financial transaction tax

Gagging on an Ad Blitz of Empty Anti-Wall Street Rhetoric

Sam Pizzigati — Sat, 13 Oct 2012 20:44:33 -0400

Candidates this fall are taking plenty of pokes at the financial industry's best and brightest. But they could be doing a lot more than poke. They could push to start taxing Wall Street.

All those political ads flooding our media are smacking dozens of different targets. One particularly: Wall Street. From mid-April to mid-September, Ad Age reports, $1 of every $10 spent on campaign ads has blasted bankers.

And these ads haven’t just come from Democrats. The list of “big anti-Wall Street spenders” even includes the Republican National Committee.

Campaign strategists are placing these anti-Wall Street ads for an obvious reason. Wall Street’s greed grab, they understand, has deeply angered America.

Last week brought still more cause for that anger. New York’s state comptroller, Thomas DiNapoli, revealed that average annual pay on Wall Street has shot up 16 percent over the last two years to $362,950.

Financial industry pay in New York is now running 5.3 times higher than pay in the rest of the private sector. In 1980, Wall Streeters only averaged twice the private sector's take-home.

The typical employee on Wall Street isn’t, of course, making $362,950. Wall Street secretaries don’t sit anywhere near that lofty total. But investment bankers and traders are making millions above it, and Wall Street’s “greater concentration” of these “most highly compensated positions,” as New York’s comptroller puts it, wildly skews the overall average.

What are these “most highly compensated” doing to earn their millions? They’re running a casino. They take bets on stocks, currency, and commodities — and while away the hours designing ever more exotic financial “innovations” to bet on.

On every bet, Wall Streeters take a cut, just like the “house” at any casino. And sometimes they rig the game and place their own bets on the sure-winners.

This endless gambling impacts us all. Wall Street has essentially placed our entire economy on a risky roller coaster. On the ups and downs, crashes — even Great Recessions — become unavoidable.

Most Americans have at least a vague sense of these dynamics, and candidates are seeking to exploit this public unease with all those anti-Wall Street campaign ads. But we don’t need ads from candidates. We need commitments from them — to rein in our economic casino.

How could these candidates start reining? They could enact what analysts call a financial transaction tax, a tiny levy on every “trade” — every gamble — that Wall Streeters take.

Gamblers throughout the U.S. financial industry currently pay no tax on their wagers. All other gamblers in the United States do. Out of every $2 racetrack bet, a tax comes out. But Wall Street wheeler-dealers who can routinely bet billions pay no taxes whatsoever.

A growing number of lawmakers in Congress are aiming to change this 1 percent-friendly status quo. They've introduced over a dozen different financial transaction tax bills. The latest — from Rep. Keith Ellison of Minnesota — would place a 0.5 percent tax on every stock trade and somewhat smaller taxes on every trade of bonds, derivatives, and currencies.

Wall Street movers and shakers are predicting economic doom, not surprisingly, should a financial transaction tax ever become law. Traders will merely, they argue, shift their trading abroad.

But if these traders should flee, they’ll have a hard time outrunning financial transaction taxation. Last week, 11 European nations, led by France and Germany, agreed to implement a new tax on stock, bond, and derivative trading.

This landmark new victory for financial transaction taxation in Europe figures to give Ellison’s bill some substantial momentum. Some 130 organizations, part of a “Robin Hood tax” campaign, have already endorsed it.

These Robin Hood campaigners don’t have a fraction of the cash spent so far on all those anti-Wall Street political campaign ads. But they do now have solid legislation to push — and an equally solid determination to keep all those anti-Wall Street candidates honest.

To encourage your representative in Congress to co-sponsor Rep. Keith Ellison’s new Robin Hood tax, click to this online action center.

Sam Pizzigati edits Too Much, the online Institute for Policy Studies weekly on excess and inequality. Read the current issue or sign up here to receive Too Much in your email inbox.

The Tiny Tax that Terrifies Wall Street

Sam Pizzigati — Sat, 23 Jun 2012 15:18:56 -0400

Robin Hood would not be happy if he happened upon our incredibly top-heavy modern world. But the new campaign to levy a tax on speculative trading would most likely have him breaking out in smiles.

The most lavishly paid bank CEO in America, Jamie Dimon of JPMorgan Chase, sashayed back to Capitol Hill last Tuesday for still another congressional hearing on JPMorgan’s billions in speculative trading losses this past spring.

Dimon didn’t have much trouble fending off the few tough questions that came his way from lawmakers on the House Financial Services Committee. But Dimon and his fellow Wall Streeters may have much more trouble handling a new campaign — for taxing financial speculation — that launched the same day Dimon testified.

The goal of this new “Robin Hood” campaign: a tiny tax on the ever-churning financial transactions that have made the Jamie Dimons of our time fabulously wealthy.

This Robin Hood campaign for a financial transaction tax actually began two years ago in the UK and quickly spread to over a dozen other nations. The U.S. branch of the campaign that launched last week comes with some high-profile champions.

Actor Mark Ruffalo — a star in the hit film The Avengers — introduced the campaign on Tuesday with a video now bouncing all around the online world.

A follow-up came Thursday, when over 50 top financial industry professionals from around the world endorsed the financial transaction tax notion in a letter to the leaders of the world’s 20 top nations economically.

The volume of global speculative trading, these financial industry experts pointed out, now exceeds — by 70 times — the size of the entire real global economy, the actual goods and services that people use everyday.

This massive speculation endangers the entire world. But a tiny tax on every trade, the financial professional letter notes, could moderate that speculation.

The Robin Hood campaign is calling for a 0.5 percent tax on stock trades — the equivalent of a 50 cent tax on every $100 of trading — and a smaller levy on Wall Street's heavier-volume, casino-style trading in derivatives, currency, and other speculative instruments.

All told, this level of financial transaction taxing would raise over $300 billion a year from Wall Street, money, notes the Robin Hood campaign, that could “stop foreclosures, fund new jobs, and help repair the social safety net.”

Those Wall Streeters who would bear the vast bulk of the Robin Hood tax burden, nurses union leader Rose Ann DeMoro pointed out last week, can certainly afford to pay a new tax. The pay pools at JPMorgan Chase and the nation’s six other largest banks totaled $156 billion in 2010.

JPMorgan CEO Dimon alone last year pulled in $23.1 million, a sum that Adriana Vasquez, a 37-year-old janitor at the JPMorgan Chase tower in Houston, would have to work over 2,400 years to match. Vasquez and her union confronted Dimon in Washington last week after his congressional testimony.

Vasquez took home $9,000 in 2011, and the contractor that manages JPMorgan janitorial work in Houston is currently offering only a 10 cent-an-hour raise over the next five years.

In Europe, the Robin Hood campaign has already gained serious political momentum, even support from Angela Merkel, the conservative German chancellor. In the United States, two lawmakers — Rep. Peter DeFazio from Oregon and Senator Tom Harkin from Iowa — have a transaction tax bill pending.

A tax on speculative trading, DeFazio said last week, would dampen Wall Street volatility and “drive some of these hedge fund speculators out of the market.”

“These people are getting filthy rich by driving up the price of commodities,” added DeFazio. “They don’t care how they affect the real economy. They don’t care if they drive up the price of oil. They’re just there to trade something 1,000 times a minute with super-computers.”

DeFazio’s financial transaction tax bill calls for just a 0.03 percent tax on speculative trades, a tax rate that runs 321 times smaller than the typical sales tax on a tube of toothpaste.

Most all movers and shakers on Wall Street, not surprisingly, oppose any tax whatsoever on financial transactions, no matter how tiny. They contend that any such tax would cripple investment.

But the United States has a long history of taxing financial transactions. The federal government started taxing stock trades and transfers in 1914 and had a financial transaction tax on the books until 1966.

Getting the tax back on the books will take real effort. GOP leaders in Congress remain dead set against the notion, and the White House is offering no support either. The push will have to come from the grassroots, and that pushing began last week with rallies at JPMorgan Chase offices all across the nation.

In San Francisco, pediatric nurse Martha Kuhl called on Wall Street's finest “to pay their share.” Added the activist: “If JPMorgan can squander billions in speculation, something is wrong.”

In Washington, D.C., activists protesting JPMorgan CEO Dimon’s Capitol Hill appearance last Tuesday put the matter a bit more rhythmically.

“Jamie Dimon, you’re no good,” the campaigners chanted. “The people need a Robin Hood.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.

Robin Hood Tax Gains Ground at the G-20

Mary Bottari — Fri, 04 Nov 2011 09:46:02 -0400

The G-20 meeting in Cannes got underway yesterday. The sunny beach resort, playground to movie stars and media moguls was an odd choice for a somber G-20 meeting. As President Obama and Treasury Secretary Tim Geithner touched down in Air Force One, the Greek government was on the verge of collapse, austerity was sweeping Europe and the future of the Eurozone in doubt.

But the first day of talks offered a ray of hope for the entire global economy. For the first time, the 20 most powerful countries in the world sat down to discuss taxing the financial service industry. And for the first time, the U.S. blinked.

Welcome Change of Tune for the U.S. Government

President Sarkozy of France has long championed a small sales tax on the financial services industry. "At a time when states are making remarkable efforts to restore their public finances... how can the financial sector triumphantly continue to march, indifferent to the world around it, carelessly and without a care for the disorder it has more than its share in causing," Sarkozy said. Angela Merkel of German agrees.

President Obama too has supported the idea. Ron Suskind revealed in his new book Confidence Men that Obama thought the tax was a no brainer right after the banks collapsed the global economy -- until his economic team told him otherwise.

Behind the scenes, the “opponent in chief” has been U.S. Treasury Secretary Tim Geithner who has protected his friends on Wall Street by privately characterizing the tax as unworkable, easy to evade and not likely to bring in much income. Geithner doesn't just oppose the tax for the U.S., he has opposed the tax in the context of the G-20 and as EU member nations move forward to apply the tax in their member states.

Now the White House appears to be changing its tune. Reuters is reporting that the U.S. government is backing down from its long standing opposition to the tax.

An unnamed source told Reuters the United States now seemed "less problematic than the U.K." in resisting the idea. The U.S. is still opposed to the idea in principle but would not block others from going ahead. The Wall Street Journal confirmed the story quoting White House adviser Mark Froman as saying that the governments had decided to pursue different financial taxes, but: “I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective." Translation: Go for it, but the U.S. won’t join you.

The Wall Street Journal editorial board wasted no time, savagely attacking the idea and calling on Geithner for help.

Nurses Hold Geithner's Feet to the Fire

The news reports hit the wire almost at the exact same moment that thousands of nurses took the fight for a fair economy right to Tim Geithner’s doorstep with signs demanding "An Economy for the 99%" and “Tax Timmy’s Friends.” Nurses and other groups are fed up with Geithner's soft pedaling every action that might hold the big banks accountable for the meltdown of the global economy.

The noon rally at the Treasury marks an increased effort by unions to convince the Obama administration that more needs to be done to fix the country’s broken financial system and create jobs. Obama's reelection campaign recently announced that they were hoping to turn anger against Wall Street to their advantange in the next election cycle. Hard to do if the 99% are knocking on your door, calling for meaningful measures to make Wall Street pay. The nurses later fanned out across Capitol Hill, delivering 322,844 petition in support of the idea to Finance Chair Max Baucus and other members of the Joint Select Committee on Deficit Reduction (the Super Committee).

“It is long past time for Secretary Geithner and President Obama to get on board with other world leaders in supporting this common-sense approach to raise badly needed revenues to help fund the critical programs we need to revive the U.S. and other global economies,” said NNU Executive Director RoseAnn DeMoro, who traveled to Cannes to join with nurses from around the world at a press conference and rally close to where world leaders were meeting.

AFL-CIO President Richard Trumka was also in Cannes, quietly pushing the White House to do the right thing. The American labor leader was joined by one of the richest men on the planet, Microsoft co-founder Bill Gates, who presented a paper to the G-20 leaders advocating for the transaction tax to aid the developing world. An increasing number of unions and grassroots groups, including SEIU, AFSCME, Oxfam, Public Citizen, Rebuild the Dream and National People's Action are adopting the tax and campaigning on it, and the Occupy Wall Street crowd has embraced it as well holding small actions across the country October 29th.

The Pope was not present, and neither was the Archbishop of Canterbury, but both men came out for a financial transaction tax as economically feasible and morally right in recent days.

Actor Bill Nighy, the British actor who has long campaigned for the "Robin Hood Tax" as it is called in the U.K. and who did a wonderful video to popularize the idea joined the nurses in Cannes. “I heard a banker remark the other day that 'the time for atonement is over'. I must have been out of the country at the time, or looked away momentarily because I don't remember that period of atonement taking place. It would not affect their multimillion bonuses, “ Nighy dryly observed to the Guardian.

Tax Faces Continued Opposition in the United States

While the domestic implementation of the tax faces continued opposition from the U.S. Congress, Geithner and the White House, proponents reintroduced the legislation this week and are rapidly picking up co-sponsors. Oregon Rep. Pete DeFazio and Iowa Senator Tom Harkin introduced a modest version of the transaction tax (HR 3313) in an effort to get the Super Committee to take a closer look. While the financial services industry will work hard to convince Congress that any tax will result in the immediate collapse of the global financial system and that grannie will be hardest hit, the facts are that the modest fee proposed in this legislation is miniscule in comparison to the management fees applied by some mutual funds.

"Wall Street is 40 percent of the economy. They don't make things. They don't feed people. They churn. They create volatility,” said DeFazio. “The first step on the long path to recovery happens when we rein in the excessive speculative activity that has destabilized our financial system.”

Much more work needs to be done to get the Obama administration to adopt the idea, even more work to get it though Congress, but the tax now has a growing list of powerful allies and a simple common sense appeal.

As Trumka puts it: "It is time to put Wall Street to work rebuilding Main Street with a financial speculation tax to create jobs, rein in speculation and lay the groundwork for long-term economic prosperity."

Pillage and Plunder Alert -- Deficit Commission Gets Underway

Mary Bottari — Fri, 12 Nov 2010 11:54:20 -0500

Watch out, they’re coming. After an election cycle in which Republicans worked themselves into a lather in an attempt to convince voters that the deficit was the source of all their economic woes, the political elites and their Bankster backers are coming for the middle class. What better time for us to start a new publication — "Pillage and Plunder Alert"? And what better inaugural event than the release of the draft report prepared by the co-chairs of the Presidential Deficit Commission?

First, Go After the Sick and the Elderly

The two chairmen of the deficit commission, former Clinton Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson, surprised Washington Wednesday with the release of their own draft recommendations on federal debt reduction. They were supposed to issue a report December 1, after the full 18-member panel had been given a chance to vote on each item. Knowing that it would be next to impossible to achieve a high level of support on the commission for their recommendations, the raiders decided to go it alone. Their package appears to be about three-fourths cuts and one-fourth revenue raisers.

High on the list of people who have to “feel the pain” are the sick and the elderly. The co-chairs want to "increase cost-sharing for Medicare." In other words, they want seniors' copays and deductibles to increase. Plus, they want a cap on catastrophic medical costs, tossing the severely ill over the cliff. But in what many found to be the most ominous development, the co-chairs navigated far outside the boundaries of their mandate to launch a frontal assault on Social Security.

“The commission’s mandate was to deal with the country’s fiscal problems. Since Social Security is legally prohibited from ever spending more than it has collected in taxes, it cannot under the law contribute to the deficit. Their proposal would cut benefits for tens of millions of middle class workers who are overwhelmingly dependent on Social Security for their retirement income,” said economist Dean Baker.

The commission co-chairs also recommend raising the retirement age for Social Security. "They’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever,” says Nobel Prize-winning economist Paul Krugman.

When millions of seniors have just seen their retirement savings go up in smoke, is it really the time to be talking about slashing Social Security? AFL-CIO President Richard Trumka was blunt: “The chairmen of the Deficit Commission just told working Americans to ‘Drop Dead.’ Especially in these tough economic times, it is unconscionable to be proposing cuts to the critical economic lifelines for working people, Social Security and Medicare.”

Spare the Whales, Harpoon the Minnows

Most economists agree that focusing on the deficit during a major economic downturn is counterproductive. But if you are sincerely concerned about the deficit caused by endless war and a massive financial crisis, the best way to solve the problem is to put America back to work. Working people pay taxes. The unemployed do not.

Economist Jamie Galbraith puts it best: “The only way to reduce a deficit caused by unemployment is to reduce unemployment. And this must be done with a substantial component of private financing, which is to say by bank credit, if the public deficit is going to be reduced. This is a fact of accounting. It is not a matter of theory or ideology; it is merely a fact. The only way to grow out of our deficit is to cure the financial crisis.”

At Wednesday's press conference Alan Simpson said, “we have harpooned every whale and some minnows” in order to come up with their recommendations. But it is notable that while the minnows are drowning, those blubbery whales on Wall Street have dodged the harpoon. Galbraith recommends that the big banks be forced — once and for all — to clear their books of the toxic assets that are preventing them from lending. Private lending is critical to getting the economy moving again. But it may not be enough.

With a recession this steep, more revenue is needed to put Americans back to work. Dean Baker notes that the “glaring omission” of the Deficit Commission draft is that while it includes taxes on the middle class, it does not include plans for any type of tax on the financial sector, an idea supported by commission members. He notes that a tiny tax on destructive Wall Street speculation alone could raise $1.5 trillion over 10 years, a hefty chunk of change that can be used to put Americans back to work and reduce the deficit.

Despite the deficit hype, polling shows the American public is clear that the deficit didn’t crash the economy, Wall Street did. Moreover, Americans know that the big bailed-out banks are doing nothing to improve the situation. Nomi Prins nailed it when she wrote in her book It Takes a Pillage, that to stop the rampage we need to restructure the financial system to help the many and not the few. We can start by making Wall Street pay to put America back to work.

(Stay on top of the fight for a financial transaction tax and sign up for Pillage and Plunder Alerts at www.BanksterUSA.org.)