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A group of economists and others have just released a letter to the G7 urging the adoption of a Financial Transaction Tax, see PDF.

The letter states: “We believe that a global FTT would eventually raise substantial revenue for many countries, including for the G7. But given the emergency situation in poor countries right now, our focus here is on them. Given the dominance of G7 financial markets, a G7-wide FTT could quickly start to provide at least $50 billion a year of emergency finance to fund vital public works and longer-term investments in developing countries, especially struggling young democracies.”

The signers include James S. Henry, global justice fellow at Yale and senior advisor, Tax Justice Network, who organized the letter; James K. Galbraith professor of economics at the  Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin; Sarah Anderson, Global Economy Project director at Inequality.org co-editor, Institute for Policy Studies; Pedro Biscay, former director, Central Bank of Argentina Buenos Aires; Ralph Nader, consumer advocate; William K. Black, associate professor of economics and law, University of Missouri-KC; Patrick Bond, professor of government, University of the Western Cape Cape Town, South Africa.

The signers write that while they “applaud the G7’s support for a minimum global corporate income tax (CIT) rate for multinational corporations,” the G7’s “current proposals would do little for poorer countries. Indeed, they would actually reinforce the unfair bias of international tax rules in favor of the richest countries, which host most of these corporations. If this were the only collective tax reform that the G7 undertakes right now, therefore, a huge opportunity will be missed — the chance to help developing countries recover from this historic tax injustice as well from as the pandemic, and to help finance public investments and advance the cause of international tax justice.”

The group suggests a very small tax: “a 0.1 percent transactions tax on all stock trades, paid for by investors located anywhere in the world who transact through G7 public exchanges.”

Still, substantial funds could be raised: “In 2020, for example, NewYork’s top two exchanges, the NYSE and the NASDQ, registered nearly $60 trillion in trades, nearly half the total volume of the world’s 85 stock exchanges.”

They add that to the “extent that the FTT does ‘pinch’ certain high-frequency traders, this may actually be a good thing. It enables G7 countries themselves to tackle ‘the finance curse,’ the bloated, unproductive and extractive part of high finance. It promotes longer-term investing and discourages casino-like stock speculation. …

“This nearly-perfect tax could channel $billions from a few hundred thousand wealthy folks at the top to tens of millions of people at the very bottom, whose very lives may depend on it. The FTT is so minimal and frictionless that it is not even noticed by most of those who pay it. It is hardly perceptible at all, especially compared with, say, New York City’s 8.875 percent retail sales tax or Europe’s double-digit VAT taxes. But in the right hands and if well spent, the positive impacts of all this tax revenue on the reduction of human suffering will be very perceptible. …

“FTTs also dramatically boost financial transparency and help to combat money laundering and corruption — as Kenya recently discovered when its new FTT surfaced a huge amount of ‘funny money’ washing through Nairobi’s stock exchange.”

Available for interviews:

JAMES HENRY, jsh11963@gmail.com, @submergingmkt
Henry is Global Justice Fellow at Yale University, senior advisor to the Tax Justice Network and managing director at the Sag Harbor Group.

Nurses unions and other groups have protested for a Financial Transaction Tax.

JAMES HENRY, jamesshelburnehenry at mac.com, @submergingmkt
Henry is former chief economist at the international consultancy firm McKinsey & Co. He is now senior fellow at the Columbia University Center for Sustainable International Investment.

He said today: “This stock turbulence is a great example of why we need a Financial Transaction Tax. As brilliantly portrayed in this video by the British actor Bill Nighy, a tiny tax on financial translations carried out by institutions would raise hundreds of billions of dollars.”

See Henry’s just-released remarks from The Real News: “The Sky Is Not Falling? China’s Stock Market Impact.” Says Henry: “This was an example, I think, of the way stock markets have been structured. About 84 percent of the trades that went on on Monday in the first couple hours, when the Dow plunged … were run by so-called automatic trading programs. No humans involved, they’re just looking at computers, basically looking at momentum and stop order limits that they’ve put in place. And this was just a completely arbitrary kind of decline, way out of proportion to any real economic factors. …

“Take a look at the Shanghai stock market that set all this off, and it’s like a casino. Fifteen, twenty million people. Many small investors trading on margin, which means they borrow to buy the stocks. There’s no active insider trading regulation. Shanghai’s entire daily trading volume is less than the value of the decline it set off  in Apple’s stock– let alone all other US securities. …

“We have a real breakdown in terms of macroeconomic consensus in terms of the kind of stimulus programs that countries should be engaged in. I think that’s a first priority here, to maintain growth. We can’t just do it on the basis of the Federal Reserve’s low interest rates forever. Fed’s been talking about raising interest rates like 0.375 percent in September. That won’t have any real impact on our economy to speak of. It’s certainly not responsible for this meltdown on Monday. …

“But the other thing is when we look at countries like China, they have tremendous problems of domestic kleptocracy and corruption, and basically the kind of legal systems that we take for granted are just really a work in progress in China. So if you’re an investor there, you’re worried about taking your money out of the country. There’s been massive capital flight from China. A lot of the arguments about what’s going on in China today have been talking about their debt. But the debt problem in China is really a domestic debt problem, and from a global balance sheet perspective, they have a lot of capital flight offshore.”

Henry is senior adviser with the Tax Justice Network, which last year in their report “The Price of Offshore Revisited,” estimated that total wealth in tax havens was between $21 trillion and $32 trillion.

COSTAS PANAYOTAKIS, [in NYC] cpanayotakis at gmail.com
Panayotakis is associate professor of sociology at the New York City College of Technology at CUNY and author of the forthcoming book “Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.” He said today: “Greek Prime Minister George Papandreou’s attempt to escape growing popular opposition to austerity by calling for a referendum has turned into a political fiasco, as German chancellor Merkel and French President Sarkozy have responded to his announcement by dictating that Greek voters can decide not on the latest European agreement but only on whether Greece will remain in the eurozone. By raising the possibility of Greece getting out of the eurozone, the German and French governments are hoping that they can blackmail the Greek public into submission. This threat has thrown the Greek government into turmoil and made it unclear whether the referendum will actually take place. By recommitting themselves to draconian austerity policies that have led not to the containment of the European crisis but to its spread and deepening, European leaders are as likely to fuel anti-austerity movements in Greece and across the continent as they are to exacerbate political instability in Greece.”

Reuters reports today: “European leaders could make progress in their drive for a financial transaction tax at a Group of 20 summit this week after French President Nicolas Sarkozy indicated Washington may prove less of a barrier than in the past.”

KAREN HIGGINS, Charles Idelson, cidelson at calnurses.org
DONNA SMITH, donnas at calnurses.org,
Higgins and Smith are with National Nurses United, the largest union and professional association of nurses in the U.S. — with 170,000 members. They just released a statement: “Nurses from Four Continents to Step Up Call Nov. 3 on President Obama, Other World Leaders for Tax on Wall Street,” which says: “National Nurses United, joined by the AFL-CIO and community activists, including participants from the Occupy Wall Street movement, will protest outside the U.S. Treasury Department in Washington, D.C., on Thursday, Nov. 3 to press President Obama and Treasury Secretary Timothy Geithner for a meaningful financial transaction tax (FTT) to help heal the U.S. and join the growing global movement for an FTT.

“On that same day, nurses from four continents, including a delegation from NNU, will be on hand at the opening of the G-20 summit of world leaders in France to demonstrate how to ‘inject an FTT’ to resuscitate the ailing global economy.”

“It is long past time for Secretary Geithner and President Obama to get on board with other world leaders in supporting this common-sense approach to raise badly needed revenues to help fund the critical programs we need to revive the U.S. and other global economies,” said NNU Executive Director RoseAnn DeMoro, who will speak at the G-20 press conference in Cannes.

The group states: “NNU has been campaigning since early spring for an FTT, essentially a sales tax on trades of stocks, bonds, derivatives, and other financial transactions mainly targeting the big banks and investment firms whose reckless activities caused the current economic crisis. As much as $350 billion annually could be raised by a meaningful FTT, with the revenues available for such needs as good jobs, healthcare for all, and funding for quality public education. The Obama administration has been an obstacle for the Wall Street tax, and in the face of a growing international demand for other nations, especially in Europe, to adopt their own FTT, Geithner has lobbied European finance ministers to oppose the FTT.”

Note: Citizens for Tax Justice today released a report titled “Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010.” “These 280 corporations received a total of nearly $224 billion in tax subsidies,” said Robert McIntyre, director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

Forbes just published a piece by pollster John Zogby: “Majority Of New Yorkers Want To Collect A Century-Old Phantom Tax That Will Generate Billions In New Revenue,” which states: “For over 100 years, New York State law has provided for a stock transfer tax that essentially collects a tax on all stock transactions. For many years, after heavy lobbying by stock traders, tax money was actually collected — then immediately rebated to the firms that sold the stocks. In other words, it has been for most of its existence a phantom tax.

“Since 1982, the charade of collecting first then rebating the revenue was halted, but the stock transfer tax is still on the books as state law. So, what are we talking about in real dollars and cents? The tax translates into a 5-cent tax per share every time a stock is sold, thus in 2020, with the average trade on the NASDAQ at about eight thousand four hundred dollars, the total tax would have been around $8.80 a trade, or .1 percent — a minuscule sum anyway you look at it. Since 1982, however, New York has kept the tax on the books, but it has rebated more than $350 billion to Wall Street investors.

“Most New Yorkers are not even aware of this issue. John Zogby Strategies was commissioned by a coalition of public interest groups, unions, and Albany legislative leaders to test support or opposition of breathing new life into this phantom tax. Our poll of 704 likely voters statewide found that overall, 53 percent agreed it should be collected while only 34 percent disagreed. After arguments both in support and opposition were read to voters, agreement rose to 59 percent while opposition declined to 30 percent — a 29-point differential.”

JAMES HENRY, jsh11963@gmail.com, @submergingmkt
Henry is Global Justice Fellow at Yale University and managing director at the Sag Harbor Group. He said today: “The New York State legislature is meeting Tuesday to decide what its revenue options are and Wall Street is really digging in especially because Gov. Andrew Cuomo is imperiled. They have systematically understated the Wall Street revenues that this tax would produce. … If the feds adopt a national financial transaction tax before New York State does then all the money would flow into the federal treasury. So there’s really no good argument for not doing this except that Wall Street is very nervous about this escalating into the first successful progressive tax reform in 50 years.”

Henry is co-author of the paper “Submission to New York State Assembly: the case for Financial Transactions Taxes,” which states: “In New York state, Assemblyman Rep. Phil Steck has sponsored a disarmingly simple three-page bill that would raise some $10-20 billion a year from Wall Street and plough the money into the pandemic response and the local economy, creating jobs with a fair, efficient and progressive tax.”

The Chicago Tribune reports: “GameStop’s stock is back to the races Friday, and the overall U.S. market is down again, as the saga that’s captivated and confused Wall Street ramps up the drama.”

JAMES HENRY, jamesshelburnehenry@mac.com
Henry is Global Justice Fellow at Yale University and managing director at the Sag Harbor Group, an IT consulting firm.

He said that the GameStop story highlights the need for a Financial Transaction Tax, small tax on each financial transaction that traders make. He states that it would “dampen casino trading” as well as raise substantial revenue in a progressive manner.

He adds the “Senate filibuster and Chuck Schumer’s Wall Street ties make such a development a long shot” in Washington, D.C., but New York State, as a hub of financial activity, could impose such a tax and that unions in New York are making a fresh push for exactly this.

He said: “We don’t have to take sides in this week’s particular stock mania to observe that it is the perfect illustration of much more fundamental, disturbing institutional reality. We have allowed Wall Street’s leading securities exchanges — a crucial part of the global capitalist order — to become by far the world’s largest casino. Indeed, 2020 was an all-time high for trading on New York’s two largest exchanges, with more than $49 trillion of stock trades on the NASDQ and the NYSE — more than half of the world’s trading total. Indeed, 2020 alone saw 19 of the 20 heaviest trading days since the year 2000, with the trend continuing into 2021. And up to 85 percent of these trades consist of speculative plays by hedge funds and high-frequency traders like the ones involved here.

“Fortunately, we have the perfect remedy — one that can also yield an extraordinary amount of tax revenue and help to reduce inequality, at a time when ‘the rest of us’ badly need it to help pay the soaring costs of the pandemic and prevent state and local governments from going bankrupt.

“Eighty-five years ago, in the depths of the Great Depression (1936), the economist John Maynard Keynes had already taken note of the fact that, especially during times of economic crisis, stock markets had become casinos. He commented: ‘Casinos should always be remote and expensive to use,’ and went on to propose that we put a simple ‘progressive sales tax’ on stock trades.

“Just so happens that we already have a .05 percent stock transfer tax in New York which has been rebated to the financial institutions since 1982. $344 billion ($2020) rebated thru 2020, We’re on the verge of getting the legislature to restore it. Governor Cuomo will have to decide whether he’s going to go along with Wall Street or join the herd.

“Yesterday we had a two-hour Zoom conference in which the tax was endorsed by the TWU [Transport Workers Union of America], CWA [Communications Workers of America]” and other unions, with more expected shortly.

CommonDreams.org reports: “‘A Small Tax on Wall Street to Make Big Change’: Bernie Sanders and Barbara Lee Introduce New Financial Transaction Tax.” Also, see: “As 2020 Democrats Cozy Up to Wall Street Donors, Warren and Sanders Refuse to Play Big-Money Game.”

DOUG HENWOOD, dhenwood at panix.com, @DougHenwood
Henwood’s books include Wall Street. He said today: “I’m skeptical of some of the revenue claims made for a financial transactions tax, because if imposed, it would put a damper on hyperactive trading. A lot of computer-driven trading, for example, relies on tiny oddities in market pricing of no economic significance, but which have a great power to destabilize the markets. Taxing those, even at very low rates, would take away all the profit opportunities. But that would be a good thing, like taxing carbon or tobacco: the point isn’t to raise revenue, though some might be raised, but to stomp out noxious things.”

Founder of Left Business Observer, Henwood now blogs at lbo-news.com and hosts the program “Behind the News.”

The New York Times reports: “Saying that offshore tax havens deprive the United States Treasury of tens of billions of dollars of revenue a year, two senior Democratic senators are pushing to help reduce the federal deficit by tightening rules that allow hedge funds, derivatives traders and corporations to skirt federal taxes.

“A bill unveiled Tuesday by Senator Carl Levin, chairman of the permanent subcommittee on investigations, would change Internal Revenue Service regulations that allow American traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. It would also tighten rules that enable some hedge funds and corporations based in the United States to reduce their federal tax liabilities by declaring themselves foreign companies and moving a small part of their operations overseas.”

NICOLE TICHON, nicole at tjn-usa.org, or via Bob Keener, bobkeener at businessforsharedprosperity.org
Tichon is executive director of Tax Justice Network USA and a founding member of the Financial Accountability and Corporate Transparency (FACT) coalition. She said today: “At a time when Congress and the Administration are wringing their hands to come up with ways to address the deficit, this bill offers specific ways to not only raise revenue, but also level the playing field for small businesses and fix a broken tax system that facilitates job loss, crime and economic devastation. Any discussion of fiscal responsibility cannot stop at our shores and should include both sides of the ledger. This is a proposal that all taxpayers can get behind.”

FRANK KNAPP, sbchamber at scsbc.org, or via Bob Keener, bobkeener at businessforsharedprosperity.org
Knapp is president and CEO of the South Carolina Small Business Chamber of Commerce. He said today: “Small businesses are the lifeblood of local economies. We pay our fair share of taxes and generate most of the new jobs. Why should we be subsidizing U.S. multinationals that use offshore tax havens to avoid paying taxes? Big corporations benefit immensely from all the advantages of being headquartered in our country. It’ s time to level the playing field. We need to stop tax haven abuse – not reward it with tax holidays.”

BRIAN SETZLER, brian.setzler.cpa at gmail.com, or via Bob Keener, bobkeener at businessforsharedprosperity.org
Setzler is a member of Business for Shared Prosperity, an advocacy organization leading the “Business and Investors Against Tax Haven Abuse” capmapign. Setzler said today: “Imagine if I took my U.S. college degrees and CPA license off my wall, stuck them in a safe deposit box for a shell corporation I created in Bermuda, and told my Oregon clients to send their payments there. Imagine this little accounting trick allowed me to avoid paying U.S. taxes until I brought those ‘foreign’ funds back to the United States – or maybe I’d just go retire in Bermuda. This is just the kind of absurd accounting acrobatics U.S. multinational corporations use to avoid paying billions of dollars annually in U.S. corporate income taxes.”

The following analysts — from various perspectives — advocate a financial speculation tax.

SARAH ANDERSON
Global economy project director at the Institute for Policy Studies, Anderson said today: “On Friday, G-20 finance ministers will discuss the IMF’s proposals for taxing banks to ensure that the financial sector pays a fair share of the costs of the global crisis. A public forum on Thursday will include diverse speakers who have been advocating for financial speculation taxes, very small levies on transactions of stock, derivatives, currency, and other financial instruments that could curb excessive speculation and generate billions for creating jobs, providing global development aid, and addressing climate change worldwide. Several of the experts involved in this event are available for comment on the IMF financial sector taxation report, which was leaked to the media yesterday. While the IMF came out in favor of other types of taxes, it did not challenge whether financial speculation taxes are implementable.” See PDF of the leaked IMF report.

Anderson helped coordinate international civil society consultations with the IMF on this issue. For more information on the Thursday panel titled “How the Financial Sector Can Pay for the Crisis,” which Anderson will moderate, see IPS.

ALAN CHARNEY
Charney is with Americans for Financial Reform, a coalition of more than 200 labor and consumer groups. He said today: “We’ve had this incredible expansion of the financial sector. It’s not being adequately taxed and as a result we have a deficit of revenue.”

BHUMIKA MUCHHALA
Muchhala is policy analyst for the development and finance program of the Third World Network. She said today: “It seems what is proposed by the IMF is a one-time, backward-looking slap on the wrist. A financial speculation tax by contrast would provide progressive revenue into the future.”

For background, see “Responses to Criticisms of Taxes on Financial Speculation” by Dean Baker.

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

The Institute for Policy Studies has just released a report titled “Reversing the Great Tax Shift: Seven Steps to Finance Our Economic Recovery Fairly.”

Among the authors of the report available for interviews are:

CHUCK COLLINS
Collins, senior scholar at the Institute for Policy Studies, said today: “Now is the time to reverse three decades of tax cuts for America’s ultra-wealthy. In 1955, when April 15 became ‘tax day,’ America’s top 400 taxpayers paid three times more of their income in taxes than the top 400 of 2006.”

JOHN CAVANAGH, via Emily Schwartz Greco
Cavanagh is IPS director. The new report outlines specific proposals that IPS states “would raise $450 billion of revenue to support economic recovery.” These include:

* “Introducing a modest financial transaction tax that will chill speculation and generate $100 billion a year.

* “Implementing an estate tax reform that taxes inheritances over $2 million at progressive rates.

* “Setting an emergency tax rate on extremely high incomes that would generate over $60 billion a year.

* “Eliminating the tax preference on capital gains and dividend income, generating $80 billion.

* “Closing overseas tax havens for individuals and corporations, generating $100 billion.

* “Scrapping $18 billion in tax breaks that subsidize excessive CEO compensation.”

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

CHUCK COLLINS
Collins is senior scholar at the Institute for Policy Studies, where he coordinates the Working Group on Extreme Inequality. He wrote the piece “A Fair Plan to Pay for Economic Recovery,” which states: “The corporations that rigged the casino economy and the wealthy CEOs and investors that profited at everyone else’s expense should bear the recovery costs, not our kids and grandchildren.”

Among Collins’ specific proposals:
“Institute a Financial Transactions Tax. Congress should levy a tax on financial transactions such as sale and purchase of stock and more exotic transactions such as credit default swaps, options, and futures. The UK has a modest financial transaction tax of 0.25 percent, a penny on every $4 invested. This is negligible for a long-term investor, but imposes a cost on the fast-buck flippers. Estimated annual revenue: $100 billion. …

“Eliminate the Tax Preference for Capital Gains. Wealth extracted from Wall Street windfalls will pay out income for years to come. There’s no economic reason for taxing income from corporate dividends and capital gains at 15 percent while taxing income from actual work at 35 percent. Taxing wealth and work at the same rates would generate $95 billion a year in revenue. …

“Eliminate Taxpayer Subsidies for Excessive CEO Pay. Five loopholes that benefit top executives should be abolished. These include eliminating offshore deferred compensation, capping the tax deductibility of excessive pay and eliminating double standards for stock option accounting. Closing these tax loopholes would generate $20 billion a year. …

“Close Offshore Corporate Tax Havens. Congress should prevent corporations from playing games by claiming expenses in the United States and profits in countries that don’t collect taxes. According to the Government Accountability Office, two-thirds of U.S. corporations paid no corporate income tax between 1998 and 2005. Closing this loophole would generate over $100 billion.”

Collins’ books include Robin Hood Was Right and, with William H. Gates Sr., Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167