Monday, March 17, 2014

The Untaxed Americans: The Speculators, Hustlers, and Freeloaders of Wall Street

Paul Buchheit
Common Dreams
Purchases of American products generally come with a sales tax, and often an excise tax, and possibly state and local add-on taxes. A consumer can avoid all this by limiting purchases to food and prescription drugs, or by shopping online. There's one more way—by visiting a nearby financial exchange and buying a million dollars worth of derivatives.

There is currently no U.S. tax on the purchase of stocks, derivatives, and other financial instruments. The rest of us pay up to a 10 percent sales tax on the necessities of daily life. A tiny financial transaction tax of perhaps a tenth of a percent on the trading of financial securities would begin to correct this inequity, while generating billions of dollars of revenue.

There are at least five good reasons why our country is ready for such a financial transaction tax (FTT).

1. The Top Four "Freest Economies" All Have FTTs

As of March 2014, Hong Kong and Singapore and Australia and Switzerland were the top four countries on the Heritage Foundation's Index of Economic Freedom, and they ALL have FTTs (Table 2-9). Critics might argue that other non-FTT taxes are lower in Singapore and Hong Kong. But the World Bank dataset shows the U.S. with lower tax revenues as a percentage of GDP, and the CIA World Factbook shows little difference in the same measure. Economic freedom is not restricted by reasonable taxes on financial transactions. Economies may, in fact, be made freer by encouraging small-business investment over high-frequency trading.

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