On Wednesday I discussed the Robin Hood Tax initiative where I praised those, especially the rich people who are embracing the idea.
I portrayed the Obama administration as being against, primarily out of fear that investors would go abroad with their money. The case is not so clearly defined. According to one administration official, there is actually support precisely to curb the risky activities that led the crises in the first place.
“The president is sympathetic to the goals that a financial transactions tax is trying to achieve and he is pushing for a financial crisis responsibility fee and closing other Wall Street loopholes as the best and most feasible way to achieve those goals,” the administration official said.
Labor unions and groups are supportive and organizing demonstrations in favor, They envisage the taxes levied to help finance job creation programs.
“The tax is a good idea because banks are where the money is. It’s the same reason Jesse James robbed banks,” said Rose Ann DeMoro, executive director of National Nurses United, which recently held demonstrations at the offices of 60 members of Congress in support of the levy. “The thing about the financial transactions tax is it’s stunning how quickly people get it and how fast they embrace it.”
I got the impression that Bill Gates and President Sarkozy envisaged using the money to help development in the worst areas of poverty, which I assume mean in Africa and Asia. Other political leaders are probably imagining using this as revenue to help plug government deficits.
We should not forget that this is a tiny tax for the individual. The EEC proposed a tax of $10 for $10,000 worth of transactions throughout the European Union which could raise $77 billion a year just in Europe.
An American version of this bill (imposing a $3 tax per $10,000 of transactions) might raise $350 billion over the next decade. Kudos for some rare bi-partisan cooperation to Representative Peter DeFazio, an Oregon Democrat, and Senator Tom Harkin, an Iowa Democrat.
Mr. DeFazio envisaged the tax could “raise money to invest in the real economy,” but even he and his partner are skeptical the Republican caucus in Washington would accept any form of new taxes.
The opposition is already gathering, citing a fear that people will slow their investment rates. Kenneth E. Bentsen Jr., executive vice president for public policy at the Securities Industry and Financial Markets Association, released a statement saying:
“At a time when we face a slow economic recovery, such a tax will impede the efficiency of markets and impair depth and liquidity as well as raise costs to the issuers, pensions and investors who help drive economic growth,”
The British Chancellor of the Exchequers, George Osborne, called the proposed tax “economic suicide.” In this time of economic crisis, he said, the European Union “should be coming forward with new ideas to promote growth, not undermine it.”
Opposition on this side of the pond comes from Glenn Hubbard, past chairman of the Council of Economic Advisers under President George W. Bush. He described the Robin Hood tax is a “monstrously bad idea.”
“Such a tax isn’t really going to get at the banks,” added Hubbard. “It’s going to hit the people who own the assets that are traded,” like investors.
If you think Hubbard is just crying from the political bleachers, think again. He is currently an adviser to Republican presidential candidate Mitt Romney.
Ironically Britain, Hong Kong and Singapore (the latter two can be proud of the growth of their financial markets) all have such a tax in place. In fact, and please don’t tell the Republicans, the US had imposed a tiny tax on stock trades between the years1914 – 1966. Socialists!
Finally, let’s remember why this tax is being proposed in the first place. There are too many people in this world who are starving, denied medicine and clean water, suffering from diseases that can be cured. And, as the British actor Bill Nighy, has described it, this is “a beautiful idea.”
“It would raise enough money to solve problems at home and overseas, and it could do it without hurting ordinary people,” Mr. Nighy said.
So simple. So true. So possible.
Alon Shalev is the author of The Accidental Activist and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/ and on Twitter (@alonshalevsf).