March 5, 2013

Congress Should Pass A Financial Transaction Tax

Last Thursday, Senators Tom Harkin and Sheldon Whitehouse, along with Representative Peter DeFazio, introduced a bill that would levy a tax of 0.03% on financial transactions. The small tax on each transaction would raise $352 billion in revenue over the next 10 years, while finally forcing Wall Street corporations to sacrifice a little for the sake of deficit reduction. Washington Post opinion writer Katrina vanden Huevel makes the case for the tax:

The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it. If this were a tax on coffee, it would cost you $1 for every 800 cups you bought at Starbucks.

But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.

Opponents of the bill argue that it will slow growth, but Rep. DeFazio and Senator Whitehouse dismiss these concerns:

“For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”

“This commonsense proposal will raise billions in new revenue to get rid of the sequester or reduce the deficit while also discouraging the kind of reckless high-volume trading that contributed to the financial crash in 2008,” Whitehouse said.

Since working Americans have been forced to feel the pain of the sequester, Wall Street corporations should have to make a contribution to deficit reduction. The financial transaction tax is a commonsense way to get them to pay their fair share.

Let us know what you think about the financial transaction tax by tweeting at us or commenting on our Facebook page.