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Why Isn’t Everyone In Favor of Taxing Financial Speculation?


#1

Why Isn’t Everyone In Favor of Taxing Financial Speculation?

Robert Reich

Why is there so little discussion about one of Bernie Sanders’s most important proposals – to tax financial speculation?

Buying and selling stocks and bonds in order to beat others who are buying and selling stocks and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of the nation’s best and brightest, and subjects financial market to unnecessary risk.


#3

Congress will get to this, right after they eliminate sugar subsidies...


#4

I think the tax should be on trades that occur in short periods. That are, in other words, speculative trading. Otherwise, everyone's pension - for those that have one, and we might wish it was everyone - is being taxed.


#5

Two essential planks in the platform: outlaw speculation use of pension fund monies and expand social security

For anyone interested in signing a petition posted by Social Security Works calling for expansion of social security


#7

... and that, right after those elected to legislative office uphold their constitutional oath and forego the 'perks' from lobbyists after those are regulated and Citizens United is struck down.


#8

Thank you once again Robert Reich!

Wicklund, what you say is true----most people haven't a clue and that is understandable given the nature of this bizarro land that is Wall Street. About as removed from the natural flow of how life was before industrial civilization as possible. If you did a poll and asked people on the street: "What is financial speculation?" ---- what do you think the results would be?

I don't fully understand how it works and have family members (by default) that are deeply involved in this world. They are making millions from what Robert Reich speaks of; high speed trading via "algorithms". (digression here) I swear to god, the human world is being reduced to algorithms! (think, Pandora, Spotify)

Reich makes an EXCELLENT point re taxing financial speculation. It is a point that should be spoken loudly, clearly and repeatedly in a way that is clear and concise. This is possible but has not been done----it will be done, it MUST be done.

What I witnessed was sickening. Patents ("intellectual property") for high speed trading that are held in secretive LLC's, millions and millions of dollars made and no taxes paid. Not a cent. These people are pathological-----and have no compassion for other humans or the natural world. The greed is a sickness. It must be stopped.


#9

Reich is exactly right. A tax on financial speculation won't happen because Wall Street won't allow it. And that raises another of Bernie's most important points -- that Wall Street and other big-money interests OWN the political process. It's time to end that, and voting for Clinton is not the way to make that happen.


#10

Thank you, Robert Reich. Wish this important piece had appeared earlier, before pre NY distraction, and post NY apathy.


#11

let's hope NY is feeling the bern today!


#12

Bernie says he will fund free higher ed at state universities and colleges. There are a whole lot of people out there who don't believe that higher ed should be free. In their minds the tax is connected to something they are against. And then there are the idiots!


#13

One would have to assume that tens of millions of people who own mutual funds would be afraid that they would obtain decreased yields making it harder to save for retirement, etc. if stock and bond trading were taxed in this way. Also, college and university endowments would probably earn less on their investments making if more difficult for them to pay their expenses without raising tuition. Also, pension funds for all types of workers would be hit. And, since the only people directly benefiting would be people paying tuition at public colleges and universities many people would not receive a direct benefit but could lose a lot money from reduced investment yields. Those are some reasons why not everyone is not n favor taxing stock and bond trading. If society really wants free public college and university tuition why not simply raise income tax rates like we do to fund most things?


#14

I will look into the mechanics of taxing trading, especially high-speed trading, over in the UK and elsewhere. Friends in the industry at CME keep saying it is impossible to track and tax each individual trade. It gets hard to follow, but this is the first I am hearing of other countries doing it, so thank you. CBOT also is one of the biggest tax-payers in Chicago, and with relatively fewer employers than others on the list. Not defending them, just sayin stuff.

Update: Stamp Duty Reserve Tax (SDRT) or other "Stamp" tax for different types and methods of tax buying, capital gains tax for selling. Stamps applied at time of purchase through trading system, managed by Euroclear. (LIFFE's Connect system here in Chicago)

So yes, entirely doable, though auditing it could cost a lot (factor that in to the perceived tax windfall)


#15

Market speculation provides liquidity. Getting "civilians" - regular people - involved in the various markets - provides liquidity and volume for trades. What's wrong with incremental, like 0.5% on trading in stocks, options and futures? Also, outlawing massive, high-speed trading can be done. I worked at a large "discount" or self-managed, trading firm in the 90s. There were hundreds of customers with account values of $5,000 or so. These people were the backbones of the market(s). They provided jobs for the firms, exchanges, and for the regulators. Why not tax trading? It's a service for which the infrastructure already exists, and the tax would provide funding for the important regulators of the process.


#16

absolutely - couldn't agree more.


#18

I'd like to submit a qualification to walk back that bit about voters being "mostly ignorant and stupid". Not everyone knows everything about everything.
Politics is so dicey that "advisors" are paid the really big bucks. Some voters may very well be exceptionally good in a variety of areas that simply are not included in the arcane world of politics AND we have throughout history found in hindsight that there are countless cases of politicians having lied to us. Given these realities PLUS their effects - your assertion should could be countered in kind with the proposal that a mirror might just be being held a bit too close for comfort.


#19

No doubt there is a software that can provide for the demands of auditing.


#20

Interesting. Your argument against actually describes the problematic distortions fairly well. These result from some 40 years of an ideology that essentially states that life should serve an economic ideology where everything leading to there being something to trade having to pay a price. That is essentially unethical and unsustainable. Its like asserting a special coronation for traders. The consequences speak for themselves. Watch those who scorn trade regulation yammer loudly when it comes to 'products' used in personal lives. Nice to have regulations in, say, the food industry to make sure you're not poisoned by precisely the same mindset dominating production.

.05 seems a small price to pay to jump-start some movement toward getting the regulatory structures back in motion.


#22

I think it's because we have reached the point where corporate and financial powers are our of our control. We can huff and puff all we want, but are powerless to do anything about it. We can stand in solidarity until our knees give out, and it won't make any difference. Everything appears to be out of our control now.


#23

Still, the apparent Clinton takeover indicates that this is what even Democrats want. It makes sense, really. Our very lives are now dependent on the corporate state, as we have made so much progress in becoming comfortable with simply dumping those who aren't of current use.


#24

For better or worse, certain 'buzz' words have been manipulated to create a negative, visceral almost involuntary recoil response. Tax(es) is one of those words. Liberal has been a lesser member of this group. I am sure you can think of others. Like any learned, conditioned response, this can be changed. If a tax was presented as being something that benefits us we might not react so negatively. IE: If our government guaranteed each citizen the right to 'free', quality healthcare without arbitrarily changing the rate, I would wholeheartedly support it. Also if everyone was taxed - no exceptions or loopholes - a sense of fairness might begin to grow. We pay taxes now but what does the average person GET in return? The rich get richer and the average citizen gets shafted/can't get ahead.