Monday, April 28, 2014

An Open Letter to Robin Hood

April 27, 2014 

Of the proposals made to tax Wall Street's financial transactions, the best-known and presumably best-funded is the "Robin Hood Tax." Represented in the US as the "Inclusive Prosperity Act," introduced by MN Rep. Keith Ellison, Robin Hood is curiously sponsored by the British NGO OxFam, who promotes it with slick viral videos featuring well-known British actors like Bill Nighy.

While we at UFAA are broadly supportive of Robin Hood's goals and have been present at a number of Robin Hood demonstrations held by the National Nurses United, one of the unions promoting the tax, we are obligated to offer the following criticisms:

1) The tax rates are too low!

Whereas the UFAA demands a 1% tax on the sale of all stocks, bonds and derivatives, Robin Hood starts at 0.5% for stocks, but descends to 0.005% for derivatives (futures, swaps, indeces, etc.)

This is not only too low for our tastes, it's much lower than the rate demanded by similar bills, such as the proposed "Harkin-DeFazio" tax (0.03% or 6X the rate of Robin Hood) and John Conyers' HR 1000, which applies a rate of 0.02% (4X)

Derivatives include the most dangerous types of financial speculation, such as the credit default swaps that crashed the housing market or the energy derivatives and agricultural futures that comprise up to 1/3 the cost of your gasoline and grocery bills. Robin Hood attacks the stock market in a fairly aggressive manner, but leaves these derivatives relatively unscathed.

We emphasize that a Wall Street Sales Tax has a two-fold purpose: 1) to generate revenue, and 2) to penalize non-productive speculation, which redirects money flows toward productive investment. Robin Hood offers no convincing arguments that such a small tax is sufficient to accomplish either goal.