We all pay sales tax – on everything from school supplies to SUVs. But missing in this revenue raising routine is a sales tax on financial transactions – trading in stocks, bonds, and derivatives. As both a matter of fairness to all taxpayers and to raise funds critical to support our communities, this void needs to be filled.
The Robin Hood tax
The U.S. Robin Hood tax campaign (www.robinhoodtax.org), with more than 160 endorsing organizations of labor (NYSNA included), consumers, small businesses, religious organizations, and others, whose ranks add up to many millions of members, can usher in this essential change in our tax code worth an estimated $350 billion a year.
The Inclusive Prosperity Act, reintroduced in Congress last year by Rep. Keith Ellison (D-MN) and enumerated H.R. 1579, embodies the Robin Hood tax principles and goals. Eleven European countries have passed a Robin Hood tax on financial transactions to be implemented in January 2016.
How does it work? The tax falls on brokers. H.R. 1579 requires those who make fees carrying out trades to pay a small sales tax – 50 cents per $100 on stock trades, lesser amounts on bonds and derivatives. (Derivatives are insurance on bonds and speculative trades, like betting on commodity prices.) The majority of trading today – as much as 70 percent of market activity – is carried out at high speeds and frequencies by computers for hedge funds and other speculators. They can surely afford the tax: Wall Street profits amassed by speculators are astronomic.
Keep in mind that pension and mutual funds do not trade in the fashion of speculators – rapidly and repeatedly to extract profits at increments of nanoseconds. Exposés on high speed trading, chronicled in the book, Flash Boys, by Michael Lewis, accuse some speculators of “rigging” the stock markets.
Others have raised doubts about the value of market speculation to the national economy overall. Does it create a productive economy? Speculation in the markets adds an estimated $1 to the cost of every gallon of gasoline and ups the price of other basics, such as wheat.
Still others have tied speculation to market volatility. Economists predict that H.R. 1579 will serve to reduce trading volume and induce stability.
Revenue for the people
Adding revenue is the legislation’s centerpiece, and $350 billion in new revenue each year can make a real difference if used the right way. Here’s what H.R. 1579 explicitly proposes: expand and improve Medicare and Medicaid; invest in education; give students debt relief; support job training; improve housing assistance; invest in mass transit and infrastructure repair; protect our environment; and combat climate change. All activity is geared to job creation.
This critical legislation also seeks to raise U.S. funding of international HIV/AIDS research and treatment.
Many communities never received the recovery promised after the financial collapse of 2008. The collapse was triggered by the very Wall Street speculative activity H.R. 1579 seeks now to tax. There’s more than a small measure of justice here.
An alternative to austerity
For those demanding “austerity,” that is, more government cutbacks that hurt our most vulnerable communities, including attacks on hospitals at the very time people have been told more care is coming, the Robin Hood tax is an answer.
We joined Robin Hood supporters at the United Nations last year, and a NYSNA contingent was in Chicago on April 4 to rally for H.R. 1579. There’s more to come.