Tax Wall Street But Not Main Street

by Stuart Shapiro

Senator Tom Harkin and Rep. Peter Defazio have proposed a tax on financial transactions. The Joint Tax Committee analyzed its effects yesterday:

A minuscule tax on financial transactions proposed by congressional Democrats would raise more than $350 billion over the next nine years, according to an analysis by the Joint Tax Committee, a nonpartisan congressional scorekeeping panel.

The Wall Street Trading and Speculators Tax Act would impose a tax of 0.03 percent on financial transactions, meaning that longterm investors would barely notice it, but traders who move rapidly in and out of positions would feel its sting and, the authors hope, reduce the volume of their speculation in response.

I know, I know, all taxes are bad according to the Republicans in Congress so this doesn’t really have a chance of passing.  But it should be fun to see the argument they come up with against this one.  It doesn’t hit small businesses.  It doesn’t hit job creators.  It reduces volatility in the markets (and everyone hates volatility or uncertainty, especially business, right?).  And it raises money that helps close the deficit.  There go the usual suspects for arguments against taxes.  Maybe they’ll have to resort to “But our donors don’t like it!”  Nah, they’ll never use the real reason for their opposition.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.