How to Raise $140 Billion a Year From Wall Street Banks

How to Raise $140 Billion a Year From Wall Street Banks
By Dean Baker | Counter Punch

The deficit hawk crew, famous for missing the $8 trillion housing bubble that wrecked the economy, is now on the warpath pressing the case for a big new national sales tax. They claim that the country badly needs additional revenue to address projected budget shortfalls.

While we may need additional revenue at some point, it makes far more sense to impose a financial transactions tax (FTT), which would primarily hit the Wall Street banks that gave us this disaster, than to tax the consumption of ordinary working families. We can raise large amounts of money by taxing the speculation of the Wall Street high-flyers while barely affecting the sort of financial dealings that most of us do in our daily lives.

The logic of an FTT is simple. It would impose a modest fee on trades of stocks, futures, credit default swaps, and other financial instruments. The United Kingdom currently puts a 0.25 percent tax on the sale or purchase of shares of stock. This has very little impact on people who buy stock with the intent of holding it for a long period of time.

For example, if someone buys $10,000 of stock, they will pay $25 in tax at the time of purchase. If they sell the stock ten years later for $20,000 then they will have to pay $50 in tax. The total tax would be equivalent to an increase of 0.8 percentage points in the capital gains tax. Read more.