News Release

Beyond the GameStop Drama: Tax the Wall Street Casino

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.