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The Case for a Tax on Financial Transactions - The New York Times [1]
['Jared Bernstein']
Date: 2015-07-22
WASHINGTON — LIKE it or not, the campaign season is upon us, and that almost certainly means somebody is going to try to buy your vote with a tax cut — even though average federal tax rates are already low in historical terms, our tax code remains tilted in favor of the wealthy, and our children, neighborhoods and infrastructure desperately need public investment.
What would really be interesting is if a candidate proposed the opposite: a new way to raise more revenues.
Senator Bernie Sanders of Vermont, who is seeking the Democratic nomination for president, has done just that, by proposing a financial transaction tax: a small excise tax, typically a few hundredths of a percent, on trades of stocks, bonds, derivatives and other securities. An itty-bitty, one-basis-point transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over 10 years, according to new estimates by the nonpartisan Tax Policy Center. That would be enough to finance an ambitious expansion of prekindergarten programs for 3- and 4-year-olds and restore funding of college assistance for low-income students.
What’s more, a financial transaction tax could significantly reduce the amount of high-frequency trading. This trading, most of it automated, is used to make windfall profits through arbitrage (taking advantage of small differences in price) in milliseconds. It does nothing to help ordinary investors and can destabilize financial markets.
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[1] Url:
https://www.nytimes.com/2015/07/22/opinion/the-case-for-a-tax-on-financial-transactions.html
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