GOOD LUCK-what do Bill Gates, Hugo Chavez, the Archbishop of Canterbury and protest nurses have in common? All of them have voiced their support for the financial transaction tax, which will probably destroy the advantages of many financial institutions on Wall Street if it imposed.
A call to tax the transactions has been growing in recent weeks and is now a major topic of discussion at the G-20 meeting in Cannes, France this week. But despite widespread public support for the tax, it is difficult to see it become law in the United States anytime in the near future. Nevertheless, the continent seems committed to get one put in place, which ultimately could put pressure on the United States and United Kingdom to follow suit, especially if there are more market crash associated with high frequency trading.
Financial transaction tax is not a new idea. In fact, the U.S. had such taxes from 1914 to 1966, when taxes forced the investors to pay a small fee each time they executed the trade. It is intended not only to increase government revenues, but also to prevent excessive speculation. Congress had flirted with the idea raised taxes in some shape or form since going back in the 60s, but never enough support for one.
Such damage can bring profit tax on Wall Street are pretty clear. The tax would reduce the volume of trade, which would hurt the bottom line broker dealer. It will also provide for the exchange of blows, which depends on a high volume of trade to give advantage to investors.
Taxation of financial transactions had been proposed twice in the last five years. As taxes nearly made it into the financial regulatory bill Dodd-Frank but not quite the bi-partisan support to get it through the Committee. But on Wednesday, two of the biggest supporters of the tax transaction, representative Peter DeFazio (D-Oregon) and Senator Tom Harkin (D-Iowa) introduced legislation that would put a tax on equity and bonds at 3 basis points per transaction. It is equal to $ 3 for every $ 10,000 traded.
