Nothing new about the tax (revamped at the Turner-Brown tax), but the admin's opposition should be getting a lot more attention. Keep in mind, these types of (sales) transactions are tax-free. Kind of like excluding the insurance industry from anti-monopoly regulation.
Taxing the Speculators
By PAUL KRUGMAN
Should we use taxes to deter financial speculation? Yes, say top British officials, who oversee the City of London, one of the world’s two great banking centers. Other European governments agree — and they’re right.
Unfortunately, United States officials — especially Timothy Geithner, the Treasury secretary — are dead set against the proposal. Let’s hope they reconsider: a financial transactions tax is an idea whose time has come.
The dispute began back in August, when Adair Turner, Britain’s top financial regulator, called for a tax on financial transactions as a way to discourage “socially useless” activities. Gordon Brown, the British prime minister, picked up on his proposal, which he presented at the Group of 20 meeting of leading economies this month.
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And a financial transactions tax, by discouraging reliance on ultra-short-run financing, would have made such a run much less likely. So contrary to what the skeptics say, such a tax would have helped prevent the current crisis — and could help us avoid a future replay.
Would a Tobin tax solve all our problems? Of course not. But it could be part of the process of shrinking our bloated financial sector. On this, as on other issues, the Obama administration needs to free its mind from Wall Street’s thrall.
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http://www.nytimes.com/2009/11/27/opinion/27krugman.html?src=twt&twt=NytimesKrugmanIt's worth noting that criticism fails to mention the amount of revenue that it would garner and how that revenue could be used.
What are Tobin Taxes?
They are simple sales taxes on currency trades across borders. The original proposal came from James Tobin, Ph.D., a Nobel laureate economist at Yale, but economists have since refined his approach. Tobin Taxes can be enacted domestically by national legislatures, but will require multilateral cooperation to be effectively enforced... Political will for passage is the major obstacle to be overcome, by citizen mobilization...
The proposal is important due to its potential to prevent financial crises. Also, the estimated $100 - $300 billion per year makes it possible to meet urgent global priorities, such as preventing global warming, disease, and poverty. Help turn the tide towards global solutions in the 21st century...
How Tobin-style Taxes would work:
* Currency speculators trade over $1.8 trillion dollars each day across borders. The market is huge, and volatile.
* Each trade would be taxed at 0.1 to 0.25 percent of volume (about 10 to 25 cents per hundred dollars)
* This would discourage short-term currency trades,about 90 percent speculative, but leave long-term productive investments intact.
* The currency market would thus shrink in volume, helping to restore national economic autonomy. Nations again could intervene effectively to protect their own currency from devaluation and financial crisis.
* Billions in revenue, estimated at $100 - $300 billion per year, would be generated.
* Revenue could go into earmarked trust funds to fund urgent international priorities.
http://www.tobintax.org/factsheet.htm
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