Geithner Throws Tobin Tax under the bus
U.S. Secretary Geithner says a Tobin Tax, a tax on financial transactions, is something America will not support and slaps down the U.K. Prime Minster for mentioning the "T" word.
A day-by-day financial transaction tax is not something we're prepared to support.
Oh really? There are already various proposals introduced in Congress for some type of transaction tax on speculation in commodities which affect the national economy (oil).
As noted in this previous post, the only real way a financial transaction tax could work is if it is implemented globally. Else, trades will simply move to a country which has no such tax.
Why would other nations being considering a Tobin Tax? Prime Minister Gordon Brown wrote a Financial Times op-ed to explain:
I believe any measures we consider should be assessed against four core principles.
First, in a global economy and with a global financial sector, any such measures could work only if applied globally.
Second, any measures must not create distortions or incentivise avoidance.
Third, any measures must complement regulatory measures already being adopted or discussed.
And fourth, any costs to the financial sector must be fair and measured to enable institutions to do their job for our economy.
The IMF is researching a Tobin Tax and will report in April. But it's fairly clear global finance is trying to kill the idea without consideration, esp. our TARP loving Treasury Secretary.
Meanwhile, even though it's clear there needs to be a global response to financial regulatory reform, Business Week lists all of the ways other nations are diverging from acting in concert. Note how many nations are retracting Stimulus, since their economies are responding. Other nations are also raising interest rates.
What was that about the dollar being the mother of all carry trades?
Brown and Tobin Tax
I'm surprised Brown would bring this to the table. Being a conservative PM and all. Geithner is the last Treasury Secretary that should reject a way to raise revenue. A painless way at that.
Securities Turnover Excise Tax
This is the same thing? STET
150 billion? If this is true we need to implement this immediately. The percentage on each transaction is so small it will have no affect on business. The US needs revenue. This is a painless way to raise real money.
check out DeFazio
honestly, I don't know if this would work or not but beyond raising revenue, they are trying to consider stopping flash trading on critical commodities. But it's clear it needs to be done globally to work.
I agree, we need these large banks to pay for their own bail outs....
and raise revenue. How about a executive bonus tax? Say at 80%?
Sounds Good
Put an 80% tax on any bonus over 50k. Help them keep touch with reality.
0.25% can be big!
My understanding is that Tobin taxes were the norm a few decades ago.
The seemingly small number (0.25%) is actually quite large. Remember that the financial "innovations" of late have all required skimming a small amount of large transactions (ok, not so small if we're selling financial instruments to cities) and leveraging it up high.
This sort of tax will utterly strangle any of the financial tricks that have been exploited recently - and that's a good thing.
People are, at their core, game players - identifying the unstated rules to games and then exploiting the system. It's what we do very well and as a society our government must act against such exploitation - ideally before it gets to the point that it's at right now.
A Tobin tax is a way to deal with hot money flooding into, and then out of regions or industries and we've just managed to forget how not having one burned us in the past.
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