There is little question that Republicans took a political hit for the senseless government shutdown. If there is a lesson to be learned for the GOP (and everyone else), it’s that government shutdowns and debt-ceiling standoffs are counterproductive and irresponsible bargaining chips in political debate (not to mention a cruel tactic for millions of Americans, not just federal employees and beneficiaries of public assistance programs, but everyone really). But whatever is learned, the larger fight over taxes and public investments is far from over.
As the new December budget and January debt ceiling deadlines approach, United for a Fair Economy and our allies will continue to push back with a clear anti-austerity message to Washington: “Damaging cuts are not necessary! America is not broke! Congress simply needs the political will to raise taxes on the wealthy.”
In addition to UFE's fights to strengthen the federal estate tax and tax wealth like work, UFE is one of 150 organizations supporting the "Robin Hood Tax," an exciting proposition that could raise hundreds of billions of dollars to invest in our communities (and raised from the reckless Wall Street speculators who wrecked the economy in the first place).
The Inclusive Prosperity Act (H.R. 1579) by Rep. Keith Ellison would create such a "Robin Hood Tax," or financial transactions tax (FTT), on the sale of stocks, bonds, derivatives, and other financial instruments. The FTT rate on stocks would be 0.5%, with lower rates applied to bonds and derivatives.
United for a Fair Economy wholly endorses the “Robin Hood Tax.” Why? Because this tax accomplishes two very important goals at the same time, not to mention it’s totally feasible:
1) It Reins in Casino Capitalism
Because the financial transactions tax is levied each time a stock is sold, its otherwise nominal rate is magnified many times over for those speculators who buy and sell stocks repeatedly in a single week or day.
If someone buys $100 in stock shares and holds it for 5 years, the tax expense, 50 cents, will be spread over 5 years (so you will owe effectively 10 cents a year in taxes on this transaction). But if you trade that same stock each week to gain some small advantage, you'll pay $26 a year instead. And if you trade hourly using automated computer software, well then the multiplier effect really kicks in. That's the whole point!
By taxing at the point of transaction, the Robin Hood Tax effectively separates the type of long-term investments that are good for the economy, from the type of high-frequency trading – or "casino capitalism" – that contributes nothing but volatility and instability to the economy.
If people want to gamble, they should go to Vegas. We cannot afford to let the reckless behavior of Wall Street gamblers take down the global economy again.
2) It Raises $350 Billion for Important Programs
Levied at the rates of the Inclusive Prosperity Act, the financial transactions tax would raise upwards of $350 billion. That is a tremendous amount of money that will be moved out of disruptive speculation and into the public sector, where it is truly needed.
Just for a sense of scale, $350 billion is more than the combined total of President Obama's proposed 2014 discretionary budgets for the Departments of Education, Housing and Urban Development, Veterans Affairs, and Transportation!
Applying this level of funding to the real needs of the nation – health care and health research, rebuilding and greening our transportation infrastructure, education, job creation, and more – would have a profound and positive impact on our nation's long-term well-being.
It's Totally Doable!
Already 40 nations across the world have some form of financial transactions tax, including the United Kingdom, Japan, China, and many others. At this point, the majority of the major financial centers around the globe are operating in nations with a financial transactions tax.
Additionally, the 0.5% rate on stocks being proposed in the Inclusive Prosperity Act is the same rate the United Kingdom already levies, and that has in no way endangered London’s status as powerhouse in global finance.
The US actually had a financial transactions tax from 1914 to 1966, levied initially at 0.2% and later raised to 0.4%. After the stock market crash in 1987, there was a serious effort, led in part by one of President George H.W. Bush's chief economists, to restore the financial transactions tax in order to bring stability to the markets.
With 11 nations across Europe now looking seriously at enacting a financial transactions tax, this has become a growing global movement to rein in the kind of casino capitalism that wreaked havoc on the global economy, while funding vital programs that foster true national wellbeing.
What can you do?
Visit the Robin Hood Tax web page to for news, research, talking points, and other helpful resources! Contact your member of Congress and ask them to support H.R.1579, the Inclusive Prosperity Act.