Additionally, the bill mainly applies to brokers, and there are provisions, for example, to prevent the tax from being applied to direct purchasers of securities with less than a certain gross income.Īccording to Dean Baker of Center for Economic and Policy Research and Robert Pollin of Political Economy Research Institute, the estimated revenues of the tax would be anywhere from ~$175 to $350 billion depending on the assumed reduction in trading volume. The bill would be implemented through amending the Internal Revenue Code. This legislation is offset by imposing a Wall Street speculation fee on investment houses, hedge funds, and other speculators of 0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives. 1373).Īlong with expanding the federal work study program and simplifying the student aid application process, the main premise of the bill is as follows: Sanders, who has a long history of introducing pseudo-anti-capitalist legislation, previously tried to introduce the tax as a bill in the Senate twice as the "Inclusive Prosperity Act" (S. The financial transactions tax has been around for decades it's been called the Tobin Tax in the U.K., and more recently, Bernie Sanders has incorporated it as the Robin Hood Tax as part of his presidential campaign. However, for all the passion and dedication, the actual implementation of their platforms is lacking and their solutions seem far-fetched to say the least - in particular, the Robin Hood Tax. Wages have been stagnant for decades and it's rupturing the business cycle so much so that capital investment rates have barely recovered from the Great Recession. For example, the middle class of this country is shrinking, and it is hurting the economy. It is hard not to appreciate the zeal with which leaders like Sanders or Corbyn present their ideas to the public, and, for the most part, the overarching theme of their political platforms is correct. No one would have remembered the Good Samaritan if he'd only had good intentions. A financial transactions tax could reduce trading volumes and liquidity, raise the cost of capital and even affect the performance of financial institutions and funds. Despite the low likelihood of such a bill becoming law in the U.S., it is important to recognize its hypothetical effects on financial markets and the wider economy. The idea behind a financial transactions tax levied against investment institutions has been around for decades, however, the movement is gaining significant traction in the public forum. However, this model is under serious threat, as international labour, under the leadership of high-profile figures such as Jeremy Corbyn and Bernie Sanders, mobilize movements to enact a "Robin Hood" tax, or financial transactions tax. Low-cost, high-frequency electronic trading has been the cornerstone of the modern financial era - the so-called democratization of the investment community.
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