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The Progressive Economics Forum

Financial Transactions Tax

Oxfam are seeking endorsements of this letter by professional economists. If you want to sign on, please notify

Sophie Freeman: SFreeman@Oxfam.org.uk

Dear G20

As economists from across the world, we call on you to implement a financial transaction tax (FTT).

This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.

Even at very low rates of 0.05% or less, this tax could raise hundreds of billions of dollars annually and calm excessive speculation. The UK already levies a tax on share transactions of 0.5%, or ten times this rate, without unduly impacting on the competitiveness of the City of London.

This money is urgently needed. The crises of poverty and of climate change require an historic transfer of billions of dollars from the rich world to the poor world, and this tax would offer a clear way to help fund this. Given the automation of payments, this tax is technically feasible. It is morally right. We call on you to implement it as a matter of urgency.

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Comments

Comment from Phong Tran
Time: February 3, 2010, 7:04 am

I’m not quite sure that a financial transaction tax is the solution. There are too many people in the stock market right now without a true understanding of valuations and the business cycle. They’ve grown up in a culture where their life savings reside in a vehicle that no longer works and has been taken over by non-regulated financial institutions.

To impose a financial transaction tax across the board would weaken an already impoverished middle class and do little to stem the ‘control’ that those same financial institutions have on the markets. Even a two-tiered system where the financial institutions are taxed more would not work.

If the government needs more tax revenues to combat the increased deficits as they try to replace private sector jobs with public sector jobs, they should just raise the income tax levels and explain why they are doing it.

Prohibition never worked and neither will taxing the large financial institutions. The workers will suffer the tax while the institutions will just push the expense down to the working class through higher loan rates, etc.

Comment from Patricia harney
Time: February 15, 2010, 2:00 am

Brillian Idea. let’s make it happen round the world and especially in the USA

Comment from Rebba
Time: February 15, 2010, 5:32 am

This Transaction Tax is the least intrusive means to curb frontrunning and naked shorts. The so-called Self Regulating Organizations, the Exchanges, are controlled by the very worst of the pirates.

Workers will not suffer. The revenue generated will not change legitimate investment and settlement processes in the least. Crocodile tears for the middle and working classes ??? What a wonderful example of disingenuous perversion.

The only ones affected by this will be the Co-Located insiders, who are stealing massively by introducing software “Trojans” and uncontrolled network code into the software system underlying NYSE/NASD. The firms that have rewritten the SRO rules, overturning New York State and Federal law.

These pirates steal billions with frontrunning, as well as enabling their naked short schemes that damage company after company. The pirates, principally Goldman, Sachs. The associations of criminals.

BTW: ask the EU about these Goldman, Sachs pirates and a criminal scheme to hide the Greek debt. This is typical GS criminality. Also, ask Harvard about hiring a GS senior thug to be its president. That thug — one Larry Summers — then arranged a strange contract that put Harvard in debt to GS to the tune of $1,000,000,000.

These GS thugs are brilliant. Smarter than we are. Beyond being shamed or prosecuted. Apparently all we can hope for is to tax them.

Comment from Dave King
Time: February 15, 2010, 8:26 am

FTT might work somewhat. But, of course, the same powers that be would connive to take those billions back via their overweening influence on governments from Tucumcari to Timbuktu. Fat Cat Charlie and his friends in high places will continue to build bridges to nowhere with the illusory promise that “jobs are good”. But most modern jobs are simply a waste of time and resources –puerille money shuffling and overproduction of junk products.

What we really need is something like a World Profitsharing Fund (WPF!), which starts at birth. The less Earth-destroying dross you produce, the greater your share. Thus, we could move more steadily toward achieving universal unemployment while preserving the resources of this planet. This, after all, was the purpose of the industrial revolution, and the beginning of the era of replacing human labor with that of machines.

“First do no harm” should be the most profitable thing any one of us humans “does”. Doing nothing should be the prime-most art of living well. That means fewer Barbie dolls, automobiles and high speed rail boondoggles, because –what’s the hurry? You really got nowhere to go today! Just r-e-l-a-x and spend your life near the rivers and trees, making rhymes, and be free!

The dream shall never die, even though most of us alive today will not make it to the mountain top.

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