Wall Street financial firms had some big problems last year, due to their involvement in high risk investment schemes that they could not sustain. The federal government rushed to their aid with unimaginable piles of money. Wall Street got its fix, and now those firms are surging back up to the heights of success, ready to make more high risk investments with public money to back them up.
Here on what they call “Main Street”, people aren’t doing so well. They aren’t getting tens of billions of dollars in bonuses, like the executives of Wall Street are. Many of us can’t even find work. Our economic recession is going on long after the Wall Street recession has faded.
How can this economic gap, where Wall Street gets the benefit of high risk investments, but Main Street provides the collateral, be reformed? How can these reforms remain fiscally responsible?
One option for reform has been crafted by U.S. Representative Peter DeFazio. Representing a coalition of 26 members of Congress, Defazio has introduced H.R. 4191, the Let Wall Street Pay for the Restoration of Main Street Act.
This legislation would establish a small tax of just one quarter of one percent of stock transactions, and only two hundredths of one percent on credit swaps, futures and options. This minimal tax on Wall Street activities would, however, bring approximately 150 billion dollars into the federal government.
H.R. 4191 would require the money obtained through the new tax to be used in two ways:
- half of the money would be put into job creations programs that promote jobs that pay at least the median wage in the United States, without benefit to any companies that have received bailout money
- the other half of the money would be required to pay off the federal budget deficit
The legislation would create accountability for Wall Street, tying finance firms profits back into jobs for the rest of us, and counter some of the big bailout spending from earlier in 2009 and 2008. Should it succeed? Can it succeed?
With Wall Street pretty much calling the shots in D.C. i’d guess the probability of something like this actually going on the books at close to zero.
This tax may not be a good idea for the long haul….first of all, the margin of profit for a typical daytrader (as this will essentially be a daytraders tax) is .002% in many cases. If the tax is .25%..most will not daytrade at all. Let me ask you, how can the government make money on a daytrading tax, when the tax is so high that noone will even daytrade any longer? Many small time (i.e. main street) daytraders will be out of a job, and be supported by the system. This means that the government will have to spend more in order to have this tax in place. What will happen if the daytraders decide to invest in offshore, international investment opportunities? This could devestatingly damage our economy if our money goes to supporting other countries, some of whom we already owe money to, instead of being kept here where our “money can earn money” and create new wealth in gross domestic product, a natural way for our country to slowly get out of debt (with less spending of course). This bill will cause institutional daytraders to create higher costs for….you guessed it….the small time main street people of America. The cost from the taxes will get trickled to you and I.
My other thought on this is……current levels of daytrading that are here today causes liquidity to the market that A. keeps the market prices from falling too quickly…and B. Allows enough price fluctuation so that investors (which put their money into corporations, these corporations make new products, which get sold overseas, which helps our country become richer) to get into the market. What will eventually happen if this tax is implemented is it will take days for large stock orders to get filled. Many people who are intelligent will simply stay out of the market, due to the risk this will cause them by investing in a dry market. This over time will create devestating effects to our economy as a whole.
This bill will also break our Constitutional rights as a whole. This country was fought tooth and nail to keep big government at bay. Our forefathers nearly had heart attacks over a tiny 3% tea tax. Now we are getting taxed for how much money we make, what we purchase, where we live, our license plates stickers, our inheritances, our lottery winnings, we are never taxed just once. In essence we are taxed in every nook and cranny of our pocketbooks. Let me repeat again…THIS COUNTRY WAS FOUNDED ON FIGHTING TOOTH AND NAIL AGAINST BIG GOVERNMENT.
April, this country was made possible by fighting against the English monarchy. The fight wasn’t against big government, but against big government without representation. It wasn’t taxes that were the problem, but the lack of representation that gave people no say in what their taxes would be. The tea party was an anti-England, anti-autocracy protest. The tax was just one instance of the larger problem.
This country was founded by the Constitution, which allows for Congress to pass laws dealing with interstate commerce, which H.R 4191 would do. Totally constitutional.