![]() Even today, the Securities and Exchange Commission (SEC) continues to fund its own operations through a small tax on transactions, thus providing a successful model on which to build.Ī few proposals on FTTs have been put forward recently. Several of the world’s other advanced capital markets have an FTT, including France, Italy, the UK, and Hong Kong. ![]() New York imposed a similar tax as recently as the 1980s. There was an FTT in place for much of the twentieth century, from 1914 to 1965, during a period of great expansion of capital markets. Rather than channel funds for investment back to American corporations, HFT further enriches the wealthy while creating risks of market volatility.įTTs are common around the globe and even have a long history in the United States. As Andrew Ross Sorkin pointed out in a recent column, this type of trading makes “a mockery of the idea of actual investing” while giving Wall Street firms unique advantages over retail investors. Today, the FTT targets a practice known as High Frequency Trading (HFT), which relies on complex algorithms to execute a slew of transactions in milliseconds, turning tiny changes in price into huge profits. These assets might include stocks, bonds, or derivatives, but the type of asset is only one factor in determining when the tax applies. BackgroundĪ Financial Transaction Tax is a small tax applied every time a financial asset is sold, the same way that we all pay a small tax when we buy a t-shirt or a haircut. An FTT would ensure that high-volume stock market transactions would curb, rather than reinforce inequality, and return needed resources to support vulnerable families. This type of tax, known as a Financial Transaction Tax (FTT), is designed to discourage economically useless speculation, progressively raise hundreds of billions of dollars for social and economic investments, and help transition to a more equitable tax system in the United States. To start, Congress should immediately pass the Wall Street Tax Act, which would tax the sort of high-speed trading that has turned the financial sector into a casino at the expense of our communities. It is a fundamental imbalance that can change only with a suite of corrective actions. Detached from the daily lives of most Americans, the stock market surge almost exclusively benefited the disproportionately wealthy, and the pandemic once again lived up to its distinction as “ the great clarifier.”įor years, Wall Street has been increasingly out of touch with the underlying economy of workers, jobs, and wages, and the fortunes reaped by hedge funds and billionaires have not helped the millions of Americans in dire need. In the parallel universe of the financial industry, stock indices soared to historic peaks as Americans wished good riddance to the deadliest year in our history. But Wall Street doesn’t represent most Americans. The COVID-19 pandemic triggered the worst economic crisis in nearly a century, with millions suddenly facing hunger, unemployment, or eviction. For most Americans, what threatens health also threatens wealth.
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