The unwritten rule of Washington debates about taxing and spending is
to never consider anything new. But wouldn’t it be wonderful if the
pressure of the next few months’ debate changed that?
Last month, 11 European countries, including France and Germany, moved forward on introducing a minuscule taxon
trades in stocks, bonds and derivatives. The tax goes by many names.
It’s often called a Tobin tax, after the economist James Tobin. In
Europe it goes by the more pedestrian financial transaction tax. In
Britain, it goes by the wonderful Robin Hood tax, and is supported in an often clever campaign.
this side of the Atlantic, there is a ghostly silence on a transaction
tax in respectable political quarters. But that might change. This
month, Senator Tom Harkin, Democrat of Iowa, and Representative Peter
DeFazio, Democrat of Oregon, plan to reintroduce their bill calling for
just such a tax.
A transaction tax could raise a huge amount of money and cause less
pain than many alternatives. It could offset the need for cuts to the
social safety net or tax increases that damage consumer demand. How huge
a sum? Mr. Harkin and Mr. DeFazio got an estimate from the bipartisan
Joint Committee on Taxation, which scores tax plans. It’s a hearty one: $352 billion over 10 years.
money would come from a tiny levy. The bill calls for a
three-basis-point charge on most trades. A basis point is one-hundredth
of a percentage point. So it amounts to 3 cents on every $100 traded. ... If some kind of increase in taxes is inevitable, one that takes aim at
high-frequency traders probably hits few Iowans and average Americans in
general, while doing much good.