much over, but it might throw a wrench into the plans. Tell others.
 
 
+44 # cmp 2013-04-18 19:08
Why make it a simple flat tax???

We have no shame or guilt selectively tax gouging the $hit out of the bottom of the food chain but absolutely zero cojones for the top?

If their ever was a circumstance that required a progressive tax and a weighted interpretation of a society's needs, ideals and goals, this would have to be it!!!
 
 
+7 # Penelope Jencks 2013-04-19 04:29
True, but would it stand a chance of passing??
 
 
0 # cmp 2013-04-19 19:53
Haha! BBI-You, are the one who is so "True."

The other night, I spent a couple of hours at the Senate Finance Committee's website. Now, their was some pure fiction.. It's absolutely astounding the measures that they will take to lie about the "obvious."

After 4 years, I think that we would all consider the implementation of the "Wall St Reform Bill," as weak as it is, to be a major victory. Ouch!
 
 
-29 # edge 2013-04-19 04:36
Quoting cmp:
Why make it a simple flat tax???

We have no shame or guilt selectively tax gouging the $hit out of the bottom of the food chain but absolutely zero cojones for the top?

If their ever was a circumstance that required a progressive tax and a weighted interpretation of a society's needs, ideals and goals, this would have to be it!!!


What a great idea!

Let's tax it like 100%
Then the money center will move to Europe and Wall Street can dry up.

I certainly want my pension fund and my 401k to really get creamed so that Government can squander what I have worked for.

Fantastic!
 
 
+6 # dkonstruction 2013-04-19 06:32
Quoting edge:
Quoting cmp:
Why make it a simple flat tax???

We have no shame or guilt selectively tax gouging the $hit out of the bottom of the food chain but absolutely zero cojones for the top?

If their ever was a circumstance that required a progressive tax and a weighted interpretation of a society's needs, ideals and goals, this would have to be it!!!


What a great idea!

Let's tax it like 100%
Then the money center will move to Europe and Wall Street can dry up.

I certainly want my pension fund and my 401k to really get creamed so that Government can squander what I have worked for.

Fantastic!


The "answer" is not to not tax the sale of stocks and other financial instruments but rather to give workers control over their pension funds instead of giving this over to professional money managers. If workers actually controlled their pension funds ($100 billion + for NYC public employees alone) they could invest in things that would both give them a good return as well as serving a "public good" e.g., investing in the development of permanently affordable rental housing for their members and others (which in turn provide a permanent, steady source of income to continue to build the fund).
 
 
+1 # zornorff 2013-04-20 02:20
Giving the average person "control" over their investments is like giving a bic lighter and gasoline to a child. The stupidity of "self directed investors" supported by the crappy trading firms like Fidelity and ETrade would lead to a further erosion of wealth for those folks who invest based on their friends' opinions and following buffoons such as Jim Cramer.
 
 
+2 # dkonstruction 2013-04-20 10:30
Quoting zornorff:
Giving the average person "control" over their investments is like giving a bic lighter and gasoline to a child. The stupidity of "self directed investors" supported by the crappy trading firms like Fidelity and ETrade would lead to a further erosion of wealth for those folks who invest based on their friends' opinions and following buffoons such as Jim Cramer.


Zornoff, i was not suggesting that individual workers control their own individual pensions. What I am suggesting is that the unions have to take back control of their pension funds from the professional wall street money managers to whom they have ceded control. The unions can then invest in both profitable as well as socially responsible investments and more importantly in investments that produce the kind of economic growth and community development that actually benefits union and non-union workers alike.

so, i agree, i'm not suggesting essentially "privatizing" pensions and creating somethink akin to the "medical savings accounts" that republicans wanted to do with health care.
 
 
+2 # Michael Lee Bugg 2013-04-19 13:54
Edge, you are getting rather dull. You already got creamed after the March of 2000 and October of 2007 market peaks (a.k.a. bubbles) because of the unregulated games the con artists of Wall Street played while Bush and Congress and now Obama looked the other way! Maybe you were in a coma and missed it each time. Of course you would think the transaction would be taxed at 100%, that's how habitually irrational people like you are these days. How many more Americans have to be robbed of their hard earned savings by unethical stock brokers, mismanaged mutual funds, and Wall Street Casino manipulators while the government turns a blind eye before you realize you picked the wrong enemy?
 
 
+17 # LizR 2013-04-18 20:18
I'm in favour of this, even if govts do spend most of our money on illegal wars etc, at least they do *some* good. The "financial sector" produces nothing whatsoever (except smug rich gits). Given a "Survivors" scenario, none of those guys would have a clue about real life.
 
 
+3 # Milarepa 2013-04-18 22:51
Excellent mental exercise by Mr. Nader. However, the US is moribund, nothing will save it, it must dissolve. The late Thomas Naylor founded Second Vermont Republic secession movement. There are secession movements in a number of states. That's the way to go. The US is too big, too destructive. Split her up in smaller units that threaten no one. The world will benefit, to say nothing of the vast majority of US citizens.
 
 
+11 # RMDC 2013-04-19 03:25
There was once a sales tax on stock transactions. It would be the right thing to do now. it may tamp down some of the insane program trading -- computers that make a million trades a minute. None of this sort of investment trading contributes anything to the american economy, except for more profits with which to gamble. the casino economy of the US is really dangerous. Right now the stock market is at record highs again. This means a huge crash will happen pretty soon.

The insane volitility of the investment market is the way inside traders make tons of money. They are able to stay ahead of the fluxuations. But small investors or savers are always behind and they always lose. Stock markets have always been exactly what John Rockefeller said they were -- ways of sucking money out of middle american and into the banks in NYC.

There is no chance in hell of a stock transaction tax. Obama and the other presidents elected by banks will never allow it. So much for democracy.
 
 
+13 # Texas Aggie 2013-04-19 05:04
"A financial transaction tax could raise $350 billion annually."

As you mentioned, the major benefit of this tax would be to "tamp down some of the insane program trading." The extra revenue is nice, but by slowing down their ability to damage the economy, we would reap a much greater benefit.
 
 
+2 # zornorff 2013-04-20 02:27
Thank you. Program trading, dark pools, high speed trading have stacked the deck against the individual and are keeping the entire system operating on the brink of disaster. $350 billion would eliminate 4 sequesters.
 
 
0 # Regina 2013-04-20 13:27
The very fact that the traders can make tons of money playing investment games is diverting investment from products to sell. Only sales to people that are enabled to buy will get the economy moving for all people. When all the neo-BS is shoveled aside, Krugman and Stiglitz are correct. They didn't get Nobels for nonsense.
 
 
+13 # Underledge 2013-04-19 03:40
How soon we forget that our "representative s" are bought and paid for by the very powers who would be taxed.
 
 
+9 # Trueblue Democrat 2013-04-19 04:36
All forms of prostitution should be outlawed, including (but not limited to) Wall Street, Congress and mega-buck media.
 
 
+3 # dkonstruction 2013-04-19 06:35
Quoting Trueblue Democrat:
All forms of prostitution should be outlawed, including (but not limited to) Wall Street, Congress and mega-buck media.


Since all wage-labor is prostitution (prostitutes are just more honest about it) sex-workers should be legalized (and unionized so they have some protection from their exploitative bosses)...what Wall Street is involved in is not prostitution but rather (financial) rape which I agree should be criminalized and perpetrators should be brought up on charges of financial crimes against humanity and sentenced accordingly and their businesses seized (as the gov't does with other organized criminal enterprises) and instead of simply being liquidated should be turned over to the workers and turned into worker-owned cooperatives.
 
 
+11 # dkonstruction 2013-04-19 05:48
There is a stock transfer tax on the books here in New York...it's been on the books for more than 100 years (first passed in 1905). However, during in 1979 the NYC fiscal crisis was used as the excuse to then "rebate" this tax to those who had to pay it (makes perfect sense right, lower tax revenue in the midst of a fiscal crisis...hmmm, sound familiar?). The result: this past year's NYS budget showed a roughly $10 billion "deficit" so big cuts were called for by our (Democratic) Governor...howe ver, had the Governor supported collecting the stock transfer tax (which is still on the books) instead of rebating it plus reinstituted the full millionaire's tax that also used to be on the books in NYS the state would have had a $6-$7 billion surplus!

So, when states and the fed tell you that we're broke and running deficits and so have to make massive cuts don't just buy into the crap....dig a bit and you will often find that this is just bull and a way to continue the massive attack on working people that has been underway in this country since the recession of the early 1970s (i.e., this didn't just start with Bush or even Reagan for that matter) and both democratic and republican administrations have been playing us in very similar ways.
 
 
-4 # Milarepa 2013-04-19 07:06
Don't waste your time trying to fix what has already been irreparably ruined. Concede we're beat, then work to secede.
 
 
+3 # tonywicher 2013-04-19 09:25
That's exactly what the Empire wants. Break up the United States, the only threat to their global dominance. They want to destroy the very memory of what the United States was ever supposed to be. They backed the South in the Civil War, too. Their real victory lies in getting what might once have been patriotic Americans to start thinking like you.
 
 
+7 # reiverpacific 2013-04-19 09:12
Actually, Senator Tom Harkin (D-IA) and our own Oregon Congressman Peter DeFazio have been trying to raise support for such a tax since 2009. Joining Harkin and DeFazio in cosponsoring the legislation were Senators Bernie Sanders (I-VT) and Sheldon Whitehouse (D-RI) along with 19 House cosponsors.
Harkin stated "“The American people overwhelmingly agree that deficit reduction in this country must come from a balance of spending cuts and necessary revenue increases,”
And there is no question that Wall Street can easily bear this modest tax. This Wall Street tax is a simple matter of fairness and fiscal sanity.”
De Fazio added that “This Wall Street Speculator Tax should be a no-brainer. It will raise significant revenue that we desperately need and rein-in the excessive speculative activity that has destabilized our financial system. The only way we can meaningfully address our deficit is by taking a balanced approach that includes revenue raisers and smart, targeted cuts. This bill should be part of that balanced solution,”
Anybody who can't go along with this attempt at redress is a pandering, regressive fink on their own kind (unless they are one of the filthy, greed-raddled rich).
The only problem for the sponsors is getting many of their bought and paid for, lobbyist-enrich ed colleagues to go along with it. My Gawd, they might have to work for a living and earn their taxpayer-funded salaries without the attentions of their back-door corporate bag-carriers!
 
 
+1 # tonywicher 2013-04-19 09:17
A Wall Street sales tax is a great idea. Let's make it 1%! But let's also re-structure our economy in more fundamental ways that will prevent instability caused by excessive financial speculation.

Thomas Michael Hoenig is a director of the Federal Deposit Insurance Corporation. He took office on April 16, 2012. From 1991 to 2011, he served as the eighth chief executive of the Tenth District Federal Reserve Bank, in Kansas City, United States. In 2010, he was serving as a voting member of the Federal Open Market Committee, as one of five of the twelve Federal Reserve Bank presidents that sit on the Committee on a yearly rotating basis. He is known as an anti-inflation hawk.

Hoenig just published an article on the FDIC web site that outlines a real solution to our out-of-control, hyper-inflation ary financial system, basically consisting in returning to the tried and true Glass-Steagall standards that governed banking since the Great Depression, standards that were progressively vitiated until we got to the point where we are now.
http://www.fdic.gov/news/news/speeches/spapr1713.html?source=govdelivery
 
 
+4 # dkonstruction 2013-04-19 10:57
The Dallas Fed has recommended an better idea...break up the "too big to fail banks."

To think that we will ever be able to truly regulate these banksters is Einstein's definition of insanity i.e., doing the same thing over and over and over again and expecting a different result.

The real answer is to create truly publicly owned financial institutions (see the model that's been in use and working just fine for the State Bank of North Dakota) and use these to deposit public monies (private funds can be deposited in non-profit credit unions) including the trillions of dollars in public employee pension funds.

Once we separate "our money" from "theirs" then we can let the banksters make all the stupid uber risky bets (they call them "investments") they want and they will understand that when they "fail" that we won't bail them out for even one penny.
 
 
-2 # tonywicher 2013-04-19 09:21
There is a bill with 53 co-sponsors in he House that would accomplish the restructuring of our economy recommended by Hoenig, HR 129.
http://beta.congress.gov/bill/113th-congress/house-bill/129/text

The main obstacle to passing this bill and re-establishing these standards is Obama. He is a total Wall Street stooge and a traitor to the New Deal and the tradition of Roosevelt (as well as his country). Most Democrats would long ago have signed on to this bill if they were not following Obama's treacherous lead.
 
 
+2 # dkonstruction 2013-04-19 11:01
Quoting tonywicher:
There is a bill with 53 co-sponsors in he House that would accomplish the restructuring of our economy recommended by Hoenig, HR 129.
http://beta.congress.gov/bill/113th-congress/house-bill/129/text

The main obstacle to passing this bill and re-establishing these standards is Obama. He is a total Wall Street stooge and a traitor to the New Deal and the tradition of Roosevelt (as well as his country). Most Democrats would long ago have signed on to this bill if they were not following Obama's treacherous lead.


The problem with reinstating Glass-Steagal is that it will give people the false sense that this will actually fix the problem which it won't. At this point, the investment banks have already been declared "too big to fail" which they will continue to be even if the Glass-Steagal separation between commercial and investment banks is put back in place. This means that even if that were to happen and one of these big investment banks is going to go under we (i.e., the taxpayers) will bail them out only now it's all their money instead of a mix between "theirs" and "ours" (i.e, depositors).

Breaking up the "too big to fail" banks so they are no longer "too big to fail" and then letting them fail and not bailing them out with any taxpayer money is the real and only solution.
 
 
+3 # tonywicher 2013-04-19 13:19
dk, I sense that we are on the same side here, but I think you do not understand what Glass-Steagall did and what HR 129 would do again. The "too big to fail banks" must indeed be broken up, but they must be broken up in such a way as to separate commercial banks from investment banks. It is the affiliation between them that was prohibited by Glass-Steagall. The difference between commercial and investment banking became vitiated over the years, and was finally eliminated in 1999-2000. Commercial bankers, under the influence of the managers of the bank holding companies with which they became affiliated, began behaving like speculators, buying mortgage backed securities and derivatives, knowing that they were FDIC insured and the government would bail them out.

The only reason that these banks are considered "too big to fail" is because if they fail, all the valid commercial financial assets, such as our savings accounts will disappear if they fail. But a Glass-Steagall complete separation of financial institutions into commercial banks, narrowly defined, FDIC insured and managed as commercial banks, and uninsured investment banks would break up the banks in a controlled way that would preserve valid financial assets. The investment banks and their quadrillion dollars worth of worthless derivatives would go belly up while he rest of us could cheer and set about rebuilding our real economy.
 
 
+2 # dkonstruction 2013-04-19 14:42
Tony, i agree that the commercial and investment banks should be separated again.

At the same time, i think that the creation of financial instruments such as derivatives (including such things as securitized mortgages and credit default swaps) means that in many ways the banks had already figured out how to get around, or gone beyond the problems that glass steagal was created to prevent.

so, yes separate them, but that shouldn't then give people any false sense of security or believe that we have actually solved the problem.

As, i said, i think the only real "solution" under capitalism is to democratize who owns and controls capital and collectively our tax dollars make up the largest pool of capital in the country if not the world. So, take that money out of the privately owned banks (which will shrink them considerably just by that one act) and create genuinely publicly owned banks on the state and the federal level and invest those funds so that yes they show a return on their investment but also target investments into things that will actually make this a better place (and put people back to work at the same time).
 
 
+1 # tonywicher 2013-04-19 17:31
Dk, Perhaps we can agree that what we need is a real national bank, like Hamilton's First Bank of the U.S. and Monroe's Second Bank of he United States to orchestrate the whole economy to increase productivity, produce economic growth and a rising standard of living. Take a look at this proposed legislation for a national bank:
http://larouchepac.com/restorethebank

Also, here is a great history of the destruction of the National Bank by the administration of Andrew Jackson:

http://www.larouchepub.com/eiw/public/2012/eirv39n49-20121214/04-45_3949.pdf

Let me know what you think.
 
 
+2 # dkonstruction 2013-04-20 10:41
Tony, I believe we need a Publicly Owned and Run national bank. Neither the First nor the Second national bank of the US were publicly owned. In that sense they are closer to the Federal Reserve Model than say the State Bank of North Dakota. That's the model.

Check out: http://publicbankinginstitute.org/

There's information there about public banking in general but also about the State Bank of North Dakota which is a model that can be replicated in all 50 states as well as on a national level for a truly publicly owned national bank into which our tax dollars are deposited and from which the federal government can then also borrow (i.e., we then borrow from ourselves and never, never again have to borrow from others at interest).

My problem with Larouche on this is he does not call for the creation of this typed of publicly owned and operated banking system.

I agree that there are problems with Jackson (though perhaps for different reasons) but for me the relevant point here is that Jackson too was not really calling for the kind of public banking system i would argue is what is needed.

Capitalism is at least in part about who controls the capital. Public banking would give "the public" much greater control over how its money is being invested if we had this type of public banking system and it eliminates the need for us to ever have to borrow from anyone else (at interest) ever again.
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN