But there is a deep divide on the wisdom of a financial transaction tax. Progressives see it as a smart way to simultaneously curb predatory trade while funding ambitious programs to alleviate America’s inequality problem.
“The odds are still against passing a financial transaction tax, but for the first time in a decade this proposal should be seen as a viable policy option rather than just a topic of discussion,” Isaac said. Boltansky, director of policy research at Compass Point. Research and trade.
Last week, House of Financial Services Speaker Maxine Waters said she was “very interested” and “certainly considering” a financial transaction tax.
Concentration of “ mind-blowing ” wealth
Lawmakers will certainly be tempted to tax transactions as this could raise huge sums of money at a time when Washington is strapped for cash.
“We have huge income inequalities in our society and a huge deficit. A financial transaction tax would be an incredibly efficient and gradual way to increase income,” said Aaron Klein, former head of the Treasury Department of the Obama Administration, to CNN Business.
“The concentration of wealth in the stock market is mind-boggling,” said Klein, who is now a senior economic studies researcher at the Brookings Institution.
“There are fees today and the world is not over,” said Dennis Kelleher, CEO of Better Markets, a group that advocates for tighter monitoring of Wall Street. “The proposed fees are so minimal that no reasonable retail investor would ever notice.”
The financial sector argues exactly the opposite.
“This approach has a long history of unintended consequences that will penalize American workers, retirees and families,” a spokesperson for the Coalition to Prevent Taxation of Retirement Savings told CNN Business.
“An FTT will increase transaction costs for investors – including individuals – to undermine the competitiveness of our financial markets and hurt the US economy as we work to recover from this pandemic,” the spokesperson said.
Some countries have tried and failed
“There is no such thing as a tiny tax that generates big revenues,” Angel said in an interview.
He pointed out how some other countries, notably Sweden in the 1980s, had abandoned these taxes after the volume of trade disappeared and incomes were depressed. (Of course, the United States, with its deep financial markets, massive economy, and world reserve currency, is not Sweden.)
“It really ruins the deal,” Angel said.
If trade volumes in the United States were to decline sharply, the FTT would not raise as much as the $ 777 billion estimated by the CBO.
Greg Valliere, chief US policy strategist at AGF Investments, said the chances of a financial transaction tax are “very slim” because moderate Democrats would be unlikely to support it.
“It would be a disaster. It’s a Pandora’s box that shouldn’t be opened,” Valliere said.
Of course, it is possible that TTF’s proposals to Congress will be scaled back, including lowering the rate or excluding smaller blocks of transactions.
Level the playing field
“We strongly believe that a financial transaction tax would hurt Americans trying to save for retirement,” Griffin said.
Klein, a member of the Brookings Institution, called Griffin’s comments a “selfish lie” because high-frequency trading companies like his are said to be among those suffering.
The GameStop trading frenzy drew attention to how Robinhood was able to bring commission-free trading to the masses.
Payment for the flow of orders has made trading cheap and easy. However, critics say it really is Wall Street that is making the most of the deal by skimming pennies on every trade and getting ahead of retail orders to make a profit.
“We believe the markets today are rigged to favor high frequency traders,” said Kelleher, CEO of Better Markets. “The industry has taken a visible upfront commission fee and disguised it as an invisible payment for the order flow.”
In other words, the trade is not really free.
“A finance commission on orders could be the death knell for predatory high-frequency trading,” he said. “Everyone will be better off – except predators.”