Saturday, May 19, 2012

taxing commodity traders a really small amount would raise $6 billion per year for Illinois

The presentation that was both the most hopeful and had the most specific plan was "Making Finance Work for the 99%: The Campaign for a Speculative Sales Tax in IL", the last session I attended. Unfortunately, the attendance was weak.

Bill Barclay, of Chicago Political Economy Group and Democratic Socialists of America, and Susan Hurley, of Chicago Jobs with Justice, made the case for applying a $1 tax on futures transactions. (It's really $2 since it's one from the seller and one from the buyer.) Since this minimum transaction is over $30,000, it's a very small tax percentage wise. And since various fees are already $8-95 per transaction, it's not much of a change from the point of view of the cost of conducting business.

There's a bit of a learning curve on this. Most people think of the tax as applying to stock transactions. But in Illinois it's futures that get traded, so it wouldn't affect the normal investor. However, it would still raise $6 billion per year.

There was some talk of Chicago applying this tax. But the lobbyists for the Chicago Mercantile Exchange convinced the Illinois General Assembly to pass a law making this impossible.

I have long supported such a tax (which I learned as the "Tobin tax"), but Barclay had some great information.

A number of countries already have a tax like this in place at the 0.1-0.3% level. None of these countries has experienced capital flight.

Also, according to Barclay, for about 50 years in the early Twentieth Century the United States had this kind of tax.

If you believe the problem facing the U.S. economy is capital pooling while labor stagnates, this is one of the most straight forward ways to get the money circulating in the middle-class economy.

Hurley said there's an organizing meeting upcoming, probably May 30 or 31. If you want to be involved contact Hurley at JWJ.

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