Wall Street Should Pay A Sales Tax, Too

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Above Photo: Elvert Barnes / Flickr

Note: People pay taxes when they buy necessities like food, clothing and shelter, but when the wealthy and corporations by investments – a non-essential – they pay no taxes. Even a small micro-tax on transactions for stocks, bonds and derivatives would create a massive amount of funds. A tax on Wall Street investments would also help to reduce the wealth divide, slow down rapid investing which causes problems and provide necessary funds for essential needs like rebuilding the infrastructure, rapidly transitioning to a clean energy economy, providing a guaranteed basic income and more.  KZ

When a high-rolling trader buys millions of dollars’ worth of stocks or derivatives, there’s no levy at all.

In case there was any doubt, the presidential election fight has confirmed that blasting Wall Street, even eight years after the financial crisis, is still a vote-getter.

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 accountability a centerpiece of his campaign.

Of course, financial industry lobbyists aren’t about to take this lying down. In recent weeks, they’ve turned up the heat on lawmakers to block one particular measure that Sanders has mentioned in nearly every stump speech: taxing Wall Street speculation.

Americans are used to paying sales taxes on basic goods and services, like a spring jacket, a gallon of gas, or a restaurant meal. But when a Wall Street trader buys millions of dollars’ worth of stocks or derivatives, there’s no tax at all.

Sanders has introduced a bill called the Inclusive Prosperity Act, which would correct that imbalance by placing a small tax of just a fraction of a percent on all financial trades. It wouldn’t apply to ordinary consumer 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 Company 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 Sanders is promoting would target the high rollers in the financial casino. Because the tax applies to every trade, it would hit the traders engaging in computerized split-second 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 percent to 0.5 percent, depending on the financial instrument. By contrast, ordinary sales taxes currently 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 money 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 already 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, Singapore, and Switzerland. In the European Union, 10 countries have committed to implementing the world’s first regional transaction tax.

It’s encouraging to see Wall Street lobbyists agitated over the possibility of a speculation tax. It means this option is finally gaining the traction it deserves.

  • A “SALES TAX on Wall Street??” What a WASTE of time, energy and resources!!

    There is one and only one solution to both the American and the entire Global problem of the thorough “financialization” of the Kleptocratic, Corporate-owned and Corporate-Run [Corporate Takeover] Fascist Dictatorships that have enthroned themselves to power. Here it is:

    The CRIMINALS must be PROSECUTED for their CRIMES. Absolutely NOTHING will “change,” much LESS get “better” until and unless THAT happens. Indeed, if the CRIMINALS are ALLOWED to continue to PLUNDER, it will, in FACT, only get WORSE. MUCH WORSE.

    ALL criminals involved in these monstrous, reprehensible, PATHOLOGICAL financial CRIMES, which were clearly, totally and willfully collaborated as a gigantic Scheme to Defraud and totally BILK the very citizens of this, our country, the United States, and, um, the entire world, MUST PAY.

    Each one of these Criminals must be Indicted, Prosecuted to the fullest extent of THE NEW LAWS, (all of which will be made retroactive) and, finally, actually PUNISHED SEVERELY.

    Let me be perfectly clear: Each CRIMINAL that is found GUILTY in the Courts of Law, whether by a judicious Judge or by a Jury of his/her “peers,” shall be held fully accountable for their [blatant] CRIMES, and penalties will surely entail STIFF terms of imprisonment, along with the lawful SEIZURE of ALL ill-gotten gains.

    We all know, for example, that both George Bushes, Dick Cheney, Rumsfeld, Obama…that list goes on and on; And let’s not forget Jamie Dimon, Lloyd Blankfein, Richard Fuld, Hank Paulson, Larry Sommers, Timothy Geithner, Alan Greenspan; And an astonishingly dizzying and countless number of all the other CRIMINALS; All should be on the TOP of the list for the vigorous investigations and thorough prosecutions.

    We MUST HOLD each of these Serial PREDATORS/Criminals FULLY ACCOUNTABLE for their outrageous crimes of Fraud, Scheme to Defraud, Financial Elder Abuse, and countless other very serious Felonies.

    The financial terrorists, the banks, utterly and outright OWN our entire societal and political systems; And not a single politician, including Bernie Sanders, tells the actual TRUTH and FACTS.

    The corporate government and it’s collaborators across the corporate media, spews constant incessant lies, deliberate disinformation, half-truths…to a mostly unwitting public. This is a highly contemplated, long-enduring, intensive program of total brainwashing and mind control of the citizens here in America…And Abroad. This program is a War of Deception. ALL LIES. And THEFT.

    What we are left with is debt slavery/debt peonage as the kleptocrats in our ILLEGAL and ILLEGITIMATE government, and their Wall Street, Banking Corporate buddies who bankroll them, ALL detestable CRIMINALS, abscond all the wealth of all the nations and their peoples.

    Any “speak” about “breaking up the big banks” is total nonsense. This is Lawlessness. And it’s ILLEGAL.

    All Private Banks and Corporations must be Abolished and OUTLAWED; PERIOD. All those engaged on any level in this criminal conspiracy and scheme to defraud must be trialled for their crimes in a REAL Court of Law, prosecuted under the NEW LAWS, and finally punitive measures are to be enforced forthwith, i..e. PRISON!!

  • auntiegrav

    Sure, I’m all for sales taxes to replace ALL other taxes and a PREBATE to everyone that covers basic needs. That way, everyone sees what the overhead cost of civilization is when they make the most important decisions of our world, and they see the cost at the decision point (the checkout line).
    It is wrong to tax useful production and to encourage consumerism in a finite world. All transactions should be treated the same, unless they are person-to-person exchanges, which don’t demand government servicing. The rich get rich when people buy stuff and when the masses of people work for them. We need a system that encourages people to work for each other and is simple and not designed with infinite loopholes for corporations (non-persons). People don’t need “jobs”: we need food, clothing, shelter and each other working at useful tasks. We’ve lost the concept of being useful to ourselves and sold our usefulness to Panama Papers – type thieves.