It’s a rejection of such tax-the-rich policies that buoys former vice-president Joe Biden in the standings and has propelled South Bend Mayor Peter Buttigieg into contention. The progressive Democratic candidates appeal to the party’s base, but other memberss are worried they’re so progressive they will drive voters into the arms of President Donald Trump. It failed to resonate with British voters, drowned out of the election debate by more urgent issues. In short, for all the noise it doesn’t seem as if a financial transactions tax is an idea whose time has come. The UK Labour Party found to its dismay that British voters was unconvinced by its platform, which also included a financial transaction tax on top of the stamp tax on real estate and share transfers that has been in place for decades, with new levies on derivatives and currency trading forecast to raise an additional £8.8 billion a year. ![]() The question is whether the American electorate is ready to embrace these relatively left-wing propositions. A recent report from Public Citizen estimates that slightly more than half the middle 20% of households by income have any retirement plan, and the average added cost to them would be only $13 a year. The main objective of a financial transaction tax is to reduce inequality by putting a brake on the wealthy, who profit most from stock market trading, while not penalizing the middle class. For one thing, investors are likely to alter their behavior if a tax is imposed, perhaps accelerating the shift toward private markets. The Tax Policy Center estimates the Sanders plan could generate $400 billion over 10 years, far short of the $3 trillion the candidate forecasts. As with the European plans, his would exclude certain types of investors, such as pension funds, because the aim is to curb high-frequency traders and hedge fund speculators. Sanders’ plan includes a 0.5% tax on stock transactions, a 0.1% tax on bond trades, and a 0.005% tax on derivatives. Views on the financial transaction tax do follow an ideological divide, which makes it a particular political challenge. In the US, taxing the rich is a major policy plank of the two leading progressive contenders for the Democratic nomination, Sen. The plan foundered on opposition from bank lobbies, center-right parties and EU member states with significant cross-border financial services sectors. It’s a far cry from a broader EU plan floated in 2011, which applied to derivative and bond trading as well, and was reckoned capable of bringing in as much as €57 billion to the tax coffers of the then-27 EU countries. Germany’s share would be about €1.5 billion. A 0.2% tax on these transactions would generate revenue of €3.4 billion, to be split among the 10 countries. It’s a limited plan, applying only to stock trading and then only to the shares of the 500 or so European companies with a market cap of at least €1 billion. Olaf Scholz, Germany’s Social Democratic finance minister, has proposed a plan to his counterparts in the 10 EU countries who remain committed to the idea. While advocates claim the tax could actually improve performance for retail investors by reducing churn in retirement accounts, it’s not self-evident that taking 0.1% or 0.5% off the top of trades is going to boost returns. Proposals in the European Union and the United States face uphill battles, while the UK’s Labour Party, which included proposals for such a tax in its platform, was resoundingly defeated in December elections. ![]() The notion of a financial transaction tax is gaining popularity on both sides of the Atlantic, but the politics of putting it in place are complicated. ![]() Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at. The author declares that he has no relevant or material financial interests that relate to the research described in this paper.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |