Galen Wolffit (wolffit) wrote,
Galen Wolffit
wolffit

Taxing financial transactions

Full story on CNN

The bill, which is still in the draft stages, would tax each stock transaction at 0.25% and futures, swaps and credit-default swaps at 0.02%. The bill's sponsors estimate that it can raise about $150 billion per year, half of which could be set aside in a "job creation reserve" for Congress to allocate in the future.

Seems to me this is backwards. Credit-default swaps in particular are a big part of what caused the financial mess we're in (at least according to some people.) Why tax those at a lower rate than regular stock transactions, which haven't been blamed for anything? "Average americans" can participate in stock transactions far more easily than they can participate in any of the more complex financial instruments, so yeah there's a larger tax base to draw from, but this particular tax structure incentivizes riskier behavior. I'm not (necessarily) opposed to a tax on financial transactions, but let's make it at least a fixed rate across the board, if not a higher rate for transactions which pose a greater risk to the financial system?
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