A Financial Transaction Fee Is Waaaay Overdue

By John Ballard

Sometimes my mind wanders as I'm waiting at the gas pump. My credit card has a magical magnetic strip with numbers that identify me in a flash. A brain in the pump gives an order and my tank starts to fill. The numbers swirl past and as the flow comes to a stop the slightest pressure of my fingers can spend nickles and dimes faster than a slot machine can spit them out. All those numbers... all the electricity... all the switches...
Someday, I wonder, isn't it reasonable to expect one of those numbers to get lost?
Lights burn out and my PC messes up with predictable regularity.
How come credit card records are perfect?
Years go by and I keep waiting...hoping that one of these days I might get a tank of gas at no charge cuz the equipment dropped a number.
But no, the bill always comes with uncanny accuracy.  

(Staples now has copy machines that accept my credit card to make copies for five cents apiece. Can you believe I have seen a line item on my credit card statement for $.05 for making a copy? To me that's as amazing as nanobots looking for germs in my blood. Smart pills have been around over a year that electronically tell when and if they have been used.)

All this is to make a simple point.

A financial transaction fee is possible, reasonable, feasible, and long overdue.

We aren't talking big money, folks. The amount under discussion is in the range of fractions of a penny on the dollar. Tracking it is as straightforward in todays world as keeping track of a FedEx package. Easier, actually, since no trucks or drivrers are involved. It's more like the credit card company keeping up with my gas bill.
And for the average person it's one helluva lot less trouble than the junk fees and baggage fees charged by airlines. Or those five buck charges for checking accounts that everybody is complaining about.

(Incidentally, no one knew or complained about the transaction fees banks were getting every time a consumer swiped a credit or ATM card. The merchant simply paid the fee and recovered the fee by charging customers. How do you think the merchant pays rent or electricity? Think about it. Any charge to the merchant is a charge to customers.) 

Readers who may not be familiar with the idea are urged to do some homework. I only learned of the idea less than a year ago. Like the cap on Social Security payroll taxes on high income earners, a Financial Speculation Tax, also called Financial Transaction Tax, has been a well-kept open secret. No need to trouble the lumpen, you know. They aren't smart enough to know about such things anyway. (Pity the poor bright-eyed Congressional staff novice naive enough to bring up such an idea in a brainstorming session.)

Here are links to get started.

?Financial transaction tax, the Wikipedia article

A financial transaction tax is a tax placed on a specific type (or types) of financial transaction for a specific purpose (or purposes). This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. However, it is not a taxing of the financial institutions themselves. Instead, it is charged only on the specific transactions that are designated as taxable.

If an institution never carries out the taxable transaction, then it will never be taxed on that transaction. Furthermore, if it carries out only one such transaction, then it will only be taxed for that one transaction. As such, this tax is neither a financial activities tax, nor a "bank tax,"for example. This clarification is important in discussions about using a financial transaction tax as a tool to selectively discourage excessive speculation without discouraging any other activity (as John Maynard Keynes originally envisioned it in 1936).

There are several types of financial transaction taxes. Each has its own purpose. Some have been implemented, and some remain unimplemented concepts. Concepts are found in various organizations and regions around the world. Some are domestic and meant to be used within one nation; whereas some are multinational.

?Occupy Wall Street's 'Robin Hood Tax' A Tough Sell At G20 (Forbes. Need I tell you more?)

The Robin Hood tax, sort of like a Tobin tax, was proposed by Germany as a means to raise revenue for countries hit hard by the 2008 housing and credit markets crash. Yet, the estimated 1% transaction tax would have to be global in nature for it to work, and countries as diverse as the UK and Russia are against it.

The tax is being proposed for members of the EU only, but there is a push to make it global.

?Bloomberg Doesn't Like Financial Speculation Taxes and Is Prepared To Make Stuff Up to Make Its Case by Dean Baker. Business Insider

?Baker is co-founder of the Center for Economic Policy and Research which has a raft of additional links.

?#OccupyWallStreet: The Real Tea Party also by Dean Baker, US News.

Many people have forgotten that the Tea Party movement had its origins in the anti-TARP protests in the fall of 2008. Millions of people across the country were outraged that the government was going to loan hundreds of billions of dollars to the banks that had brought themselves and the country to the brink of ruin through their own greed and incompetence. Just as these people feared, the bailouts saved the banks, leaving their high-flying executives largely unharmed, but did little to get the economy back on its feet.

[Read a timeline of the Occupy Wall Street protests.]

This led to enormous anger that was harnessed by right-wing politicians to go after the government, but the sentiment was always misdirected. While the right wingers want the Tea Partyers to support their efforts to roll back government social programs, large majorities of Tea Partyers actually support key programs like Social Security, Medicare, Medicaid, and even unemployment benefits. If these programs are protected, and the military budget is not cut (the right wingers oppose military cuts), there is not much left in terms of "government waste" for the Tea Partyers to attack. This leaves an incoherent movement.

[See a collection of political cartoons on the Tea Party.]

The Occupy Wall Street crew picks up on the Tea Party anger directed at the use of the government to make the rich even richer. While it does not have a coherent program or list of demands at this point, the vast majority of the Occupiers understand that there is something seriously wrong in this country. The government is pursuing policies that are making those at the top very rich, while offering little for the vast majority of the population.

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This chart is not directly relevant to any financial transaction fees unless you look at the extreme right column. 
Notice that the numbers are the Income Cetegory Minimums in each column.
Not medians.
Not averages.
Minimums.
That's why the lowest Quintile has all zeros. That's where folks fall at -- not near -- the bottom. 

That term "middle class" is carelessly used to refer to the middle three of the five quintiles. 

The History Of Wage Inequality In One Gigantic Chart 
(Click to Enlarge)

Next time you hear someone say the Occupy Wall Street demonstrators have no clear agenda or plan, tell them to get their head out of their butt and do a little homework.