Financial Speculation Tax:Formula To Raise $250 Billion Annually From Wall Street

A Financial Speculation Tax (also known as a financial transaction tax) is a small tax on purchases or sales of stocks and other financial purchases like futures, options, or credit default swaps. The rates are proportional to actual transaction costs in the industry - for example, a stock purchase could have a small tax of 0.25%. Anyone who trades stocks, currencies or debt instruments would pay the tax. It would apply to both buyers and sellers. Most of the income from this tax would come from big banks, hedge funds, and brokers who trade frequently. If you have a 401(k) and invest for the long term instead of trading for short term profits, you would pay very little tax –less than the fees normally
charged by mutual fund managers to handle your investments.

Most of the trading and speculation that takes place in stock, currency and debt markets is unrelated to any productive activity in the real economy. For example, the value of currency trades is more than 25 times the actual value of our foreign trade. Even if trading were to decline by 50% – a very unlikely event – our financial markets would remain liquid and attractive to investors from both the U.S. and abroad.

Has anyone tried a Financial Speculation Tax?

Yes, Britain has had a "stamp tax" on stock trading of .5% for many years. It has provided needed government revenue and has not hampered the growth of the British stock market, which is now the second largest in the world. In fact, the U.S. had a "transfer tax" from 1914 to 1966 which levied a 0.2% tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help financial recovery and job creation during the Great Depression.

Who supports the idea of a Financial Speculation Tax?

• Prominent financiers including George Soros, John Bogle, and Warren Buffet
• Prominent economists including John Maynard Keynes, Nobelists James Tobin and Joseph Stiglitz , Jamie Galbraith, Dean Baker, Robert Pollin and Larry Summers
• Prominent world leaders including French Prime Minister Nicolas Sarkozy and Germany’s Andrea Merkel
• The New York Times highlighted the Financial Speculation Tax as a top idea of 2008
• Unions and community organizations
• Polls have shown widespread support for measures that would rein in Wall Street, including a Financial Speculation Tax

Is there a Bill in Congress?

Rep. Pete DeFazio (D-Oregon) has introduced HR 4191, the “Let Wall Street Pay for the Restoration of Main Street Act.” Senator Tom Harkin (D-Iowa) has introduced S 2927, the “Wall Street Fair Share Act.” Under these bills, half the funds would be deposited in a job creation reserve fund to put Americans back to work and half would be designated to reduce the deficit. The bills were designed this way to have broad bipartisan appeal in Congress. Eventually there may be multiple FST vehicles in Congress. (Jobs With Justice)

Jobs with Justice engages workers and allies in campaigns to win justice in workplaces and in communities where working families live. JwJ was founded in 1987 with the vision of lifting up workers’ rights struggles as part of a larger campaign for economic and social justice. We believe in long-term multi-issue coalition building , grassroots base-building and organizing and strategic militant action as the foundation for building a grassroots movement, and we believe that by engaging a broad community of allies, we can win bigger victories. We reach working people through the organizations that represent them—unions, congregations, community organizations—and directly as JwJ activists. Nearly 100,000 people have signed the Jobs with Justice pledge to Be There at least five times a year for someone else’s struggle as well as their own.

In more than 40 cities in 25 states across the country, we are building coalitions of labor, religious, student and community organizations that are committed to each other for the long haul. Our campaigns make a difference for workers facing hostile bosses, knowing they are not alone in their struggle. At JwJ, solidarity is a two-way street: when communities come out for unions, they can expect unions to come out for them. Union victories are crucial, but they are not enough. We must maintain a strong commitment that our coalitions will weigh in on community fights.

In 2009, local coalitions worked on a total of 111 workplace justice campaigns affecting more than 135,000 workers. Jobs with Justice coalitions supported approximately 46,000 workers in 56 organizing and first contract campaigns, and helped more than 10,000 workers at 17 workplaces win union recognition or first union contracts. Jobs with Justice coalitions worked on 130 community campaigns on issues like health care, immigrants’ rights, global justice, accountable development, state minimum wage increases, and sweat-free ordinances. JwJ coalitions were the primary coordinators for 70% of these campaigns.(Jobs With Justice)