Friday, December 4, 2009

Oregon's DeFazio Calls for Tax on Wall Street Speculators

Oregon has some great Representatives.  Here’s the latest from Peter DeFazio.

TearDownWallStreet Rep. Peter DeFazio, D-Ore., put his prickly relationship with Wall Street into legislative language Thursday, proposing a tax on financial transactions that he said would deter high volume speculators while raising $150 billion a year that the government can use to "invest in our future, our infrastructure and our middle class.''

The proposal is nearly identical to one DeFazio introduced in the past only to see it founder. This time he believes prospects are better in the wake of government bailouts for big investment banks such as Goldman Sachs and amid rising public anger over the government's treatment of those firms

''The American taxpayers bailed out Wall Street during a crisis brought on by reckless speculation in the financial markets,'' DeFazio said. "This legislation will force Wall Street to do their part and put people displaced by that crisis back to work.''

According to DeFazio, half of the money raised by the tax would go to reduce the deficit while the remainder would be used finance jobs. Most of those those jobs would be connected to building and repairing infrastructure across the nation.

And for the first time, DeFazio is getting some support in the Senate. Sen. Tom Harkin, D-Iowa, has agreed to offer an identical measure in that chamber next week.

''There is no question that Wall Street can easily bear this tax,'' said Harkin, who joined DeFazio at a news conference announcing the legislation.

"Last year, the U.S. taxpayer bailed out Goldman Sachs to the tune of $10 billion. This year, Goldman Sachs has set aside nearly $17 billion for bonuses. We need a shift in priorities in this country to ask not what America can do for Wall Street, but ask what Wall Street can do for America,'' he said.

"Main Street bailed out Wall Street so it's time for Wall Street to return the favor,'' DeFazio said at a news conference where he was joined by Harkin and seven House co-sponsors.

DeFazio and his allies said the tax would only to apply to high volume traders and not average investors or people who have retirement accounts such as 401(k)s. Nor would it affect education or health savings accounts.

Under his proposal:

* Stock transactions would be assessed a tax of one-quarter-of-one percent (0.25 percent);

* The tax on futures contracts to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price would be 0.02 percent;

* Swaps between two firms on certain benefits of one party's financial instrument for those of the other party's financial instrument would pay a 0.02 percent tax;

* Credit default swaps where a contract is swapped through a series of payments in exchange for a payoff if a credit instrument (typically a bond or loan) goes into default would also pay a 0.02 percent levy.

* The tax would not directly strike the average or small investor, DeFazio said. Tax-preferred retirement accounts such as IRAs and 401(k)s would be exempt as would the first $100,000 in trades.

Despite those safeguards, prospects for passage are not good. Treasury Secretary Timothy Geithner said the Obama administration is opposed to the idea as is Wall Street's influential banks and investment houses. Moreover, DeFazio has problems within his own party.

"The imposition of such a tax would place a huge new tax burden on our fragile economy and could drive up an already high 10.2 percent unemployment rate,'' the letter said. "It also may have serious unintended consequences on our financial markets by raising the cost of credit and private investment for businesses and governments alike."

It continued: "Proponents of a transaction tax argue that a small 0.25 percent tax on stocks would be paid for by the highly paid financial traders and would not affect most Americans. This is simply not true. A tax on stock transactions would affect every single person who owns and invests in stocks from small business owners to senior citizens," the letter said.

Channeling his best, sarcastic voice, DeFazio rejected those suggestions. He pointed out that the United States imposed a transaction tax between 1914 and 1966. Moreover, the tax was doubled during the Great Depression yet the Stock Market and the economy thrived… [emphasis added]

Inserted from <Common Dreams>

Since Geithner is the Obama administration, where Wall Street is concerned, his statement means only that he does not want his cronies to have to pay.  His objection that  common people who own and invest in stocks will be hurt by this is a lie.  DeFazio’s exemptions exclude virtually all but professional investors.  I support DeFazio’s bill.  It’s time that these Wall Street beneficiaries of Bush/GOP/Geithner socialism for the rich be made to pay so dearly, that they’ll be calling Larry Craig for stance-widening lessons.  It’s also time for Obama to fire Geithner.


Infidel753 said...

Calls for Tax on Wall Street Speculators

I was hoping for something more along the lines of flogging, but DeFazio's idea has merit.

The real problem with financial-transaction taxes is that, in the online age, it's easy to move such transactions from one venue to another. If they are taxed in New York, a lot of the activity will move to London or Tokyo or whatever, the government will collect less revenue than expected, and Wall Street's business will slump. I'm not sure how big of a problem this really is, but I do know that years ago a proposed stock-transaction tax was defeated in San Francisco because of this objection. It might be necessary to get the coopoeration of other countries to make it work.

Randal Graves said...

Must be all that pot that Bill Walton sells. ;-)

Infidel753 said...

PS Great pic.

TomCat said...

Infidel, I founmd it this morning. It's not an original. Your point is well taken, and I don't have a ready soultion.

LOL, Randal!

Hill said...

LOVE the pic!

DeFazio's proposal is DOA.

His heart is in the right place, but the Corporati$t$ will never allow it.

Lisa G. said...

I think there is a need for this kind of tax. Most of the business, worldwide is done in NY, especially the NYSE. It would be a real pain in the ass for companies to register on other exchanges to avoid this tax. Plus it is soooo small. Quit your whining and suck it up already!

Oso said...

Nader had pushed this idea for several years.

Jolly Roger said...

I've become a complete skeptic that these guys do anything but destroy economies anyway. It is hard to argue that they are actually needed, or serve a purpose other than to leech.

Lisa G. said...

A list of Obama's accomplishments since he's been in office:

I hadn't heard of even half of these and I consider myself well informed.

Dave Dubya said...

We'd have balanced and prosperous economy if we could only tax greed. If we could add taxing right wing lies we'd all have free rent and health care.

Jack Jodell said...

Tax them? I say JAIL them with HARD LABOR! These worthless weasels produce nothing of true value and attempt to skim off the top while in effect raising prices on products and services for all the rest of us. These people want to make easy money at our expense, so I say, give 'em HARD LABOR instead!

TomCat, I absolutely LOVE that picture motif at the beginning of this post! That is one "Wall" that is screwing this country royal! That's not the "free market", but a contrived and manipulated one!

TRUTH 101 said...

Jack as usual is on the money. We have a super wealthy class of people nowm that make money on nothing. Speculation and raiding corporations so they can be outsourced overseas makes a few people a boatload of money but adds nothing to the economy.

Perhaps a good rule would be for every job eliminated or outsourced the CEO and board of directors gets a year of hard labor under the watchful eye of Jack Jodell.

TomCat said...

Hill, you're right, of course, but it does help raise awareness.

Lisa, I agree. They wouldn'y have to give up a single chip in their diamond studded toilet paper dispensers. Thanks for the link. I almost based an article on it today.

I know, Oso, but the only think he's accomplished in the last decase is to allow W to steal the presidency.

JR, they actually could serve a valid purpose and make a fair profit. They used to do so until greed took over.

Dave, if we could tax GOP lies, they would all be living under bridges.

Jack and Truth, I could not resist taking off on this for today's top post. I see Jack has discovered his part in it. :-)