This one seems to me to be a no-brainer. There are two bills in Congress that would impose minuscule taxes on financial transactions of certain types that, depending on the size of the tax, could solve the nation’s financial crisis almost overnight.
But as blogger Andrew Reinbach points out, the system could stand a much higher rate than what is called three basis points. He points out, “A similarly small tax—say, twenty-five cents per $100—could solve the country’s fiscal problems altogether, with room to spare. And it wouldn’t really cut into financial trading, because business people do what they do because there’s a profit to be made. Taxes are just the cost of doing business.”
Here’s the math. A 0.25% sales tax on $1.669 quadrillion would produce $4.172 trillion a year. By comparison, the entire Federal Government spent about $3.8 trillion last year on everything, including debt service.
As our economy has shifted from agriculture to manufacturing to information and now to financial instrument manipulation and management, it makes sense that the tax base should shift along with it. Think what kind of nation we’d have if the 0.25% transaction tax made it possible to reduce or eliminate personal and corporate income taxes. Talk about jump starting the economy!
Who, other than short-sighted Wall Street tycoons, could oppose this idea? Yet, without even spending a moment on research, I’m willing to bet that the financial services industry is already mobilizing against this pittance that would cut into their gargantuan and entirely unjustified profits. (Unjustified, I say, because they don’t add any value to the economy. They just move stuff around.)