It’s fitting that the G8is meeting in Chicago this May. In a city with the highest sales tax in the country, where the state tax rate was recently increased by 66% and property taxes went up $300 per homeowner, and where 2012 state education spending was cut by a greater percentage than in any other state, a tax break of $85 million per year was given to the largest and most diverse financial exchange in the world.
The CME Group, made up of the Chicago Mercantile Exchange and the Chicago Board of Trade, had a profit margin higher than any of the top 100 companies in the nation over the past three years.
That leads us to another astonishing fact: an American mother pays nearly a 10% sales tax on shoes for her kids, while millionaire investors pay .002 percent (2-thousandths of a percent) for a financial instrument.
The FTT is sensible, equitable, and long overdue and familiar to some of your more farsighted G8 members. The United Kingdom has had a tax on stock trades for decades. French President Nicholas Sarkozy insisted that his country, despite opposition from the European Union, would institute an FTT. Germany favors a tax, as reportedly do Brazil, Argentina, and South Africa. The Belgian finance minister recently stated, “All goods and services are regularly subject to tax, so I don’t see why financial transactions would have exceptional protection.”
The Bank for International Settlements reported in 2008 that annual trading in derivatives had surpassed $1.14 quadrillion. For the U.S. alone, revenue estimates by the Center for Economic and Policy Research and the Chicago Political Economy Group approach a half-trillion dollars annually
The FTT would also limit the speculative trading that contributed to the financial meltdown in 2008, and which continues to devastate Greece and other financially troubled countries.
Bankers, trade associations, and conservative research groups have concocted a variety of arguments against the FTT, including its effect on ordinary investors, the practicality of collecting the tax, and the risk of exchanges bolting to other countries. But ordinary investors and retirement funds can be exempted from the tiny amount they might be taxed; the modern electronic trading system can easily incorporate a new fee; and a global tax would leave nowhere for tax avoiders to hide.
The Wall Street Journal calls the FTT a “sin tax” which would punish Main Street. It seems, rather, that Main Street has been punished by the absence of an FTT. Considerable support for the tax exists outside of the financial industry. Bill Gates, George Soros, prominent economists, Catholic development groups, National Nurses United, the Pope. In 1989 Lawrence Summers recommended a securities transaction tax. Even Fortune admits, “There is growing consensus from diverse corners of society for some sort of financial transaction tax.”
The FTT is fair and equitable, and should be instituted. How the funds are used is a different story for a different time. Banks, Financial Institutions and Major investment brokers are greedy, that do not want to give up their multimillion dollar salaries, their houses in the Hamptons, and their 2500.00 suits, and someone needs to tell these boys, that it is time to give back what you take.