financial transaction tax
RoseAnn DeMoro appeared on The Real News Network and together with Robert Pollin, Professor of Economics at the University of Massachusetts in Amherst, talked about the financial transactions tax:
ROBERT POLLIN: Okay. So the basic idea of a financial transaction tax is that it’s the equivalent of a sales tax. Right now if you go down the street and you buy a bicycle, if you buy a car, if you buy chewing gum, if you buy a baseball hat, you’re going to pay 6, 7 percent on your sale. So $100 sale, you’re going to pay $6. Right now, every single financial transaction on Wall Street and throughout the world—that is, every purchase of the stock, every purchase of a bond, a derivative, foreign exchange—goes untaxed. So this is an enormous potential source of new tax revenue, even to just come up to something like a degree of fairness relative to a sales tax.Now, if we start with a very modest tax on stocks of 0.5 percent, that would mean $.50 on a $100 purchase of stocks, which would then mean, say, $0.25 for the buyer and the seller, $0.25 on a transaction of $100 of stock. Then if we also tax bonds and derivatives at much lower rates, you can generate around $350 billion a year within the United States. Three hundred and fifty billion dollars a year, that’s more than one-third of the entire federal deficit. It’s more than three times more [than] all the states’ deficits and the austerity programs that they are being forced into. You could cover those three times over just by implementing a financial transaction tax.