One idea to raise a bit of funding for Washington without delving into the pockets of every American seems awfully appropriate in light of Wall Street’s penchant for risk.
Regulatory in spirit and stunningly simple in execution, the financial transactions tax would shave off 0.25% from the sale or transfer of stocks and other assets that have long-escaped any charge by the IRS. For ordinary traders the quarter percentage point would be a relatively painless amount to lose, but for financial speculators and other Wall Street cowboys who do hundreds of trades a day, the tax could add up–and reduce the super-risky trading that has brought large Wall Street institutions to their knees.
Dean Baker of the Center for Economic Policy and Research and the author of Thinking Big: Progressive Ideas for the New Era pioneered research on the financial transactions tax. Baker recently told Big Think that a financial transactions tax is nothing new. Wall Street was subject to one until 1964, but the footloose environment of subsequent years saw it eliminated to open the market to more average investors.
In 1964, the average daily volume of the NYSE was a mere $4 million; last year it was $1.5 billion, a number representing what could be a prime revenue source for the country.
Though the financial landscape is likely to be more regulatory moving forward with more of an aversion toward risk, Baker said he doesn’t take it for granted that Wall Street’s addiction to high-stakes trading will never come back to haunt us once again. A financial transactions tax is relevant no matter what the atmosphere, he said, and ultimately “just makes sense.”
An Economist debate on fleecing the rich